Duke LifePoint on track to buy MedWestPublic hearing, vote in Haywood is pending
Duke LifePoint Healthcare, a joint venture of LifePoint Hospitals and Duke University Health System, is on track to purchase the assets of WestCare and Haywood Regional Medical Center, which united to form MedWest Health System.
In dual announcements Tuesday, the WestCare board of trustees voted to pursue a relationship with Duke LifePoint Healthcare, and the Haywood Regional Medical Center governing board will be holding a public hearing, most likely on Nov. 12, on the same option. A vote is expected to follow the hearing.
No other details from HRMC were released on the proposal, though more specifics will be known before the public hearing process, which is required by state law since the it is a public nonprofit hospital authority. The WestCare system is private, nonprofit hospital, and doesn’t have the same public disclosure requirements.
If the deal goes through, a significant tax boost will be felt in the western counties since Duke LifePoint is a for-profit hospital system.
Mark Clasby, MedWest Health System board chairman, estimated Haywood County will realize $200,000-plus in property taxes annually, and additional sales tax revenues in excess of $1 million each year.
The additional taxes paid shouldn’t raise the overall cost of health care, Clasby said, since there will be other savings realized, mainly starting off with no debt and a clean balance sheet.
At present, the hospital, and ultimately Haywood County, are on the hook for a line of credit advanced to the Haywood hospital system by Carolinas HealthCare System, the managing partner for MedWest. Of the $10 million credit line, an estimated $8.6 million has been drawn to keep operations afloat.
Clasby said the proceeds realized from the sale of the hospital facilities, if ultimately approved, would offset the line of credit debt and provide additional funds in Haywood.
WestCare vote complete
The WestCare news release makes it clear the vote to pursue a contract with Duke LifePoint severs ties with Haywood.
“This is a game-changing step forward for the WestCare hospitals,” said Bunny Johns, chairman of the WestCare board. “This relationship provides us the opportunity to focus on our hospitals and medical community serving Jackson, Swain, Macon and Graham counties in a way that makes sense for local patients, their families and physicians. WestCare will be operated independent of Haywood Regional Medical Center.”
While MedWest Health System was operated as a unit by Carolinas HealthCare, there was no merger of assets and the funds generated and spent by the HRMC and WestCare systems remained separate.
“We only formed a joint operating company,” Clasby said. “The balance sheets were never merged.”
While there were capital projects and acquisitions during the three-year period MedWest has operated, those will be split according to where they are located, Clasby added.
The WestCare board news release said the Duke LifePoint relationship will provide “significant clinical, quality, operational and financial resources and expertise to position Harris Regional Hospital and Swain County Hospital to realize their full potential, meeting and exceeding community expectations for high quality, local healthcare.”
The HRMC governing board is in the process of addressing the offer.
“We are encouraged to have reached another milestone in this process,” said Frank Powers, chairman of the HRMC board. “We look forward to the public hearings and working with the county commissioners to find a decision that will most benefit our patients and community.”
About Duke LifePoint
A spokesman at Duke LifePoint said it is premature to comment on the Haywood Regional Medical Center opportunity, but issued this statement about the WestCare vote.
"We are impressed with Harris Regional Hospital and Swain County Hospital and believe that our organization can add great value that will benefit these hospitals and their communities," said Diane Huggins, vice president of corporate communications at LifePoint Hospitals. "The next step will be to enter into a non-binding memorandum of understanding allowing us to move forward in negotiating the proposed relationship. We are excited about the opportunity to be considered as WestCare's strategic partner for the future."
Duke LifePoint's website states the partnership is one of the first joint ventures in which an academic health system and hospital operations company have partnered to own and operate a system of hospitals.
The almost three-year old entity has embarked on an aggressive, nationwide expansion strategy and already has nearly 60 hospital campuses across the U.S.
A section on “Why Partner?” promised to continue enhancing patient care for the community, financial stability and security, the ability to expand services and develop new specialized services, as well as the ability to ensure continuity of care for patients through tertiary and quaternary care available through Duke.
The MedWest Health System, as well as the separate entities that formed the group, have traditionally referred or transported patients needing a higher level of care to Mission Health in Asheville.
Clasby said he sees the local medical facilities still relying on Mission for tertiary care — procedures such as open heart surgery that aren’t done locally.
“As for quaternary care — things like organ transplants — people often go elsewhere for those, including to Duke,” he said. “Mission is a good hospital and they are important to the region. They are our tertiary care hospital and I don’t see that really changing.”
