HCA Healthcare completed its $1.5-billion acquisition of western North Carolina’s Mission Health in 2019, but the nonprofit sale to a for-profit entity hasn’t been without scrutiny. Following reports from the local community of charity care that’s difficult for patients to understand and declines in service, a slew of physician departures is now turning heads.
Dogwood Health Trust — a foundation formed with proceeds from the sale to monitor HCA’s compliance with obligations of the deal and to invest in the health and well-being of North Carolinians — hasn’t notified HCA of any issues of noncompliance to date. But the recent or impending loss of more than a dozen physicians has caught the attention of the North Carolina Attorney General’s Office as well as the independent monitor put in place to advise Dogwood Health Trust.
Stipulations put in place prior to the deal’s closing focus on retaining hospitals and other healthcare services for the region that Mission Health facilities serve, which includes many rural communities. Mission Health is a seven-hospital system based in the western North Carolina city of Asheville. Founded in 1885 as the Little Flower Mission, providing healthcare to the indigent, it now employs some 12,000 people and serves 18 largely rural counties.
The recent physician departures amount to more than just a handful of providers, including those who specialize in family medicine, orthopedic surgery, and urology.
At least 16 doctors are slated to leave Mission Health facilities this year, according to The Transylvania Times, a newspaper in Brevard, about 30 miles south of Asheville, where one of the system’s hospitals is located. The newspaper called the departures an “exodus of local MDs.” Most of the physicians are moving to offices that are not affiliated with Mission Health but are within the same county.
Though specific reasons for the physicians’ departures weren’t immediately clear, a spokeswoman for HCA pointed to employee contracts.
“Through our contracts with our employed physicians, Mission Health seeks to support our focus on patient care while compensating our physicians at Fair Market Value,” Nancy Lindell, director of public and media relations for HCA’s North Carolina division, said in an emailed statement. “While most Mission Health physicians were offered new employment contracts, some have chosen to pursue other local options. We are confident that most will continue to care for our community here in Western North Carolina as members of our Mission Health medical staff.”
As with any organization, employee contracts are confidential, Lindell said.
System-wide, HCA — which has more than 180 hospitals and thousands of other care sites in more than 20 states and Great Britain — reported salary and benefit expenses of $23.9 billion in 2020, up from $23.6 billion in 2019. HCA reported revenues of $51.5 billion and net income of $3.8 billion last year, compared to revenues of $51.3 billion and net income of $3.5 billion in 2019.
Physicians named in The Transylvania Times’ report either declined to comment or did not immediately respond to a request for comment from MedPage Today.
Terms of the Deal
North Carolina Attorney General Josh Stein cleared the way for Mission Health’s Sale to HCA in Jan. 2019, but only after a number of stipulations were made.
One of the requirements was to appoint an independent monitor — Nashville-based consulting firm Gibbins Advisors — whose role is to advise Dogwood Health Trust on HCA’s compliance with a list of commitments that can be enforced by the foundation as well as the AG’s office.
Both the AG’s office as well as Gibbins Advisors are keenly aware of the physician departures.
Laura Brewer, a spokeswoman for Stein, told MedPage Today in an email that, “Our office is monitoring the situation closely to ensure that the agreement is being upheld.”
HCA’s commitments that fall under the scope of the independent monitor include keeping material facilities open and maintaining an uninsured and charity care policy until at least 2029. They also include spending $232 million in general capital expenditure within five years.
Though four of the commitments that fall under the scope of the independent monitor deal with retaining hospitals and services, there is not an explicit mention of maintaining staff levels or dealing with physician departures.
“As independent monitor our scope is generally limited to 15 specific commitments by HCA,” Ronald Winters, principal of Gibbins Advisors, said in a statement provided to MedPage Today. “While we regularly revisit the asset purchase agreement to confirm our interpretation, aspects such as staffing levels and physician departures, are not specifically outlined as obligations in the APA or under the scope of the independent monitor.”
However, Winters said, “As part of our work, we do consider and evaluate whether such issues may indirectly impact compliance with HCA’s commitments that we are tasked with monitoring.”
He added that any individual with concerns about HCA’s compliance may submit such information to the firm.
“We evaluate each submission to determine whether the issues raised fall under the scope of the independent monitor or give rise to a concern about compliance with the buyer’s commitments,” Winters said. “We will speak to the individuals submitting comments if they request or if it helps inform our work. We provide HCA with an anonymized log of comments we receive from the public, so that HCA is kept apprised of concerns.”
Access to Care
In announcing the completion of HCA’s purchase of Mission Health in 2019, leaders from the North Carolina system — which includes seven hospitals — cited its buyer’s sprawling resources as key to long-term sustainability in the region and new investments in the social determinants of health through the Dogwood Health Trust.
As many health systems continue to struggle financially as a result of the pandemic, HCA in October announced that it would return $6 billion in CARES Act funds to federal agencies, citing a conservative approach it implemented in the early days of the pandemic for its ability to do so.
For HCA, its 2019 purchase of Mission Health gave it a foothold in North Carolina.
However, high hopes for the pairing haven’t been felt by everyone.
Dogwood Health Trust received its first annual report from Gibbins Advisors last summer for the year ended Jan. 31, 2020. Gibbins Advisors used site visits at Mission Health facilities, community meetings, and local input as well as annual and capital expenditure reports from HCA to prepare the report.
The foundation noted in a statement issued in August that, during the independent monitor’s review, members of the local community and the Attorney General expressed various concerns relating to Mission Health operations in 2019.
“Dogwood Health Trust communicated with HCA and the Attorney General about those concerns, including sexual assault nurse examiner services at Angel Medical Center; Transitional Care Unit services at Transylvania Regional Hospital; and HCA’s Charity Care Policy,” the foundation said in the statement. “In addition, concerns were raised regarding surgical services at Blue Ridge Regional Hospital during calendar year 2020.”
However, Dogwood Health Trust noted that the concerns “do not appear to give rise to potential noncompliance under the asset purchase agreement.”
“Dogwood Health Trust, with advice from the independent monitor, continues to monitor HCA’s compliance with its commitments, including charity care and the provision of services at the Mission Health System hospitals and will notify the North Carolina Attorney General and HCA, as applicable, regarding HCA’s compliance with its commitments,” the foundation added in the statement.
A spokeswoman for Dogwood Health Trust referred MedPage Today to the independent monitor regarding the recent physician departures.
Lindell of HCA’s North Carolina division added in an emailed statement that, “We are actively recruiting to fill any vacancies that we anticipate … we recently signed contracts with three new providers.”
Jennifer Henderson joined MedPage Today as an enterprise and investigative writer in Jan. 2021. She has covered the healthcare industry in NYC, life sciences and the business of law, among other areas.