03/10/10 — Groups look at Duplin hospital

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Groups look at Duplin hospital

By Catharin Shepard
Published in News on March 10, 2010 1:46 PM

KENANSVILLE -- Duplin County commissioners and Duplin General Hospital staff will know by the end of the month which entities might want to make a deal for control of the county's hospital.

March 31 is the deadline set for receiving proposals from health care systems interested in leasing or buying the hospital.

So far, two entities have asked to take tours of the facility, hospital President Harvey Case said.

"We've actually had one group to come in, that was Quorum Health," he said.

Quorum Health Resources, a Brentwood, Tenn.-based company, visited the hospital Monday, and representatives of Health Management Associates of Naples, Fla., might examine the facility in the near future.

Wayne Memorial Hospital was among the hospitals that received a request for proposal. According to a recent president's report from Wayne Memorial Hospital, due to "pressing capital requirements at Wayne Memorial and limited debt service capacity, management has chosen not to respond to this RFP from Duplin County."

According to the report, commitments requested by responders to the RFP included a pledge to infuse $20 million over the upcoming 10 years in capital purchases for the hospital and a commitment within seven years to begin construction of a new hospital and medical office building in the community.

So far the process has gone as expected, and the decision to lease or to sell the hospital to a larger entity with deeper pockets is still the right move, Case said.

"Absolutely, in today's environment you need resources including financial resources," he said.

Leasing is a growing trend nationwide for smaller hospitals that are not in a position to survive the economic challenges, Case said.

Earlier this year, the commission hired Dick White of Whitewood Management in Wallace to work through the process. So far White has been in contact with several hospital systems to draw attention to Duplin General's lease or sale availability.

"We're working with a number of people to encourage them to turn in proposals," he said.

A total of 16 RFP letters were sent to hospital systems that might be interested in responding. However, a complete list of the responses will not be available until after March 31.

Leasing the hospital is important in order to continue providing quality care for residents in the region, White said.

"Duplin General Hospital is a stand-alone community hospital, and stand-alone community hospitals suffer from lack of adequate reimbursement levels in Medicare and Medicaid," he said.

Generally, hospitals in such a position seek an affiliation, merger or sale to a larger hospital system that can provide services to the community that they are unable to provide. That is what is happening in the case of Duplin General Hospital, White said.

The RFP is open to both for-profit and not-for-profit hospital systems. There is only one big difference between the two styles, he said.

"Not-for-profit means that they don't pay taxes, but they have to make profits, or their revenues have to be in excess of their costs, in order for them to survive. ... A for-profit not only has to make a profit, it also has to pay income taxes," he said.

The type of hospital will not make a difference to the people in need of care, because both for-profit and not-for-profit hospitals are held to the same government regulations regarding what kinds of care they must offer for those in need, White said.

The decision to lease or sell Duplin General to a particular entity, whether for-profit or not-for-profit, is up to the commissioners, Case said.

"That's up for the commissioners to decide what's the best step for the hospital," he said.

And the commissioners and the hospital board of trustees are working closely together to make those decisions, White said.

The interested entities have one thing in common, however.

"These are large, multi-hospital systems that can provide opportunities for increased and better services for the community, because they do have capabilities that Duplin General Hospital doesn't have," White said.

Once the responses are in the commissioners' hands after the end of the month, the county commissioners and the hospital board of directors will have to go through each one of the proposals to try and select which offer they think would be most suitable to the county.

The process of making a decision and then selecting one of the hospital systems will probably take about a month. Determining a new leasing entity, or new owner for Duplin General Hospital will not be an easy process, White warned.

"It's going to be an arduous task to go through all of these responses and select that which is the best," he said.