Beaufort County Medical Center in battle for autonomy | Eastern North Carolina Now

    The Beaufort County Medical Center Board of Trustees agreed in a 5 to 2 vote, yesterday afternoon, to embark upon at least one more good-faith effort to save the hospital as we know it. While all the trustees conceded the necessity of the continued pursuit for a potential financial partner—to help avoid a possible collapse of the independent, small-town hospital—they were conflicted over the viability of a parallel continued pursuit of cost/containment measures, as a way to preempt the need for and the reliance on a merger.

    After a spirited debate, a majority of trustees—Alice Mills Sadler, Hood Richardson, Curtis Potter, Grace Bonner and H. Alexander Easley III, MD—granted a motion by Sadler to substantively endorse a resolution passed by the Beaufort County Board of Commissioners at their second budget workshop on May 25, “authorizing the County Commissioner Representative on the Beaufort County Hospital Board (Commissioner Richardson) to proceed immediately with a plan for aggressive cost cutting measures for the Hospital” and requesting the formation of a two-year business plan, which would map out ongoing hospital operations in the case that a partner is not found within the coming months.


    The terms of Sadler’s motion will require the reactivation of the Cost/Containment Committee, which was dissolved in April. Richardson will again lead the committee in their efforts to improve efficiency and attempt to reduce the hospital’s average yearly budget deficit of $4 million; and will move forward to create the aforementioned two-year business plan, by extending said committee’s previously drafted six-month business plan. According to Richardson, the committee will be looking for ways to cut overhead to compensate for the BCMC Finance Committee’s reported decrease in patient volume.

    “It’s inconsistent that our numbers are going down, but that we are keeping our labor cost, in the medical provider part of the hospital, is going to remain constant or increase under the present plan,” said Richardson.

    Richardson reminded the hospital board that their actions are dependent upon the approval of the county, as their primary lender. Beaufort County’s resolution authorizing aggressive cost-cutting measures for the hospital comes amid fears that BCMC may be unable to honor repayment of a $1,576,828 loan within the fiscal year, and corresponding proactive damage control in the 2010-2011 recommended county budget.

    Beaufort County Manager Paul Spruill explained the “Hospital Debt Reserve” and its controversial affect on the county property tax rate in his budget message, which appears at the beginning of the 2010-2011 recommended county budget.

    “The Recommended Budget reduces the recommended tax rate from the current rate of 60.0 cents to a recommended rate of 52.0 cents…The reader will quickly conclude that this budget volume badly misses the revenue neutral target (48.2 cents) and results in an effective tax increase of 3.8 cents,” wrote Spruill. “Having said that, 3.0 cents of the recommended tax rate of 52.0 cents is set aside to anticipate an unpredictable fiscal circumstance that may or may not develop surrounding a scheduled reimbursement of debt service owed to Beaufort County Government from Beaufort County Hospital.”


    Richardson partially attributed BCMC’s recurrent $4 million shortfall to the adoption of private medical practices under its financial wing. He explained that some doctors relinquished their private practices, often due to lack of funds, and began receiving guaranteed salaries from BCMC, which placed the burden of solvency on the hospital.

    Board of Trustees Chairman Sandy Hardy clarified that BCMC did not purchase these doctors' medical practices; only provided employment, bought some of their equipment and some of their property, and, in certain cases, paid their rent. BCMC did not, however, buy patient lists, medical records, or goodwill, he said.

    “We have run our overhead right through the ceiling in doing what the chairman just described,” replied Richardson.

    Hardy said that the board has been continuously attempting to make cuts since he became a trustee in 2003.

    “We even attempted even cutting salaries across the board, throughout the whole hospital,” he said. “That went unfavorably.”

    Voting in opposition of Sadler's motion were trustees Clifton Gray and Jack Piland, Chairman of the Administrative/Finance Committee. Both were unconvinced that cost/containment efforts would be enough, considering the lowering volume of patients.


    “If, for example, our real problem is we’re losing, we’re showing fewer people coming into the emergency room, we’re doing fewer surgeries, then that really smacks to partnering up with somebody that can help get people in here,” said Piland. “I mean, you can’t just cut your costs and hope that more people will show up because of it.”

    Gray said that most small hospitals like BCMC are affiliated with larger partners.

    “So, are we really being realistic by saying, we’re going to cut costs and that’s going to help, or are we just prolonging the inevitable,” he said. “And if we prolong the inevitable, eventually we’ll be in a situation where we have to close the doors because nobody will want the hospital.”

    Piland agreed with Gray’s assessment.

    “Independent hospitals are like independent gas stations. Remember when we used to see a lot of them? You don’t see any anymore…The handwriting’s already on the wall,” he said.

    Though Easley’s vote fell in the Cost/Containment Committee-camp, it was not without similar reservation.

    “My only concern, Hood, would be that those of us around the table that looked at the same data that the Cost/Containment Committee looked at believe that there’s no way to save this hospital by cutting and trying to save that way,” said Easley. “I can’t see any harm in, you know, continuing to try to uncover things under stone, and that sort of thing, if that’s what the majority of us feel like we need to do, but I don’t think we need to do anything to slow this other process down, or we’re going to delay ourselves into an irreparable situation.”

    Gray predicted that BCMC will consider losing patients to Pitt Memorial Hospital in Greenville and Carolina East Medical Center in New Bern if it doesn’t affiliate with a larger partner, regardless of any cost-containment measures or attempts to increase volume.

    “I think the problem is the mindset of the people in our small community who think that bigger is better. And there’s absolutely nothing we’re going to be able to do to combat people’s mindset that bigger is better,” said Gray. “I think we’re trying to be the big time, big horse, and we really need to face the reality of what our community provides.”


    Sadler and Richardson reminded the board that there is no certainty BCMC will find an interested, viable partner and that they should manage the situation to avoid a scenario where the finances further deteriorate in expectation of a white knight.

    “If you dally, while you all think that you’re going to be merged with somebody else, and I know that’s what the majority of this board wants to do, if you dally, you can go broke while you’re dallying,” warned Richardson. “You have a duty to the community to show them that you’re doing everything you can to keep a hospital here…People who think somebody’s going to come to Beaufort County with a sack full of money and everything in this hospital is going to stay just like it was before they got here are really getting close to being close to delusional, because it’s not going to happen.”
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