The Wilson Times



Tuesday, July 23, 2013 10:50 PM

Hospital finds partner
Wilson Medical, Duke seek to form joint venture

By Jon Jimison | Times Editor

Wilson Medical Center has found a partner — pending multiple reviews — with Duke LifePoint Healthcare.

The hospital’s board of directors on Tuesday announced it has signed a memorandum of understanding to form a joint venture with Duke LifePoint Healthcare, which is under Duke University Health System Inc. and LifePoint Hospitals.

The process that formally began in 2012 in response to national health reform and the changing health care landscape really came together on Tuesday as officials worked out last-minute details.

Under the terms of the proposed partnership, Wilson Medical Center and Duke LifePoint would share ownership and governance of the hospital with Duke LifePoint securing majority ownership interest, hospital officials announced.

Other terms weren’t initially disclosed and more details are expected to emerge later.

The memorandum is considered the first step in the process of Wilson’s hospital joining the Duke LifePoint network of hospitals, officials said following their Tuesday board meeting.

Hospital officials pointed to potential benefits, including access to LifePoint’s capital and operational resources to allow WilMed to expand and enhance service, invest in its facilities and new technology and improve its efforts to recruit and retain physicians.

The hospital would also have access to Duke’s clinical, quality and patient-safety programs, officials said.

"This proposed joint venture with Duke LifePoint provides WMC and our community several unique opportunities,” said Jim Pridgen, chairman of the hospital board. "As a joint venture, WMC has an opportunity to maintain local ownership and an equal voice in the governance of our hospital. At the same time, as part of the Duke LifePoint network, we will gain access to new financial, operational and clinical resources that will help us better serve our community’s health care needs.”

 

APPROVALS

A memorandum of understanding is a non-binding agreement that authorizes the two entities to move forward with the necessary steps to pursue the joint venture. The partnership faces multiple reviews and approvals.

There will be a required public hearing process with Wilson County. There’s an existing reverter clause stemming from the hospital’s charter. The process stems from the charter and bylaws established when the hospital transferred from county ownership to become a tax-exempt organization.

Wilson County must approve any change in the hospital’s corporate structure.

The hospital’s board assumed full responsibility following a 1988 restated charter agreement. Before that time, the hospital was considered a public hospital. A commissioner still serves on the board of trustees.

According to the restated charter in 1988, upon dissolution of the corporation, exempt from federal income tax under section 501(c)(3), trustees shall — after paying or making provision for the payment of the liabilities of the corporation — dispose of the assets of the corporation under North Carolina law to Wilson County or at the option of the Wilson County Board of Commissioners to such organization organized and operated for substantially the same purposes as this corporation.

Following a due diligence process and negotiation of a definitive agreement between the parties, the agreement would be reviewed by the N.C. Attorney General’s Office.

"We look forward to the possibility of Wilson Medical Center joining the Duke LifePoint family of hospitals,” said William J. Fulkerson Jr., executive vice president of Duke University Health System. "One of our primary goals in creating Duke LifePoint was to create strong networks of community hospitals, and WMC would be a welcome addition to the growing network. By working together, we can help ensure that the Wilson County community has access to top quality care locally.”

 

THE FUTURE

Governance would be shared equally between Wilson and Duke LifePoint, preserving the community’s input in the direction of the hospital, officials said in a statement released Tuesday.

"Wilson Medical Center is an outstanding hospital with a dedicated staff that is committed to providing high quality health care to the people it serves,” said LifePoint Chairman and Chief Executive Officer William F. Carpenter III. "Duke LifePoint shares Wilson Medical Center’s commitment to these core values of quality, service and community. We look forward to exploring this potential partnership further and examining how we can collaborate to continue advancing health care throughout this region.”

Officials said the assets and proceeds from the transaction would eliminate Wilson Medical Center’s debt. The new joint venture would become a tax-paying organization.

"Our board began exploring potential partnerships three years ago, and after evaluating several options over the past year, Duke LifePoint stood out as the clear choice for our community,” said Rick Hudson, Wilson Medical Center CEO. "Duke LifePoint has demonstrated a commitment to quality, the well-being of our community, the success of our employees and the future of this hospital. We are eager to get to know each other better as we proceed through the public and due diligence processes.”

 

WHY NOW?

Wilson Medical Center has stood as a largely independent hospital since its inception in 1964.

But national health care reform is spurring a trend toward consolidation, a marketplace where bigger isn’t simply considered better, but essential to survive, some industry experts believe.

A trend of hospital mergers and acquisitions has picked up momentum in health care markets across the country.

The implementation of the Affordable Care Act approved by Congress and signed by President Barack Obama on March 23, 2010, stands as the major driver here, Hudson previously said, as well as some of the fallout from budget deficit talks, particularly expected cutbacks in medical reimbursements.

There are around 85 hospitals in Virginia, but only about six are left that are not affiliated in some manner. There are around 120 hospitals in North Carolina, but there are only 12 that have not affiliated or merged.

Larger affiliations also result in cost savings in purchasing products for the hospital, which reduces overhead. It’s known as economies of scale.

Wilson Medical Center has already championed strategic partnerships with systems such as WakeMed for cardiac procedures such as stents. This alone has trimmed some costs. But it doesn’t translate into assets.

The hospital also owns Eastern Carolina Joint Replacement Services, Wilson Regional Cancer Center, Wilson Nursing Care & Rehabilitation Center and physician offices such as New Hope Primary Care, Stantonsburg Medical Center, Wilson Arthritis & Osteoporosis, Wilson ENT and Sinus Center, Wilson Gastroenterology and Wilson Neurology.

 

DUKE LIFEPOINT

Duke LifePoint owns two other hospitals in North Carolina: Maria Parham Medical Center in Henderson and Person Memorial Hospital in Roxboro. It also owns Twin County Regional Healthcare in Galax, Va.; Marquette General Hospital in Marquette, Mich.; and DLP Cardiac Partners, which offers hospital-based catheterization labs and mobile catheterization services throughout North Carolina.

Duke LifePoint Healthcare was established by LifePoint and Duke to build a network of hospitals and health care providers.

Wilson Medical Center most recently reported net assets of about $230 million. The hospital also reported net revenue of about $150 million.

 

jjimison@wilsontimes.com | 265-7813




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