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Thursday, June 20, 2024

NC trend: Wilmington endowment faces growing pains as it seeks `transformational’ change

(An earlier version of this story had incorrect attribution for a comment by William Buster during an interview with WHQR public radio.)

The Cape Fear River laps at the hull as smells of breakfast fill the air. Soon, Sunday regulars are arriving at Anne Bonny’s Bar & Grill, a Wilmington barge restaurant used for a weekly worship service and breakfast provided by Anchor United Methodist Church.

Some of the 30 or so visitors smell of nights in alleys and vacant warehouses. They sip coffee and enjoy sweet rolls, some wandering off before Pastor Jamie Thompson’s message that God cares even for those without a street address.

“We don’t require them to stay. This is about meeting folks where they are,” says the Methodist pastor. “We try to connect them to professional services that we as a church aren’t equipped to provide,” such as healthcare and addiction treatment.

Anchor’s unconventional worship exists in part because of a $32,000 grant from the New Hanover Community Endowment. It was created with  $1.25 billion in proceeds from the county’s sale of 800-bed New Hanover Regional Medical Center to Novant Health in 2021. It rivals Asheville’s Dogwood Health Trust, formed after the 2019 sale of Mission Health, as among the largest community-building nonprofits created in state history.

Other significant initial donations by the endowment include more than $15.6 million to various UNC Wilmington groups, $10 million to Cape Fear Community College and $4 million to the YMCA of Southeastern North Carolina.

The endowment charter focuses on social and health equity, community safety and community development. The group has a goal of becoming a “transformational, move-the-needle,” organization, board Chair Bill Cameron says. Improving healthcare is not the sole focus.

Befitting its broad charter, the group in February approved spending $6.8 million over three years to partner with the county on a nonprofit community grocery store in northeast Wilmington, where officials say area residents have no convenient fresh food options.

But a deluge of money resulting from the sale of local hospitals can result in bruised feelings and disagreements over strategy and execution, other communities have found. That appears to be the case in Wilmington, where CEO William Buster, 52, left abruptly in early February without explanation.

At his hiring in March 2022, the foundation cited Buster’s experience as a senior
vice president of Dogwood Health, which was created after the $1.5 billion sale of Mission Health to HCA Healthcare. Buster had previous experience at foundations in Texas, Michigan and Winston-Salem.

No one will discuss the CEO’s departure. Buster issued a statement thanking the endowment for giving him an opportunity and saying his work set up the foundation for future success. He could not be reached for comment.

Asked what happened, Cameron says, “That’s a personnel matter,” declining further comment. Executive Vice President Lakesha Day is now overseeing day-to-day operations. The board hired the Durham-based moss+ross search firm to find a new leader.

Buster may have clashed with his board after feeling rushed to pump out grants to show the endowment was progressing rapidly, according to people familiar with the matter. Dozens of small, one-time grants have been made to groups such as Anchor Methodist.

Also, the former CEO was known for being outspoken. In an interview with WHQR public radio in Wilmington, he said, “If I lived in Pender County, I would be mad as hell. If my family … if my grandmother and my you know, my mom, and all my sisters, and everybody gave birth in that hospital and everybody, grandma had to go there, and we shared, and I and I saw the numbers and the number was 68% of the revenue came from outside of the county. It’s a sincere question that any rational person would have,” Buster said.”

That’s a sticky situation he inherited in Wilmington because the group’s bylaws restrict donations solely to New Hanover County. “That’s the major issue,” says County Commissioner Rob Zapple.

New Hanover partisans reason that county residents financed and built the operation, so they should benefit from its sale. But more than 40% of the hospital system’s revenue “has been derived from surrounding counties,” says Steve Stone, manager of adjoining Brunswick County, among the fastest-growing in the state. “Demographically, we’re one of the oldest counties in North Carolina, with a lot of retirees and similar residents.”

Stone’s estimate may be low; state data supports Buster’s view that more than half of system revenue historically came from residents outside of New Hanover. Beyond Wilmington, Novant operates smaller hospitals in Brunswick and Pender counties, plus more than 100 other medical offices regionally.

“If Pender or other counties had wanted their own, they could have built them like we did,” says New Hanover County Commissioner Jonathan Barfield. The endowment charter is
final and stipulates the proceeds be spent in New Hanover, Cameron adds.

The hard feelings aren’t going away, however. “There’s the basic issue of fairness,” says Stone. “It seems to have gotten lost in the transition.”

Another concern is that Novant isn’t operating the system as well as the county. The system, which has major market share in Winston-Salem and Charlotte, is also working on its $2.4 billion acquisition of three coastal South Carolina hospitals in February.

“The transition simply is not going smoothly,” Zapple says. “Everybody has my number, and they tell me problems are not being addressed. The hospital used to be the best in southeast North Carolina. Not under Novant.”

In February, Novant named former UNC Health executive Ernie Bovio as CEO, marking the third person to hold the job during the Winston-Salem-based system’s short ownership.

Bovio is a 20-year UNC Health veteran who had led UNC Rex in Raleigh.

“He’s from outside Novant and seems to have identified the problems,” says Zappple. “It’s hard to get any kind of continuity when you have so much turnover. I have high hopes for him.”

To be sure, public complaints about Novant’s efforts in Wilmington haven’t reached the same level as in Asheville, where public officials, nurses, physicians and local residents have roasted HCA Healthcare after its purchase of Mission Health. HCA officials contend that they are addressing concerns and the system is operating well.

New Hanover County sold its hospital after a lengthy public auction process, led by a community advisory board co-chaired by former Mayor Spence Broadhurst and healthcare executive Barb Biehner. Most community leaders advocated for a sale, thinking the area would be better served with a well-capitalized system operating the 8,500-employee hospital. It had been among the largest U.S. hospitals still owned by a municipality, posting annual revenue of nearly $1.5 billion.

Transparency and the endowment board’s racial makeup are other key issues to watch at the developing institution. N.C. Attorney General Josh Stein’s review of the sale included a requirement that the group hold two public annual meetings. But most other business can be handled in private, despite the endowment’s receipt of $1.25 billion in public funds. Under IRS rules, it will have even fewer public disclosure requirements as it changes from a public charity to a private foundation in 2028.

Stein, the Democratic nominee for governor in November’s election, also emphasizes that the board should “reflect the diversity of New Hanover County.” The 13-member group, whose appointments are made by Novant (six), the county (five) and board itself (two), has two Black directors and one Hispanic. About 75% of New Hanover’s population is Caucasian.

Meanwhile, the endowment is ramping to eventually provide $60 million in annual grants. The Wilmington area is home to hundreds of nonprofit enterprises, most with annual budgets of less than $1 million. There are no shortages of hands reaching out in the Port City region, as the hungry Sunday morning visitors at Anchor Methodist can attest.

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