Jon Yeatman, vice president, strategic growth and business development at Mission Health, said the hospital has always served all residents of western North Carolina. "While we fully respect the right for the boards of our neighboring communities to choose the path that they believe will benefit them, we were obviously disappointed to learn of the pending decision by MedWest to align with a Tennessee-based for-profit healthcare company," Yeatman said. "At a time when so many are struggling to receive the care that they need, the incremental burden on residents and communities to not only pay for care but also ensure returns to shareholders on Wall Street and around the globe is troubling. Regardless, Mission will continue to support the residents of these communities as we have for so many decades, and we remain steadfast in the pursuit of our big(ger) aim: to get each and every patient to their desired outcome first without harm, also without waste and with an exceptional experience for each patient and family. We look forward to working with interested parties to ensure that locally governed, locally provided, not-for-profit healthcare is available to all members of our community.”
MedWest Health System was formed in January 2010 with an affiliation of WestCare Health System and Haywood Regional Medical Center. Carolinas HealthCare System is chosen as the management partner.
There was considerable growth within the system as new facilities were built and physician practices were acquired, but the system has faced a rocky road as the two entities navigated the transition as well as a changing health care environment.
At one point, the WestCare governing board voted to dissolve the relationship, but the course chosen was to hire a consulting firm to outline options and then accept proposals from other entities willing to buy or lease the facilities.
The WestCare vote, and expected HRMC vote following the Nov. 12 hearing, will dissolve the joint operating system as each entity pursues an agreement with Duke LifePoint.
MedWest HealthCare System history at a glance
• WestCare sees a loss of physicians, which results in constrained access and loss of market share.
• Haywood Regional Medical Center loses its certification.
• Michael Poore is hired to serve as the chief executive officer of HRMC
• On Jan. 1, 2010, MedWest is formed through an affiliation of WestCare Health System and Haywood Regional Medical Center. Carolinas HealthCare System is chosen as the management partner.
• Michael Poore is hired to serve as the CEO of the entire MedWest organization.
• Hospitals attempt to come together under one system-wide management team.
• The MedWest brand is launched and the WestCare and HRMC brands are diminished.
• At WestCare, some medical staff discontentment begins to occur and by October, accounts payable slows noticeably.
• Extra capital costs system-wide and reduced patient volumes prompt MedWest to embark on a $10 million cost-cutting program, including layoffs and positions remaining unfilled through attrition.
• MedWest invests in the future by purchasing numerous physician practices throughout the service area, partnering to build a new urgent care center in Canton, an in-patient hospice facility and an outpatient care center in Clyde, building a new urgent care center in Sylva, adding a wide-bore MRI at MedWest-Harris and a cardiac catheterization lab at MedWest-Haywood.
• In January, WestCare co-signs a $10 million line of credit for MedWest-Haywood with Carolinas HealthCare System. The money was needed to meet current expenses after a costly year of settling past legal claims, purchasing a new generator, dealing with an IT failure and implementing a federally mandated electronic records program.
• In January, CFO leaves organization and MedWest senior leadership is split to focus on strengthening individual hospitals. Michael Poore is named president of MedWest-Haywood while Steve Heatherly is named president of MedWest-Harris and MedWest-Swain. John Young serves as system CEO for MedWest.
• In April, Michael Poore resigns and John Young is named interim CEO at MedWest-Haywood.
• In April, WestCare physicians address the Jackson County Commissioners with concerns about MedWest’s impact on Harris.
• In July, MedWest-Haywood reports that is has regained 62 percent of the market share in the county — the level it was at before its decertification in 2008 and a return to profitability.
• In July, Harris and Swain medical staff convey to the WestCare Board a desire for MedWest to be dissolved.
• In August, the WestCare board considers the medical staff’s vote and proposals from CHS to continue the MedWest affiliation.
• In August, Outpatient Care Center opens next to MedWest-Haywood campus
• In September, the WestCare board calls for the dissolution of MedWest, something that can’t be considered under the affiliation agreement until January 2013.
• In November, MedWest-Haywood reins are turned over to Janie Sinacore-Jaberg. John Young with Carolinas HealthCare System was overseeing Haywood operations for the previous six months.
• John Young, Carolinas HealthCare System western division vice president, tells Haywood commissioners lower federal reimbursements for both physicians and hospitals is creating a new reality in the medical field, and rural hospitals are increasingly challenged because of the high percentage of bad debt and charity care.
• In March, a consultant is hired to outline options for MedWest.
• In May, the MedWest board voted to search for a new partner willing to invest a significant amount of money in the healthcare system in Haywood, Jackson and Swain
• In July, HRMC governing board held a public hearing to gauge reaction to system change involving a new capital partner — one that may or may not be pursued in conjunction with the facilities that are part of the WestCare system.
• In August, the HRMC governing board adopted a resolution of intent to consider selling, leasing or otherwise conveying the hospital to another party.
• In October, the WestCare governing board announced a vote to pursue a relationship with Duke LifePoint as a strategic partner. The HRMC governing board announced a public hearing would be held on the proposal.