#1 Hospital to sell to private group

By Vicki Hyatt | Jan 03, 2014
Photo by: Mountaineer file photo Plans are moving forward to sell the community hospital and related facilities in Haywood to Duke LifePoint, which intends continue operations, update the facilities and expand as needed.

For eight of the past 10 years, medical care in Haywood County has been among the top 10 stories.

Each year has brought a unique twist of events at Haywood Regional Medical Center, now MedWest-Haywood, but none have packed the punch like what has happened in 2013.

This is the year leaders at the public hospital authority recognized it was the end of the road for the their small, community hospital as it once existed.

The Haywood hospital was the first public hospital in the state when it started in 1927. As times changed, it morphed into a nonprofit hospital authority, and then affiliated with its neighbors to the west to form a larger system to be operated by one of the major health care providers in the state.

But events and times being as they are, affiliating with a hospital system similar in size — and financial shape — wasn’t enough to sustain even the broadened organization.

In 2013, the hospital board of commissioners voted to sell the facility to Duke LifePoint Healthcare, a private medical care system specializing in providing community health care. The Haywood County commissioners, who first have to pass on the option to buy it if the hospital ever sells, also voted to support the Duke LifePoint proposal.

The move is seen as a last-ditch effort to ensure health care can be provided close to home and Duke LifePoint has a knight in shining armor glow in some circles with its $26.25 million offer for the cash-strapped hospital and related facilities in Haywood.

The offer on the table includes a promise to invest another $36 million over the next eight years to provide needed upgrades and add new service lines the community indicates a willingness to support.

The offer had even the most staunch supporters of maintaining a community, public hospital changing their tune.

Confronted with the realities of steady layoffs that had taken their toll, inadequate funds to make repairs, a shortage of needed medical supplies and the changing landscape of medical care, there appeared to be nearly universal support for the change.

A major change will be the one from a nonprofit to a for-profit institution.

Those who closely follow health care say there isn’t much difference in how the two types of corporate structures provide service. The nonprofit facilities plan for a net operating margin and reinvest margins in the facility. Because no profits can be taken, salaries and operating costs are often higher than forprofit institutions. The forprofit hospitals have stockholders who are paid dividends.

 

The future

The Duke LifePoint operating model is one that is in place in 60 medical center campuses across the U.S.

The company has a local board of directors at each site that is privy to the inner workings at the local site and what’s happening systemwide. A successful community operating model has been built over the past three years, company executives say, by providing care that is second to none, expanding service lines as needed and treating employees in a way that they will become the hospital’s best advocates.

At present the hospital sale is in the due diligence phase, which means the Duke LifePoint team is looking at every floor in every building, examining financial reports and talking to the Haywood hospital staff. Information gathered will be used to form a strategic vision for the future.

As the process unfolds in 2014, the final paperwork spelling out the terms and conditions of the sale is expected to be ready by mid-March.

The deal will hopefully bring an end to the crisis-to-crisis issues that have been part of the medical community environment in past years.

 

Troubled times

The first major problems emerged in 2004 when the county lost four orthopedic surgeons, physicians that handled many of the routine emergency room visits that resulted in hospitalization. Then in 2007, the emergency physician group that served the community hospital for the past 15 years was replaced amid a public stir. That year, the hospital missed its projected revenue by $3 million.

In 2008, a series of failed inspections resulted in the hospital being decertified as a Medicare and Medicaid provider. The hospital used most of its $16.6 million reserves that had been saved for a free-standing surgery center the board had approved to keep the doors open during the decertification process.

The hospital and community survived the ordeal, but it took a toll. Not only was available cash depleted, but getting back into the federal government payment pipeline proved to be difficult. Then there was the task of regaining the trust of patients in the community.

Affiliation with WestCare facilities in Jackson and Swain counties proved ill-fated. Carolinas HealthCare System had a 10-year managing contract for MedWest, but friction between the two medical communities led to hiring CEOs and an administrative team at both hospitals, negating a portion of the planned savings initially hoped for with the partnership.

By the end of the three-year re-evaluation period, the WestCare governing board wanted out. Both institutions were short on cash, as well as customers, and recognized that finding a capital partner was the only way out.

During the public hearing on selling the hospital, Haywood Regional Medical Center Board Chairman Frank Powers said the local hospital has about 56 percent of the market share within the community. He challenged Duke LifePoint to bring that number up to 80 percent.

It is a challenge the future owners are taking seriously.

Jeff Seraphine, president of the eastern group for LifePoint Hospitals, called MedWest a partnership that just wasn’t working and said under Duke LifePoint, strategic plans for each community will be developed so each can be successful.

It is something the group has done before, and is the result Haywood County residents are counting on, not only for the local health care it offers, but for the community’s economic well-being.

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