It's not a hurricane, but North Carolina's Outer Banks area is in the eye of a storm.
The disturbance is over who will build the state's first new acute-care hospital in two decades.
Two teams of providers are vying for state certificate-of-need approval to construct a hospital with up to 30 beds in long and narrow Dare County. Dare includes the northern part of the Outer Banks, a popular vacation spot along the Atlantic coast, which is fast becoming a year-round haven for retirees.
In one corner, 684-bed Pitt County Memorial Hospital in Greenville, N.C., has paired with 260-bed Chesapeake (Va.) General Hospital.
Their proposal calls for a $20 million, 18-bed hospital to be built on a 14-acre site near Kill Devil Hills. Pitt County Memorial would own 60% of the venture, while Chesapeake would own 40%.
Pitt County Memorial, which is affil-iated with the East Carolina University School of Medicine, converted from a public facility to a private not-for-profit a few months ago so that it could pursue more out-of-county deals (June 15, p. 42).
Pitt County Memorial already has a foothold in Dare with a primary-care practice and a stake in a small dialysis center under construction in Manteo.
"We chose to work with Pitt because they've been a major provider in eastern North Carolina," said Don Buckley, president and chief executive officer of Chesapeake. "We had the same vision and values on this project."
The competing bid brings together 145-bed Albemarle Hospital in Elizabeth City, N.C., and Virginia healthcare heavyweight Sentara Health System.
Albemarle and Sentara, a six-hospital system based in Virginia Beach, propose to build a 20-bed hospital at a cost of $17.2 million. The hospital would be an addition to Regional Medical Center, an outpatient facility that Albemarle runs in Kitty Hawk, N.C.
"We're going to take advantage of our existing resources, so our costs will be almost $3 million less (than Pitt County-Chesapeake)," said David Cusick, a spokesman for Albemarle Hospital.
In addition, Cusick said, Albemarle has offered to transfer 20 beds from its hospital to the new Dare County facility.
"That means no additional beds for the region," Cusick said.
The Albemarle-Sentara collaboration also includes a strategic partner: 146-bed Children's Hospital of the King's Daughters in Norfolk, Va. Children's Hospital has no financial stake in the venture but is supporting the Albemarle-Sentara proposal because of its referral relationships with those hospitals.
Albemarle would own 51% of the new hospital, and Sentara would own 49%.
Albemarle recruited Sentara as an equity partner because it makes most of its referrals to Sentara hospitals, Cusick said.
"Our (market) area is more to the north than in any other direction," he said. "They're a prime referral for cancer treatment and cardiology."
Like Albemarle, Chesapeake has had a presence as a healthcare provider on the Outer Banks for some time, Buckley said.
Chesapeake operates the county's Outer Banks Medical Center, a 24-hour emergency and walk-in clinic. Chesapeake pays $1 a year to lease the facility, which Albemarle officials are quick to point out.
However, Geneva Perry, chairman of the Dare County Board of Commissioners, said Albemarle rebuffed an identical offer to run Outer Banks Medical Center years ago.
That's part of the reason the commissioners voted 5-2 last month to endorse the Pitt County Memorial-Chesapeake proposal, Perry said.
"Through the years, when trying to bring healthcare to the Outer Banks, it's the same story," Perry said. "Pitt and Chesapeake have assisted us in expanding services. Albemarle has extended their Regional Medical Center according to their own agenda."
Pitt County Memorial likely scored points for offering to have half the new hospital's board of directors come from the Dare County community. The remainder would come from Pitt County Memorial and Chesapeake.
On the other hand, the Albemarle-Sentara deal would have at least one board member, possibly more, from Dare County.
Most commissioners also thought Pitt County Memorial-Chesapeake offered more flexibility to grow with the county's population, Perry said.
Dare County has a permanent population of about 20,000 and a seasonal population of about 10 times that. The expanding number of retirees is increasing the need for acute-care services.
"Pitt's (hospital) proposal is what we needed in size and square footage," Perry said. "That's not to say that Albemarle's proposal wouldn't be currently ample. Whoever gets (the certificate of need), it will be more (services) than we have now."
Pitt County Memorial officials said they had originally proposed that Albemarle and Chesapeake submit a CON application together, but Albemarle declined and sought out Sentara. Albemarle's Cusick said the hospital turned Pitt County Memorial down because it was a "non-negotiable offer."
"They offered us 20% of the market, and we already had a 60% share," Cusick said. "It was a lose-lose proposition, and we weren't interested."
Later, Pitt County Memorial returned with a 30% offer, which Albemarle rejected because it had already agreed to work with Sentara, Cusick said.
The Dare County hospital would be Sentara's first in North Carolina, and the system is interested in expanding into the state, said Howard Kern, Sentara's executive vice president and chief operating officer. Sentara already owns a nursing home in Currituck County, N.C.
Both partnerships submitted their proposals in June to the state Division of Facility Services, which makes CON decisions. The agency is expected to announce its decision as early as mid-November.