CHS vs. UHS, as championed by BRHS negotiating-team members | Eastern North Carolina Now

    On Monday, before the Beaufort Regional Health System hospital board voted to recommend a merger with Community Health Systems, the four board members who served on the negotiating team provided individualized comparisons of CHS and University Health Systems, as the other top bidder. The negotiating team members--Hood Richardson, Alice Mills Sadler, Brenda Peacock and Suzanne Gray--were divided in their opinions on which institution the board should recommend, with Sadler and Richardson for CHS; and Peacock and Gray for UHS

    The four comparisons given are extremely useful in gaining perspective on the matter, in that they represent the respective arguments for and against CHS and UHS, by the most informed members of the Beaufort County public. During two rounds of negotiations, the negotiating team met with executives and other representatives from the four organizations that submitted proposals in response to the RFP by the Sept. 5, 2010, deadline: University Health Systems of Eastern Carolina, Community Health Systems Inc., LHP Hospital Group and Brim Healthcare Inc., who later changed their name to Health Tech.

    "The negotiating team asked clarifying questions regarding each proposal, as well as about the respondent entities, themselves; including their financial performance, their quality standards, their past history with similar transactions, and their leadership and government models. I will also add that we actually asked them about their staff training models," said Sadler, at Monday's meeting. "The negotiating team also called and spoke with references of each of the organizations, including representatives of other hospitals with which each of the respondents had been in similar transactions."

    In forming their opinions, negotiating team members, as well as the other five board members, were encouraged to consider the financial aspects of each proposal, as well as what BRHS hospital board attorney Joe Kahn called "the intangibles."

    "The numbers are one component of your evaluation process. And I recommend that all of you consider the references that you talked to, and the ability of each respondent to provide the quality of care that this community deserves," said Kahn, at Monday's meeting.

    In broad terms, a financial summary of the bids, provided by BRHS Chief Financial Officer Richard Reif, netted a cash payment of $11,288,505 from CHS to BRHS for a lease period of 30 years, at which time BRHS would resume ownership; and a cash payment of $1,837,476 from UHS to BRHS for a lease period of 30 years, at which time UHS would assume ownership. BRHS is currently valued at $50,964,372.

    UHS's imminent ownership of the $50,000,000 local health system, with no future consideration, was a major point of contention among detractors of the UHS offer. On the other hand, the primary reason given for opposing a merger with CHS is that it is a for-profit entity that is overly concerned with the "bottom line."

    For a complete list of pros and cons for CHS and UHS, given by negotiating-team members, see below:

BRHS hospital board chairwoman, and negotiating-team member, Alice Mills Sadler expresses her reasons for voting to recommend a merger with Community Health Systems at Monday's BRHS hospital board meeting.

BRHS hospital board vice-Chairwoman Brenda Peacock
Voted for UHS

"Health care in this country is likely to be focused on the individual patient that requires, what we call, a medical home...And it's going to be conducted more so much outside of a hospital, outside of an emergency room, and in the physician's offices and the clinics that are supported by that hospital."

Cons CHS

"Community Health Systems has only one North Carolina hospital we're familiar with."
CHS doesn't "have an institution-wide integrated billing and collections system."
CHS doesn't "have a cohesive electronic medical records system as yet; they're working on those with pilots."
In CHS's "most recent proposal they did say that they may consider assuming physician contracts we have here, but did not necessarily commit; it would be after a due diligence."
"Some of the discussions I had with people affiliated with CHS, said they didn't think CHS was really interested in owning and operating physician practices; that they would rather see them remain independent."

Pro UHS

UHS has "access to monies, as a not-for-profit, that may help them meet the bottom line for services that we might not be able to continue to meet otherwise."
UHS has "shown a great deal of foresight in the past with being the first in the country actually to design and then build a new hospital specifically designated as a critical access."
UHS has "implemented an electronic medical record way before the time limits that we are now approaching this calendar year."
UHS is the parent-organization of the Brody School of Medicine.
"Our proximity is very important as a transfer facility, in giving us the possibility of being an arm of UHS."
UHS's "penetrance in this geographical area gives us a great more opportunity as far as reimbursement for managed-care contracts."
UHS has "a centralized billing and collections system."
UHS has "already developed a physician-practice management arm that has also shown to be very successful."

