Carolinas HealthCare System has agreed to drop its lawsuit against Mecklenburg County and in return will take ownership of the countys psychiatric hospital, under the terms of a settlement announced Wednesday.
The Charlotte-based hospital system said it plans to continue operating CMC-Randolph, a 66-bed hospital on Billingsley Road that treats hundreds of patients facing psychiatric emergencies each year.
To settle the suit, the county has agreed to give Carolinas HealthCare that hospital, along with about a surrounding 8 acres off Randolph Road. County real estate staff has estimated the property is worth about $15 million to $20 million, Mecklenburg general manager Michelle Lancaster said.
But officials predict the county will come out ahead, because it will save more than $35 million a year that it once paid the hospital system for indigent and psychiatric care.
Carolinas HealthCare, the multibillion dollar hospital system that owns Carolinas Medical Center, sued the county last year after Mecklenburg commissioners voted to stop paying the system to help care for psychiatric patients and low-income patients. The hospital system accused the county of breaching a contract and improperly withholding money.
Under the settlement, the county wont make those payments in the future.
I think the taxpayers fare well, said County Manager Harry Jones.
Republican commissioner Bill James agreed: Considering the amount of money that were not going to pay going forward, I do think the county gets the better end of the deal.
The county owns CMC-Randolph, but Carolinas HealthCare has run the hospital for years under a contract with the county.
The settlement stipulates that the hospital system will use the Billingsley Road property as a psychiatric hospital for at least five years, and will operate it as a health care facility for as long as it owns it.
Carolinas HealthCare also agreed to give the county the first right to buy the property if it ever chooses to sell it.
The nonprofit hospital system has in the past received about $60 million annually from the county for running the psychiatric hospital, caring for the indigent and providing public health services.
The county is scheduled to take over the public health department in July of next year, and is planning to hire 487 employees to staff it. CHS current public health employees will have the opportunity to interview with the county to keep their jobs.
The public health department provides school nurses, immunizations and cancer screenings, among other things.
The county has paid the hospital system about $22 million annually for the public health work, Jones said, and the cost of providing those services in-house will be comparable.
What caused the rift
The dispute erupted last year when county officials contended that Carolinas HealthCare breached its contract by failing to provide requested information about patients at CMC-Randolph and about plans for a new psychiatric hospital in Huntersville. CHS now plans to build that hospital in Davidson.
In June 2011, Mecklenburg commissioners voted to stop many of its payments to the hospital system.
Local officials argued at the time that Carolinas Healthcare had grown so profitable that it no longer needed the countys financial help.
Now the nations second-largest public hospital system, CHS has more than $2 billion in investments and has turned a total profit of more than $1 billion since 2009.
CHS responded to the commissioners move with a lawsuit, accusing the county of improperly withholding money. It asked the court to order the county to continue paying for indigent and psychiatric care under the 2000 contract.
Earlier this year, a judge had ruled that the county couldnt be required to pay for treatment of low-income patients and psychiatric patients. The hospital system appealed that ruling in April.
Lancaster estimated that the county spent more than $100,000 in legal fees defending the suit.
I think weve done something fair for both sides, and were ready to move on and provide good services to the community, Lancaster said.