Politics & Government

Senate budget would cut money for Greenville hospital. Vidant says Eastern NC would suffer.

Vidant Health officials pleaded on Wednesday for the N.C. Senate to remove a budget line that would cut the Greenville hospital’s Medicaid reimbursement by an estimated $35 million, saying the move would harm Eastern North Carolina.

However, despite the potential cut, the hospital said Vidant Medical Center would remain committed to its role as a teaching hospital for East Carolina University’s Brody School of Medicine, the main source of tension between the private, not-for-profit hospital and the UNC system.

The budget change, which was introduced in Raleigh this week, was in response to an attempt by Vidant to remove the state’s influence from the hospital’s Board of Trustees. Earlier this month, the hospital moved to strip the UNC Board of Governors’ ability to appoint any trustees for Vidant Medical Center.

Vidant Medical Center Aerial Photo.jpg
The Vidant Medical Center in Greenville, N.C. is the location of the teaching hospital for ECU’s Brody School of Medicine. Charlie Surratt Courtesy of Vidant.

The budget calls for the state “to no longer reimburse the primary affiliated teaching hospital for the East Carolina University Brody School of Medicine for the allowable costs for inpatient and outpatient services.”

Instead, the new budget would treat Vidant the same as any other private hospital under the state Medicaid plan. Vidant has said that because it operates as a teaching hospital it sees a higher number of Medicaid patients than a normal hospital.

“In addition to the other cuts that have been proposed,” Mike Waldrum, Vidant Health’s chief executive, said during a news conference, “it will have a significant effect and we will have to adjust the services we provide.”

Waldrum added that he was surprised by the state’s decision. He said the hospital is also expecting another $38 million loss from changes to the state health plan. The combined cuts could amount to 3% of the hospital’s total budget.

He asked for residents of Eastern North Carolina to call elected officials to tell them to drop the provision in the budget. “We did not anticipate that people would take actions that would damage Eastern North Carolina,” he said.

However, state Sen. Ralph Hise, R-Mitchell, said the hospital shouldn’t have been surprised.

“Vidant has a long-standing partnership with ECU, which is a public university (and) Vidant receives public dollars to benefit financially from this partnership,” Hise said in a statement. “However, despite the decades-old partnership, Vidant has taken action to prevent the university from having any say in the hospital’s affairs. It does not make sense for Vidant to continue receiving financial benefits directed by public policy when it has ended its side of the partnership.”

A spokesman for state senate leader Phil Berger agreed that there should be ramifications to kicking out UNC-elected board members and argued that Vidant violated its contract with the UNC system.

“That is certainly a decision Vidant can make” to change the hospital’s board structure, Berger spokesman Pat Ryan told the Greenville Daily Reflector, “but it does not make sense for Vidant to continue receiving financial benefits directed by public policy when it has ended its side of the partnership.”

The UNC system has had a relationship with the Greenville hospital since 1975 and has appointed members of the hospital’s Board of Trustees for years. Under that agreement, the facility became the teaching hospital for East Carolina’s medical school. In return, the university system agreed not to build a separate teaching hospital for the school that would have competed with the existing hospital.

While the agreement has been tweaked over the decades as it was renewed, the most recent agreement, approved in 2013, specifies that the Board of Trustees will have 20 members, 11 of them appointed by the Pitt County Board of Commissioners, and the remaining nine named by the UNC Board of Governors.

But, the hospital and the Pitt County commissioners moved to change that because it believed it was in the best interest of the region for a local authority to choose trustees.

Waldrum said at the news conference that it would be better if the hospital had trustees that knew the region and its issues “rather than a group of people that sometimes haven’t ever been to Eastern North Carolina or don’t understand the issues that we face.”

Earlier this month, the UNC Board of Governors sued the hospital to stop Vidant from kicking the university system out of the process of choosing members of the Greenville hospital’s governing board, The News & Observer reported. Orange County Superior Court Judge Allen Baddour issued a temporary restraining order last week against Vidant, stopping it from making appointments to fill any vacant seats on the hospital’s governing board. The order is in effect through the end of the day June 3.

Waldrum said that the hospital and UNC are currently in mediation to resolve the complaint.

UNC’s right to make appointments to the board was spelled out by the N.C. General Assembly when it approved the designation of the medical center as ECU’s teaching hospital. The legal complaint says the state has pumped $60 million to $65 million a year over the past five years into the Brody School of Medicine, directly benefiting the hospital.

If the university system loses its ability to appoint members to the Board of Trustees, UNC’s complaint says, the only remedy is for the system to build a separate teaching hospital for the medical school. The cost would be more than $500 million, according to the complaint.

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Zachery Eanes is the Innovate Raleigh reporter for The News & Observer and The Herald-Sun. He covers technology, startups and main street businesses, biotechnology, and education issues related to those areas.