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Thursday, February 22, 2024

NC trend: Novant Health’s Wilmington leader discusses the hospital sale

February marked the second anniversary of Novant Health’s $1.5 billion purchase of New Hanover Regional Medical Center in Wilmington and a smaller hospital in Brunswick County. The sale occurred in a public, competitive process because the medical center was then county-owned.

John Gizdic

The Wilmington hospital recorded about 256,000 patient days in the first half of 2022, which is more than 40% greater than Novant’s main hospitals in Winston-Salem (177,000) and Charlotte (168,000). Unlike Wilmington, Novant faces hospital rivals in the latter cities.

Former NHRMC CEO John Gizdic is executive vice president and chief business development officer at Novant Health, which was selected over sale finalists Atrium Health and Duke Health. He oversees New Hanover and has corporate responsibility for human resources, including diversity, inclusion and health equity.

This interview with Gizdic was edited for clarity and brevity. 

•••••••

What is your impression of the merger, two years later?

These are unusually challenging times and the past two years have been some of the toughest financial years for health care in decades. Our merger was made exponentially harder because of the pandemic. But we really view change as more of an opportunity than a threat.

New Hanover Regional was operating at a position of strength, but no one predicted the big inflation spike that occurred. Fortunately, Novant has enabled New Hanover to do much that we couldn’t have accomplished otherwise.

How has Novant improved the Wilmington system?

We have invested more than $65 million in higher employee compensation. Our minimum wage later this year will be $17 an hour. That compares with $12.50 in 2018.

We’ve more than tripled the number of people who benefited from financial assistance by making it eligible for those with income at 300% of the federal poverty rate. The standard had been 200%. More than 26,000 patients benefited in 2021 and 2022, compared with about 7,000 in the previous two years.

We’ve expanded our UNC Health and UNC School of Medicine relationship. Third- and fourth-year residents can now attend in Wilmington. We have boosted the number of students from 16 to 24 and we hope to get to 30 very soon.

Fourth, we’ve continued to invest more than $300 million in capital projects. New Hanover County could not have done this without raising taxes. This includes adding a 108-bed Neuroscience Institute; a 66-bed Scotts Hill Community Hospital; and Michael Jordan Family Clinics.

Like many peers, Novant has faced staffing shortages. What is the story there?

We are facing the same problems as others are on a national basis. We had benefited historically from a “come to the beach” approach in recruiting. But we have now had a record number of resignations and retirements by our providers. At the same time, we have had very heavy volume because so many people have put off care during COVID-19.

The situation would have been much worse as a standalone hospital. Having Novant backing us up with its recruitment and retention programs has helped our pipeline of nurses. Staffing problems also can be due to the increased acuity of patients. Wilmington has lots of retirees and, therefore, a heavy reliance on Medicare payments. Those folks can require a lot of care. 

Wilmington is also the only major trauma hospital within a couple of hours, so it draws many serious medical-care cases. 

It’s a very complicated balance, but Novant is very satisfied now with the quality of care that is being provided.

How did federal funding related to the COVID-19 pandemic affect your system?

It helped, but it didn’t cover all of the hospital’s costs, and it was short-lived. The needs have continued, which is a factor in the financial difficulties facing hospitals.

New Hanover Regional Medical Center opened in 1967.

The health care finance model is broken. Hospitals are facing double-digit cost increases, but they can’t raise fees at double-digit rates like a gas station or grocery store. The payment system doesn’t work that way. And health care isn’t connected to the consumer’s premiums in many instances.

How is the system focused on making health care more affordable?

Novant knows that hospital care needs to become more affordable. We know that improving social determinants are key to reducing costs because they affect 80% of a person’s well-being. Hospitals treat the rest. It’s the reason we believe efforts to improve health equity through diversity, equity and inclusion programs are so important.  

What were the key reasons that Novant was  picked over Atrium and Duke?

A key reason was the view that Novant would be more adept at attacking social determinants. Novant Health is only one of two health systems in the country to receive the National Committee for Quality Assurance’s Health Equity Accreditation Plus status. (Gizdic cited industry recognition for Novant’s efforts at health equity, including programs for mobile health clinics and mammogram screenings.)

We realize change is difficult, but partnering was the right decision. We had three great choices in Novant, Atrium and Duke. North Carolina is very fortunate to have so many great health care systems.

Absolutely, we made the right decision. I’m elated that we made the decision when we did because of what’s happened since then. Scale is very important. I’m not sure of the best size, but the key is whether scale leads to increased access and better affordability. You can’t just grow for the sake of growth.  

[A key merger benefit] is that the Wilmington area got a $1.3 billion community endowment, which is unlike anywhere else in the United States. It will make things so much better in southeast North Carolina.

David Mildenberg
David Mildenberg
David Mildenberg is editor of Business North Carolina. Reach him at dmildenberg@businessnc.com.

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