Mission is full speed ahead on HCA sale, board chair says

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Mission Health

Dr. John R. Ball

Mission Health’s plan to sell western North Carolina’s dominant hospital business to HCA Healthcare is on track, with a final agreement likely to be signed any day and the deal completed by late December, says Mission Board Chairman John Ball.

“We’re in the process of negotiating a final agreement,” which Dr. Ball says will be followed by 60 to 90 days of regulatory review. “There’s been nothing in the way of going in a different direction.”

Once an agreement is signed, North Carolina Attorney General Josh Stein has a say in determining whether Nashville, Tenn.-based HCA’s offer is adequate and makes clear that money from the sale would help western North Carolina.

The two groups signed a letter of intent in March that provided few transaction details. The sales price is likely to be from $1 billion to $2 billion, with proceeds to finance a nonprofit foundation, Dogwood Health Trust, which will provide money to improve health care outcomes in the system’s region.

The merger has drawn criticism because of concerns that for-profit HCA will benefit from future earnings that previously accrued to not-for-profit Mission, and fears that quality of care will suffer. Various surveys have ranked Mission as one of the nation’s top-performing hospitals, based on patient outcomes, for many years, outpacing other N.C. peers.

But Mission is making the right move because HCA will be able to maintain quality while operating more efficiently because of its vast size, Ball says. He notes that 72% of Mission patients are either covered by Medicare or Medicaid or lack insurance, which limits the hospitals’ reimbursement levels. Of the remaining 28% of patients, about 77% are covered by Blue Cross Blue Shield of North Carolina, which pays less than health care providers prefer in many instances. The result is slimming margins, he says.

In identifying a buyer, Mission sought an organization that would maintain its tradition of high quality and lower costs than the state average, Ball says. No other potential bidder had similar potential, he says.

Staying independent doesn’t work financially over the long term, he adds, noting that Mission has cut $240 million in operating costs over the last four years, whlie cutting $70 million more this year and $50 million in 2019. “Not only is there no low-hanging fruit left to cut, but there is no fruit,” he says.

HCA’s buying power and experience as the nation’s largest hospital system will benefit Mission communities more than if it remained independent, he says.

Ball, who has medical and law degrees from Duke University, is a retired executive vice president of the American College of Physicians. He worked for federal agencies before starting the Washington office for the physicians’ group.

While negotiations with HCA continue, Mission said it expects to donate as much as $90 million in equal installments over three years to help expand hospital foundations in five western N.C. towns where Mission owns hospitals, plus an affiliated home-health organization. The donations will help the foundations hire staff and determine priorities in improving the towns’ health care, Ball says.

Separately, Mission has formed the nonprofit Dogwood Health Trust to receive HCA’s payout from the proposed deal. Earnings from the trust will be used to improve programs that alleviate poverty, provide better access to healthy food and expand exercise programs.

“We’re feeling a little bit helpless in the process of the creation” of the foundation, Asheville Mayor Esther Manheimer told Mission CEO Ron Paulus at a June public hearing.

Asked Wednesday if that remains her view, Manheimer says via email, “This is an unprecedented opportunity for Western North Carolina to strategically fund programs that address issues critical to our communities such as poverty, education, housing, transportation and other social determinants of health. The people of WNC must be at the table to help shape the focus and goals of the Health Trust, and I have heard from those willing to serve on the inaugural board that they intend to embrace the community in building and shaping that vision.”

Mission has annual revenue of $1.4 billion.

 

 

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