Senate budget legislation would prompt $35 million Vidant loss

Published 7:45 pm Wednesday, May 29, 2019

The North Carolina Senate budget calls for an estimated $35 million loss in funding for Vidant Medical Center, a piece of legislation some believe is retaliation for Vidant changing how its board of trustees is appointed.

The Senate budget changes how the Department of Health and Human Services will reimburse Vidant Medical Center for Medicaid costs, stating DHHS will no longer reimburse the teaching hospital affiliated with East Carolina University’s Brody School of Medicine for the allowable costs for inpatient and outpatient services. Instead, DHHS will reimburse Vidant Medical at the same rate it would reimburse private hospitals.

It’s a decision that Vidant Health CEO Mike Waldrum said is not good for Vidant, ECU or the Brody School of Medicine.

Dr. Shirley Carraway, vice-chairman of the Vidant Health Board of Trustees and past chairman of Vidant Medical Center, had stronger words.

“Healthcare and medical education is under attack,” Carraway said during a press conference held Wednesday at Vidant Health in Greenville.

The reasoning behind the abrupt change comes from a dispute in how members are appointed to Vidant Medical Center’s board of trustees. For the 40 years the hospital and school of medicine have been working together, the agreement between the two required a hospital board consisting of 20 members: 11 appointed by Pitt County commissioners; the other nine by the University of North Carolina Board of Governors. This year, however, the hospital board and Pitt County commissioners changed the process. While Pitt County commissioners will continue to appoint 11 members, Vidant trustees will be appointing the other nine based on recommendations from Vidant Health’s board of directors, cutting the UNC Board of Governors out of the process altogether.

UNC and ECU recently filed a complaint against Pitt County commissioners and Vidant Medical Center in response, as neither entity was consulted in the decision. The two factions were moving forward with voluntary mediation when the Senate budget was released Tuesday. Waldrum said the purpose of changing the appointee process was to make sure the board is made up of people with very strong connections and significant relationships to eastern North Carolina, as well as requiring for the first time that two people in leadership roles at ECU must be on the board. The decision to change the process met with unanimous support from the board, even those appointed by UNC School of Governors, according to Waldrum.

“It comes down to a simple reality: the best governance structure is to have the board that knows the company the best determine who the new board members should be, instead of a group of people that sometimes have never even been to eastern north Carolina much less understand the issues that we face. It’s as simple as that: who knows best for our company but our board?” Waldrum asked.

Medicaid reimbursement for Vidant Medical at private hospital rates could have a devastating impact — because it is a teaching hospital, Vidant Medical sees a disproportionate amount of Medicaid patients. The potential for a $35 million loss in Medicaid reimbursement could compound a loss of $38 million already proposed by changes to the state health plan. Together, the two losses represent about 3% of the budget, but 100% of Vidant Health’s bottom line, according to Waldrum.

That impact would be felt in Beaufort County, according Vidant Beaufort Hospital President Harvey Case. In the past four years, Vidant has invested $40 million in the county: the latest investment, a $17 million emergency department renovation opened in September 2018. A multi-specialty clinic was built in Belhaven three years ago, cutting-edge technology in the linear accelerator used during radiation treatments was purchased for the Marion L. Shepard Cancer Center and a new electronic charting system installed.

“These proposed budget cuts would mean substantial changes in the services we offer and it is impossible for it not to have an impact on how we provide health care to our community. We would have to take appropriate steps to adjust our operations,” Case said.

Waldrum said he looked forward to working collaboratively with UNC, ECU and their legal teams in mediation but is reaching out to legislators to voice Vidant’s concerns. He encouraged eastern North Carolina residents to the same.

“We are hoping the eastern delegation is supporting the east,” Waldrum said. “They are listening to us, but the outcome — we don’t know yet. … I think that our legislators need to hear the voice of eastern North Carolina.”

Though the prospect of the Senate budget is dim for Vidant, Waldrum said it will not impact the Vidant mission.

“Our affiliation for 40 years with ECU Brody School of Medicine remains intact and will remain intact if these cuts go through on July 1, as you’ve just heard. We hope that our legislators from eastern North Carolina will help us stop these cuts because they understand, like our board, what our communities need,” Waldrum said. “And lastly, I just implore our physicians, nurses, team members, to do what they do every day: to work together to meet the needs of our communities, which requires collaboration between all the components of the organization whether it’s ECU, physicians, Vidant Medical Group, nurses, and other professionals to provide healthcare to one of the most difficult health care environments in the United States.”