House work

N.C.’S Gop-led com­mit­tees ex­am­ine health­care

Modern Healthcare - - REGIONAL NEWS - Vince Gal­loro

The tide that swung the U.S. House of Rep­re­sen­ta­tives into Repub­li­can hands af­ter the 2010 elec­tion had an even stronger ef­fect in North Carolina, where both houses of the state Leg­is­la­ture swung from the Democrats to the Repub­li­cans. Like their fed­eral coun­ter­parts, the North Carolina Repub­li­cans are fo­cus­ing some of their re­cently gained power on health­care mat­ters.

The state House of Rep­re­sen­ta­tives has set up two se­lect com­mit­tees that are tak­ing a look at mat­ters of im­por­tance to hos­pi­tals in the state. One is a se­lect com­mit­tee on state-owned as­sets that is study­ing, among other things, the of­fer that WakeMed Health & Hos­pi­tals made to buy its Raleigh ri­val, 431-bed Rex Health­care, from UNC Health Care, Chapel Hill. WakeMed’s un­so­licited of­fer is worth more than $ 875 mil­lion, in­clud­ing $750 mil­lion in cash and about $127.1 mil­lion in debt that WakeMed of­fered to as­sume (May 16, p. 16). UNC Health Care re­jected the of­fer in Au­gust.

At a com­mit­tee hear­ing, Dr. Wil­liam Roper, UNC Health Care’s CEO, tes­ti­fied as to the ben­e­fits of hav­ing Rex as part of the UNC sys­tem, in­clud­ing the economies of scale that the sys­tem reaps in pur­chas­ing and con­tract­ing, said Karen Mc­Call, a spokes­woman for UNC Health Care. The com­mit­tee is sched­uled to meet Oct. 25, but the fo­cus is on other state-owned as­sets, although UNC may pro­vide the com­mit­tee with an­swers to ques­tions that mem­bers had about Roper’s pre­sen­ta­tion, Mc­Call said.

Bill Atkin­son, pres­i­dent and CEO of WakeMed, said it was log­i­cal to start with the ques­tion of Rex be­cause there is an of­fer on the ta­ble al­ready. WakeMed has not been asked to tes­tify by the com­mit­tee, but would if asked, Atkin­son said.

The other se­lect com­mit­tee is study­ing is­sues that af­fect hos­pi­tals across the state: the cer­tifi­cate-of-need and cer­tifi­cate-of-pub­li­cad­van­tage pro­grams. The com­mit­tee is fo­cus­ing on ex­emp­tions that aca­demic med­i­cal cen­ters have from some parts of the CON law and the in­ter­ac­tions of pub­lic hos­pi­tals with providers that have a COPA, ac­cord­ing to a news re­lease from one of its co-chairs, Repub­li­can state Rep. John Tor­bett.

Short of a to­tal re­peal, “every­thing is on the ta­ble,” said Bart Walker, a health­care lawyer in the Char­lotte of­fice of McGuire Woods. “I don’t think any­body loves the cur­rent CON sys­tem,” he said. “There are enough peo­ple, even if they are on op­po­site sides of whether we should have CON at all, that see enough prob­lems with the sys­tem that they may have crit­i­cal mass to up­date or im­prove the sys­tem.”

Nancy Lane, pres­i­dent of PDA, a Raleigh-based con­sult­ing firm that works a lot on CON cases, also said there is a lot of sup­port to keep the CON process, re­gard­less of qualms that many have with it. “Peo­ple would rather have it than not have it,” Lane said. “De­pend­ing on the au­di­ence that you talk to, some fa­vor loos­en­ing it up a lit­tle bit, but I don’t sense gen­eral con­sen­sus on what to loosen.” The law ap­plies to projects that cost $2 mil­lion or more, a thresh­old that hasn’t been raised in many years, and that might be one pos­si­ble change, she said.

The CON se­lect com­mit­tee has con­ducted three hear­ings al­ready, in­clud­ing one last week in Fletcher, a town in the western part of the state that is dom­i­nated by Mis­sion Health Sys­tem, Asheville. The com­mit­tee doesn’t seem to be tar­get­ing Mis­sion Health, which was formed by a joint op­er­at­ing agree­ment in 1995 un­der a COPA, Walker said, but its grow­ing reach across the state does lead some to ques­tion its sta­tus.

Mis­sion Health ex­ec­u­tives were too busy pre­par­ing for the hear­ing to com­ment by dead­line, ac­cord­ing to a spokes­woman.

At a pre­vi­ous hear­ing, the North Carolina Hos­pi­tal As­so­ci­a­tion tried to point out how health­care eco­nomics dif­fers from most in­dus­tries be­cause the con­sumers of the ser­vices typ­i­cally don’t pay di­rectly for them, said Don Dal­ton, a spokesman for the hos­pi­tal as­so­ci­a­tion. CON helps hos­pi­tals se­cure the hand­ful of ser­vice lines that pro­vide the mar­gin to off­set money-los­ing but vi­tal ser­vices such as trauma and ob­stet­rics, he said.

WakeMed’s Atkin­son said the CON law has served the state well, es­pe­cially in main­tain­ing ser­vices in ru­ral ar­eas. The process has be­come more con­tentious in ur­ban ar­eas as the trans­for­ma­tion of the health­care busi­ness has led to larger sys­tems that are butting heads more of­ten, Atkin­son said. “In all fair­ness to the reg­u­la­tors, it’s a tough job,” he said. “It’s hard to tell who’s on first some­times.”

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