The market share grab by the dominant hospitals in central North Carolina has heated up with a move by Novant Health to put a ninth hospital under its corporate umbrella.
In a deal that Novant says doesn't require federal antitrust approval, the Winston-Salem, N.C.-based system wants to form a joint operating company to oversee one of its hospitals and that hospital's chief competitor. The hospitals are Novant's 128-bed Community General Health Partners in Thomasville, N.C., and 342-bed High Point (N.C.) Regional Health System, an independent not-for-profit about 12 miles northeast of Community General.
"If you have two hospitals that are overlapping in service areas, you can either have them compete or you can (do). . .what's best for the consumer" by coordinating services to make them more efficient, said Mike Massoglia, a Novant spokesman.
Both hospitals are profitable, although High Point Regional is considerably more so. Community General turned a $2.2 million profit last year on gross revenues of $40.5 million, according to unaudited figures from Novant. High Point Regional enjoyed a $38.5 million profit in 1997 on revenues of $190.3 million, according to the hospital's annual report-a profit margin of more than 20%. The hospital has not disclosed its 1998 figures.
Under the plan, the two hospitals would form a joint operating company called Southern Triad Health. Novant would have an "affiliation agreement" with Southern Triad to provide support and services, and Novant would have a seat on Southern Triad's 20-member board, made up of Community General and High Point Regional representatives.
Jeffrey Miller, president of High Point Regional, would become chief executive officer of Southern Triad. Lynn Boggs, president of Community General, would become chief operating officer.
The deal is scheduled to close by early June, which would start a three-year trial period after which the parties would consider a full-asset merger.
"It's almost like getting engaged, I guess," said Eric Fletcher, a spokesman for High Point Regional. The two hospitals did not file for federal antitrust clearance or state approval because no assets transfer will take place, Fletcher said.
Still, the agreement would eliminate competition between the facilities.
Community General is the only hospital competing in High Point's primary market, said Fletcher.
Dale Lyles, vice president of Community General, said 87-bed Lexington (N.C.) Memorial Hospital shares its market. Lexington Memorial is in Davidson County, just as Community General is.
Lexington Memorial, an independent not-for-profit, has a group purchasing affiliation with Wake Forest University Baptist Medical Center, Novant's chief competitor in Winston-Salem.
High Point Regional is the only hospital in town and the only hospital in Guilford County, N.C., that is not owned by the Greensboro, N.C.-based Moses Cone Health System, a major Novant competitor.
Novant itself is less than 2 years old, created July 1, 1997, through the merger of Carolina Medicorp in Winston-Salem and Presbyterian Healthcare, based in Charlotte, N.C.
As for Moses Cone, which locked up the Greensboro market in 1997, it's expanding, renovating facilities and consolidating services at its hospitals there. The 1,066-bed system controls the city's three acute-care facilities: Moses H. Cone Memorial Hospital, Wesley Long Community Hospital and Women's Hospital of Greensboro.