Vidant taking on East Carolina’s med school with rebranding ahead

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Standing in front of a bevy of microphones at a Greenville press conference last week, Vidant Health CEO Michael Waldrum seemed to devote more time to what wasn’t going on than what was – the impending marriage of Vidant and East Carolina University’s Brody School of Medicine.

“This is not a purchase or a takeover by either side or a merger of assets,” he said, peering at television cameras from behind horned-rim glasses. “This is about shared governance and shared leadership, about finding new solutions.” And, by design or not, probably a lot more than that.

Waldrum is a physician who’s headed Vidant since 2015 after serving at a university system in Arizona. Vidant is one of the state’s largest health systems with nine hospitals, about 1.4 million annual patients and 17,000 employees. Last week, the university’s board of governors named him dean of ECU’s Brody School of Medicine at a salary of $525,000. He earns more than $1 million annually under his Vidant contract.

He’ll remain CEO of Vidant, a not-for-profit authority affiliated with Pitt County.  The announcement was accompanied by the shuffling of several other top administrators, including Jason Higginson, head of the school’s pediatrics department, as executive dean of the Brody school. Mark Stacy, a former Duke University executive, left in May after four years as dean with no explanation provided by the university.

University officials made no secret that the move is a step toward rebranding Vidant, which started life as Pitt Community Hospital in the 1930s. Look for a new name something like ECU Healthcare, which would be more associated with eastern North Carolina. The loss of the region tie has not set well with many locals. Plus, the Brody School is geared to turning out primary-care doctors who officials hope will practice in North Carolina.

With consolidation activity heating up among N.C. hospitals, industry experts have been waiting for Vidant to make a strategic move. Its major rival in eastern North Carolina is part of the UNC System just like ECU. UNC Health owns or manages hospitals in Clayton, Goldsboro, Jacksonville, Kinston, New Bern, Rocky Mount and Smithfield in addition to its flagship sites in Chapel Hill and Raleigh.

The latest affiliation occurred last month when New Bern’s CarolinaEast Health System signed a management agreement with UNC Health. New Bern is 45 miles from Vidant’s headquarters and 145 miles from Chapel Hill.

Vidant, ECU, Waldrum and the UNC System Board of Governors have a contentious history that wound up in court when the system and ECU sued over the makeup of Vidant’s board two years ago. The dispute was settled when the two sides agreed that UNC would appoint nine members to Vidant’s board while hospital trustees would name seven. As part of the agreement, the state whacked $35 million from its share of Vidant’s budget. The health system accused the state of retaliating because of its efforts to gain greater board control.

Without a lucrative, fast-growing metropolitan market, Vidant has operated less profitably in recent years than the other big N.C. hospital systems, including UNC Health. Vidant’s service area of 19 eastern North Carolina counties includes some of the state’s poorest areas, leading to 67% of its revenue coming from Medicare and Medicaid patients. Those federal insurance programs reimburse at less than commercial insurance or private-pay rates.

Vidant reported a $40 million operating gain during the six months ending March 31, compared with an $8 million loss in the same period a year earlier when COVID-19 caused sharp decline in elective surgeries. Investment gains and $42 million in federal and state stimulus funds helped the system report a $169 million total margin during the half-year period, compared with a $94 million loss a year earlier.

The move marks a momentous decision for Philip Rogers, who became ECU’s chancellor in March. “Today, there is no transfer of assets or change in anyone’s employment status,” he said at the press conference. “Instead, this decision represents a step toward realizing our full potential together in providing access to advanced care for all of eastern North Carolina.”

Waldrum says the new brand will be unveiled soon. Vidant replaced University Health Systems as the holding company name in 2012. Rogers says the new title will reflect a “clinically integrated academic health system for our region that proudly leverages the ECU brand.”

Nobody’s saying, but it’s probably safe to rule out, “Clinically Integrated Academic Health System.”

 

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