Novant, Atrium want field hospital for surge in COVID-19 cases. But who’s going to pay for it?
Atrium Health and Novant Health want Mecklenburg County to help build a proposed field hospital in uptown Charlotte to prepare for an expected surge in coronavirus cases.
But the request has raised questions among some elected officials who ask whether taxpayers should bear part of the cost rather than two of the state’s largest medical providers.
The Charlotte region’s two biggest hospital systems say they need a 600-bed field hospital to handle the demand that is expected in coming weeks. Atrium CEO Gene Woods and Novant CEO Carl Armato asked Mecklenburg County for financial support in a joint letter dated April 2.
States and private medical centers in other parts of the nation have paid to erect temporary field hospitals in parks, convention centers and sports arenas to handle the coronavirus with the hope the federal government will reimburse them for expenses.
As part of the $2 trillion stimulus package approved by Congress and signed by President Trump, hospitals and health systems will get $100 billion in emergency grants, according to a report from The Washington Post.
But the request for local taxpayer money from two hospital systems with a combined billions of dollars in reserves has drawn concern from some Mecklenburg County commissioners.
Atrium had roughly $4.6 billion in unrestricted reserves as recently as June 2018, according to a report from S&P, a financial research company.
Novant, which is significantly smaller than Atrium, reported $1.5 billion in current assets, at the end of 2018, according to audited financial statements. That amount included $228 million in cash and cash equivalents, the documents say, along with short-term investments and other accounts.
A now-abandoned plan the hospital systems submitted would have put a 3,000-bed field hospital at UNC Charlotte and cost $70 million, according to North Carolina Emergency Management. Atrium and Novant have not disclosed how much the new proposed field hospital might cost, but Woods has said it would need a staff of about 700.
Commissioner Pat Cotham said it is not clear why Atrium and Novant can’t afford to build a field hospital without money from the county.
“As soon as I saw their letter, I questioned why we would have to pay for this,” Cotham said. “We don’t build hospitals. Why should it be on our dime?”
Atrium spokesman Dan Fogleman refused to answer written questions and referred a reporter to Mecklenburg County administrators.
“The need for a field hospital is clear,” Fogleman said in an email. “However, we are still very early in the process of most of the planning elements. And, our first priority is making sure we can take care of the people who need medical treatment.”
Novant spokeswoman Megan Rivers also refused to answer questions and referred a reporter to county officials.
Mecklenburg County and city of Charlotte officials did not make administrators available for interviews. They did not answer written questions submitted by the Observer.
In a written statement, they said they had not yet determined important details about the proposed field hospital, including how much it would cost.
“The request for a field hospital was made by Atrium and Novant based on modeling projections showing that at the peak of COVID-19 in Mecklenburg County, the surge of patients is likely to overwhelm existing resources,” the statement said. “The Charlotte Mecklenburg Emergency Operations Center (EOC) is in the planning process for a field hospital. There are many details that have yet to be determined, including the answers to your questions, and no formal agreements have been made. We are working hard with the healthcare systems to expedite this process.”
Planning for coronavirus
Mecklenburg officials are bracing for coronavirus cases to peak sometime between mid-April and mid-May. Mecklenburg is approaching 1,000 confirmed coronavirus cases — by far the highest total in North Carolina.
Atrium and Novant have canceled elective procedures and taken other steps that have doubled the normal number of hospital beds to more than 6,000 in anticipation of the surge.
But officials say there likely won’t be enough beds unless a field hospital is built.
Commissioner Susan Harden said the request for county money to build the facility comes as somewhat of a surprise.
Harden said she asked in March if Mecklenburg had enough hospital beds to handle coronavirus and was told the hospital systems had the necessary capacity. Harden said Mecklenburg Health Director Gibbie Harris assured her that the hospitals were in a good position because they had been adding beds in recent years because of Charlotte’s rapid population growth.
“It went from we have the capacity to 3,000 beds needed and now to 600 beds,” Harden said. “There was a dramatic change. Now people have questions about why the county should pay for this as opposed to the hospitals.”
