Friday, January 03, 2014 11:50 PM
Critics seek hospital merger delay
Duke LifePoint opponents seek to pack Monday's county board meeting
By Corey Friedman | Times Online Editor
Some concerned residents say Wilson Medical Center’s merger is being rushed to the operating table when it belongs in the waiting room.
About 30 people attended a Thursday meeting organized by two former hospital trustees and a local businessman who oppose the $56 million deal to sell an 80 percent stake in WilMed to Duke LifePoint Healthcare. While many at the meeting want county leaders to reject the merger, nearly all would like to see it postponed.
"I’m just concerned that we’re rushing into something without the people in Wilson County really realizing the problems that we’re facing and that we’re going to lose control of our hospital,” said Frank Jones, an NAACP member and community leader. "I think we need to slow down and look at the total picture.”
County commissioners will hold a public hearing on the hospital deal at their Monday night meeting. The board is expected to vote on releasing the county’s reverter clause, or ownership interest in the hospital, and replace it with a new reverter clause.
While some residents are lobbying commissioners to reject the Duke LifePoint deal, others believe the county board should delay the vote and review the contract at length before deciding whether to approve it.
"I think the issue is that we just need to have more time,” said Ralph Dail. "I don’t think the community really understands what’s going to happen if the hospital is turned over to Duke LifePoint.”
Late last year, Wilson Medical Center sought to partner with a hospital group in order to contain operating costs. Industry experts say hospital consolidation is a trend driven by President Barack Obama’s signature health care reforms along with cutbacks in Medicare and Medicaid reimbursements.
WilMed chose Duke LifePoint, a joint venture of Durham-based Duke University Health System and Brentwood, Tenn.-based LifePoint. The group offered $56 million for 80 percent ownership of the Wilson hospital.
County leaders would retain some influence under the proposed deal. The hospital’s governing board would be half Duke LifePoint designates and half WilMed appointees.
Clauses would allow Duke LifePoint to buy out the county’s 20 percent share or sell its majority stake to LifePoint Hospitals under some circumstances.
Opponents of the deal fear that the 80/20 partnership will lead to a total takeover of WilMed down the road and a future where elected county leaders have no say in how their local hospital is run.
"I don’t want it to be sold on the New York Stock Exchange for profit,” said Max Fitz-Gerald, who operates animal rescue group For the Love of Dogs. "I want it to remain a community hospital that is responsible to the people of this community, not some entity in some other part of the world.”
Betty McCain said her husband, the late Dr. John McCain, treated patients in Wilson nursing homes that saw local influence dwindle when they were sold to large health care companies.
"I don’t understand how people can’t understand that this will happen to them,” she said. "This is a moneymaking program run by people who are entrepreneurs. They don’t give a hoot about Duke hospital and they don’t give a hoot about us. We’ve got to stand up and be counted.”
Opponents say Duke may get top billing, but it isn’t the driving force in the Duke LifePoint joint venture. They point to a provision in the deal that would allow Duke LifePoint to sell its stake to LifePoint if quality benchmarks aren’t met for any two quarters in a year.
"Duke’s not in this enough to put in a thimble, and if you make them look bad, they’re going to leave,” Fitz-Gerald said. "They’re going to terminate their relationship.”
Hospital officials say WilMed’s quality scores are solid, and they don’t expect that to change. Another provision in the deal would allow Wilson County to buy back the hospital if quality goals aren’t met and Duke opts to walk away.
"Duke’s emphasis is the quality piece and that’s what they bring to bear and they are bringing their name to it,” hospital attorney Thomas Stukes has said. ""It’s a way for Duke to hold LifePoint accountable in the joint venture and emphasizes the importance Duke places on quality.”
Dr. Joseph D. Russell, a retired Wilson physician, organized Thursday’s meeting along with David Glover and Averette Lamm. About 30 people attended the hour-long gathering at Carolina Cheese Co. in the Shoppes at Brentwood, with prominent business and community leaders lending their voices to the merger opposition.
"If this deal goes through, you have lost your hospital forever,” Russell told those in attendance. "I daresay there probably isn’t any family in this county, in this community, that isn’t in some way connected to and impacted by the hospital.”
Russell believes Duke LifePoint underestimated WilMed’s value in its appraisal, which pegs the hospital’s worth at around $70 million. He thinks it’s more than coincidence that the appraised value falls just shy of the $70.9 million threshold at which the parties would have to seek Federal Trade Commission approval under antitrust laws. He also pointed to tax values of hospital properties.
Russell said commissioners haven’t done enough research to understand the deal they’ll be asked to approve.
Rick Hudson, CEO of Wilson Medical Center, has said the process they undertook was a solid, comprehensive one.
"I respect everyone’s right to have another opinion,” Hudson said. "We made the best decision to secure the future.”
Information from the hospital said several factors affect the purchase price for a hospital, including the quality of earnings, returns on reserves and investments that are excluded from a sale, the market position of the hospital, the degree to which the tax-exempt seller of the hospital being acquired will retain a voice in governance and the need for the acquiring entity to make future investments in the facility.
They noted the hospital is in a competitive marketplace and located in an aging facility in need of upgrades.
The $70 million valuation of the hospital by Duke LifePoint is more than nine times earnings ($9.2 million), which is significantly higher than the industry average ($7.3 million). They believe it’s consistent with fair market value.
William J. Fulkerson, executive vice president of Duke University Health System, has said he’s optimistic this proposed joint venture will be approved.
In a letter that accompanies the documents sent to the county, Paul Hannah, senior vice president of development at LifePoint/Duke LifePoint, said the partnership is uniquely positioned to improve access to services and specialists, enhance market share and best position the hospital for sweeping health care reform.
CRITICS AND COMMISSIONERS
The Wilson County Board of Commissioners is scheduled to meet at 7 p.m. Monday at the 2201 Miller Road administration building. Russell, Glover and Lamm asked those concerned about the deal to attend the meeting and speak about the proposed merger.
"We have to tell the commissioners that we want our community hospital to stay our community hospital and not be sold,” Glover said. "And the reverter clause is key. What we really need is for y’all to come to Monday night’s meeting and state that you’re against the sale of the hospital.”
Glover also asked those in attendance Thursday to call commissioners before the meeting and lobby for either a vote against the merger or a motion to delay the decision.
"They’re listed in the phone book. You need to call them and let them know,” he said. "I hope there’s enough will on the board — if they hear enough voices in the community — to stop it.”
Critics of the Duke LifePoint deal are encouraging commissioners to proceed with caution even if they ultimately give the green light.
"We need to look at this thing very carefully — at least postpone it and do due diligence on understanding it,” Fitz-Gerald said. "This has mushroomed too fast to a decision, and once it’s made, it’s too late to say, ‘God, I wish we would have looked at this.’”
Jones said both commissioners and county residents should have a better understanding of the deal before officials sign on the dotted line.
"I think we need to make darn sure before this thing transpires that all questions have been answered, period,” he said.
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