Novant Health’s $5 billion deal to buy NC hospital system wins county’s favor
The New Hanover County Board of Commissioners voted Monday night to move forward with the more than $5 billion deal to sell the Wilmington hospital system to Novant Health.
The Winston-Salem-based Novant’s proposal includes purchasing the medical center from New Hanover County for about $2 billion, along with $2.5 billion in capital investments and $600 million in other costs.
Carl Armato, president and CEO of Novant, told the Observer Tuesday that Novant and New Hanover Regional Medical Center are natural partners because of “a shared history for patient care focused on promoting community health and equitable access.”
“We’re really looking to New Hanover for an addition to the remarkable work they’re already doing to build on that and create a next-generation regional delivery network,” Armato said.
Bids came in from than 30 health care organizations from across the country, including Charlotte-based Atrium Health.
“By choosing to support the proposed partnership, our community can be a destination for medical care for generations to come,” the NHRMC Foundation Board of Directors said in a letter of support for Novant prior to the commission’s decision.
The vote comes 10 months after New Hanover County created an advisory group to explore sales options for the hospital. The 21-member Partnership Advisory Group voted unanimously July 2 to recommend the sale to Novant Health, partnering with UNC Health and the UNC School of Medicine.
Novant Health Brunswick Medical Center will be rolled under New Hanover in the deal, according to Novant.
“I know there are questions and considerations that still remain, and I look forward to learning more and defining all of the details in the coming months so that we can secure and ensure an agreement that will benefit our entire county for generations to come,” said Board of Commissioners Chair Julia Olson Boseman in a statement.
A final version of the agreement will be made public at least 10 days before a public hearing and a final vote by commissioners, on or before Oct. 19.
In the plan
The commissioners laid out how the $1.9 billion would be used:
▪ The majority, $1.25 billion, would go toward a community foundation on “health and social equity, education, community development, and community safety.”
▪ $300 million NHRMC “Transition Stabilization Escrow” that includes $200 million into a fund to support hospital employees and local providers, and $100 million in a liability escrow.
▪ $300 million in a county reserve fund for emergency response, debt relief, and tax and fee stabilization.
▪ $50 million Mental and Behavioral Health Fund: to be used by the county for mental and behavioral health initiatives.
The foundation would be governed by an 11-member board, five appointed by the commissioners and six by the hospital’s local board.
“It’s important that any proceeds we receive through this process are invested in a definitive, clear and strategic way to benefit everyone in our county for years to come, and setting up a community foundation with an endowment and investment criteria that ensures the assets are protected will do that,” said Olson-Boseman said in a statement. “It will keep the money out of the hands of politicians, and go directly to the people we serve.”
Novant also will work with UNC Health and UNC School of Medicine to expand the Wilmington branch campus of the UNC School of Medicine and establish a new UNC Health Sciences campus in Wilmington, according to a statement.
These partnerships and other community initiatives and collaborations will “create a pipeline for new jobs for the community,” Dr. Pam Oliver, executive vice president at Novant Health and president of Novant Health Physician Network, told the Observer Tuesday.
Novant currently has 15 hospitals and 605 physician clinic locations with 1,693 physicians 29,233 employees in the Carolinas, Virginia and Georgia, according to the company.
Concerns about the plan
The sole commissioner who voted against the deal was concerned about specifics in the letter in of intent and how the proceeds will be spent, WECT news reported.
Armato said the letter of intent is 42 pages, and the local board reviews and decides where investments are made.
“We intend to honor that local control,” he said.
Still, some residents are concerned about the deal. Gene Merritt, who leads the organization Save Our Hospital in New Hanover County, said he’s worried about potential rising hospital costs and lost jobs if the deal goes through.
Many hospital consolidation critics warn similar deals can lead to rising insurance premium costs to consumers, as hospitals charge insurance companies more.
Merritt says the New Hanover Regional Medical Center deal was conducted in a “secretive manner” and citizens’ concerns haven’t been fully addressed. The hospital Partnership Advisory Group held several public meetings on the proposals, but Merrit said the public meetings were “too little too late.”
“Our concern was that the public was not involved in that decision making at all,” he said. “ ... Pretty much, it’s been a railroad train coming down the track.”
Support for the plan
New Hanover Regional Medical Center Board of Trustees July 7 approved the plan to partner with Novant Health. The hospital board also passed a resolution supporting a New Hanover County Commissioners plan to put $200 million from the hospital sale into a fund to support hospital employees and local providers.
“While we firmly believe a partnership is in the best interest of the community and the NHRMC team, we know any transition is difficult for those doing the work and continuing to provide care,” hospital Board of Trustees chairman Jason Thompson said in a statement. “We want to provide the resources to help them personally and professionally so they will stay with NHRMC and grow with the organization for many years to come.”
Consolidation trend
The New Hanover deal is indicative of the trend toward hospital consolidation across the state and the country.
But the Charlotte area saw several breaks away from that trend in recent years. In 2018, nearly 100 doctors split from Atrium Health, forming Tryon Medical Partners.
And a group of doctors split from Novant in 2019 to leave for the independent physician group Holston Medical. But many of those doctors are heading back to a health care network, recently announcing plans to join Atrium Health.
Charlotte-based Atrium Health itself has come out larger in hospital consolidation moves, announcing plans in 2018 to combine with Macon, Georgia-based Navicent Health. Atrium, along with Duke Health and other systems, were passed over in the New Hanover deal.
“While we are disappointed the Partnership Advisory Group is not recommending Atrium Health as the finalist to advance in this process, we respect their decision and understand the tough choice they had to make with $5 billion being offered by the recommended finalist,” Atrium Health said in a statement after the Partnership Advisory Group recommended Novant.
“From the beginning of this process, Atrium Health listened to the community and created a unique partnership approach that did not require a sale of the hospital, as well as an alternative comprehensive and fair financial offer.”
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