Asked why Atrium, Novant and the county had not settled on sites for a field hospital before now, Cotham said she did not know.
In the April 2 joint letter, Atrium and Novant asked the county and state to take immediate action to provide money for the 3,000-bed field hospital on the campus of UNC Charlotte.
Cotham said she has been told there were concerns that the hallways and rooms at UNC Charlotte were not wide enough to accommodate hospital equipment.
“Did they have a plan?” Cotham said. “It doesn’t look like they had a good one if they did.”
No supplies and staffing
At a Board of Commissioners meeting held on Tuesday via teleconference, Woods, the Atrium CEO, said the hospital systems had taken extraordinary steps in anticipation of the coronavirus outbreak. That includes canceling elective procedures, a move that costs the hospitals millions of dollars, he said.
Atrium recently decided to secure a revolving line of credit that would allow it to borrow up to $750 million to finance operations and improvements related to the COVID-19 pandemic.
Woods said that the UNC Charlotte field hospital proposal was scrapped because projection models showed fewer coronavirus cases than previously feared.
Woods also said that federal officials refused to provide support for the project.
Mecklenburg County Manager Dena Diorio said that North Carolina’s Emergency Management office and the federal government had rejected a request to provide staffing, supplies and personal protective equipment needed to operate the now proposed 600-bed field hospital.
Federal authorities have prioritized sending supplies to some places, but “North Carolina is not at the top of the list,” Diorio said.
Diorio said she believes Mecklenburg would be reimbursed later by the federal government and the state if officials choose to help pay for a field hospital, but said she could not guarantee it.
“I’m saddened we won’t have any state or federal resources,” Commissioner Trevor Fuller said. “I regret that we have to do it alone.”
Spokespersons for the the U.S. Army Corps of Engineers and North Carolina’s Emergency Management office said they are working with Mecklenburg County and Novant and Atrium on plans for a field hospital.
Both said they had not denied any funding requests for the project.
“As (personal protective equipment) items are received at the state level they are being quickly turned around and pushed out to medical providers across the state through the regional healthcare preparedness coalitions,” said Keith Acree, a spokesman for North Carolina Emergency Management.
Acree said plans for the UNC Charlotte field hospital appeared set to move ahead a week ago. State officials were prepared to pay for 25 percent of the costs with the remainder being covered by the federal government, Acree said.
But now he said the federal government is not providing staffing or supplies. Like other states, North Carolina has only limited supplies of personal protective equipment that healthcare workers need to safely treat patients, Acree said.
Budget issues ahead?
Atrium and Novant’s plea for county financial support comes at an uncertain time for local government budgets.
North Carolina Gov. Roy Cooper last month issued a shelter-in place order and closed businesses to stop the spread of the coronavirus. Mecklenburg officials and the hospitals have praised such social distancing initiatives for helping lower the number of infections.
But with the economy grinding to a halt and unemployment claims skyrocketing, local government revenue is likely to suffer.
North Carolina cities, counties and towns typically get between 14 % to 20% of their revenue from sales taxes consumers pay when they buy goods, according to the North Carolina Association of County Commissioners.
“Since COVID-19 emerged, counties are now facing significant budget uncertainty, due to the possible postponement of tax collection and the overall decrease in sales,” Lacy Pate, a spokeswoman for the lobbying group, said in an email. “At the same time, many counties are waiving fees, providing relief to customers struggling to pay for water and sewer service, and generally absorbing costs usually covered by residents to maintain continuity. All of this means counties will be hard-pressed to balance their budgets.”
Commissioner Susan Rodriguez-McDowell said she questions spending money for a field hospital because it could be used for other pressing needs at a time when many residents are suffering financially.
“I want to protect our resources, especially in the face of this crisis,” Rodriguez-McDowell said.
This story was originally published April 12, 2020 at 1:58 PM with the headline "Novant, Atrium want field hospital for surge in COVID-19 cases. But who’s going to pay for it?."