BRHS hospital board Chairwoman Alice Mills Sadler
Voted for CHS

"Basically, what's on the table from all of our suitors is insufficient."

Pro CHS

CHS is offering $10 million in the event the county wants to sell the hospital 30 years from now. 30 years from now, UHS is certainly assuming ownership of BRHS for no extra consideration.
CHS's proposed governance structure for BRHS will allow members of the local community to be part of future decision-making.
The $11.2 million that BRHS will net in cash, through a merger with CHS, can be held in a trust account in case of an emergency.
CHS will compete with UHS and other systems to drive down the costs of healthcare.
"In my talking with people with people in Martin County, they have stated that CHS actually went above and beyond, with regards to the capital side. Also, they are very pleased with the physician recruitment and the expansion of services beyond the emergency room." (CHS began managing Martin General Hospital in Williamston since 1998.)
"CHS said that they would continue physicians' contracts dependent upon their willingness to operate under a productivity model. That's something we want to go to anyway."

Con UHS

"I have a concern that UHS wouldn't be committed, with Pitt being their flagship, to actually growing this hospital."
UHS is only offering $24 million for ownership of a $51 million facility.
It is not wise to count UHS's Brody School of Medicine as a plus, because new graduates don't have to stay in the system. Pitt County Memorial Hospital recruits physicians from all over.
Healthcare costs might rise because UHS would have a monopoly in area.
If BRHS merges with CHS, "nothing actually will change with regards to our relationship with UHS. UHS has expressed that to us on several occasions."

BRHS hospital board member Suzanne Gray
Voted for UHS

Con CHS

There is a high-rate of turnovers of CEOs at Martin General Hospital in Williamston, managed by CHS.
In talking with employees of Martin General, "some of the people that had worked there, where the department itself was considered productive based on the bottom line; based on money."
CHS's governance structure, which provides for a hospital board comprised of local community members, is too similar to the current system, which contributed to the current financial crisis, due to oversight, etc.

Pro UHS

Gray seconded the list of positives provided earlier by Dr. Peacock.
Pitt County Memorial Hospital has continued to improve and grow after it merged with UHS.

BRHS hospital board Treasurer Hood Richardson
Voted for CHS

In regards to the pro-UHS "social club" of BRHS employees who have an association with PCMC and UHS employees: "They want to keep going to the same cocktail parties, going to the same social events. They want to keep being good buddies with all of these people."

Pro CHS

"CHS is going to net us out $11 million. That's $11 million that could go into a trust fund that we can use as a hedge should anything disastrous happen in providing medical care in Beaufort County."
A merger with CHS "will help us stop out-migration to Greenville and to other places, of our patients, because they will be competitive with Greenville; they will be competitive with UHS on prices."
CHS is "going to make sure when their CEO starts slipping and not serving the community, and that comes down to looking at the bottom line. When your revenue starts going down, somebody's not doing their job."
CHS is "going to modernize the emergency room, and they're going to redo the rooms upstairs, which haven't been redone since the hospital was built in about 1958."
"CHS makes no bones about appointing a 12-person local board."
Along with the net cash payment of roughly $11 million, CHS is leaving ownership of the roughly $50 million facility to Beaufort County.

Con UHS

UHS has "already shown, when it comes to making money, they will shut a system down, and go off and leave." (referring to the recent UHS-shutdown of HealthEast Family Care in Hatteras)
UHS has "assured us...that we will still be able to send patients there, who we cannot provide for in Beaufort County, just as we do today."
UHS will form a local advisory panel of "mostly doctors" and a seven-member board from Greenville, with a Pitt County commissioner.