For-profit hospital chains haven't enjoyed warm Southern welcomes from two county facilities in North Carolina.
Nashville, Tenn.-based Columbia/HCA Healthcare Corp. and Santa Barbara, Calif.-based Tenet Healthcare Corp. have expressed interest in striking up business relationships with major county hospitals in the state (Sept. 23, 1996, p. 28).
But while the county hospitals have tilted a polite ear to the for-profits, their actions have focused on protecting their independence.
Wake Medical Center in Raleigh will be born again as a private, not-for-profit facility come spring after spending the past two years fending off for-profit advances.
Wake County commissioners voted unanimously last November to retain the hospital's not-for-profit status and transfer its assets from the county to Wake County Hospital System, a private operator that has managed the facility since 1965. The transition is expected to be completed by March or April.
The future ownership of the 644-bed medical center became unclear in 1994 when the county's newly elected board began looking into a possible sale or transfer of the facility to keep it financially healthy in a changing market. The hospital posted net income of $15.7 million in 1995.
Acquisition overtures from Columbia rallied the hospital, which threw the weight of its medical staff and community support behind its preference for remaining not-for-profit and turning its ownership over to Wake County Hospital System.
"We felt strongly that the community's interest would best be served with a local not-for-profit operator," said Raymond L. Champ, Wake Medical Center's president. The medical center provided $19.6 million in charge-based charity care in 1995, about 7% of its $279.2 million in total operating revenues that year.
The medical center's campaign worked. Columbia never made a formal offer, and the board voted in August to accept the medical center's plan. Tenet disrupted the process with a tempting, eleventh-hour lease offer that included $50 million in cash, but the county decided it would be better to keep the facility under local control.
Champ said privatization will give the medical center freedom to carry more aggressive investment portfolios, to own property outside Wake County and to form more business partnerships, such as joint ventures with physician groups.
Similarly, Durham Regional Hospital is determined to serve the community as a not-for-profit. "We're putting our energies toward a collaboration with another not-for-profit entity," said Thomas Gambill, Durham Regional's vice president for health systems development.
Gambill said Columbia and Tenet initiated calls to Durham Regional this fall to let the hospital know the "doors are open" to future collaboration. He said no formal proposals have been made and the discussions haven't continued.
Rather, he said, the 264-bed county hospital has resumed partnership discussions with 948-bed Duke University Medical Center in Durham. On-again-off-again talks between the hospitals have been occurring since 1993 (See graphic, this page).
Nancy Jensen, a spokeswoman for Duke, said the facilities are looking at a range of options that fall short of a merger. She said they plan to introduce a formal proposal in the next several months.
"We think that a relationship with Durham Regional is in the best interest of the community," she said.
Jim Lathren, regional director of health system development for Tenet, predicts the changing market will force hospitals to be more open to the for-profit alternative.
"Within two to three years, there will be a different level of receptiveness to the types of proposals that we'll be talking about," he said. "As the market changes to greater managed-care penetration in the Southeast, the organizations that haven't seriously considered their options will start looking at them."