Health Care Projects
Project: North Carolina Health Care Buyer Articles
Client: Bull's Eye Publishing
Service provided: Writing
 Joining Forces to Shape the Future
The Piedmont Triad, one of the state’s more mature managed care markets, is experiencing more than its share of mergers, alignments and affiliations by key providers bent on cutting costs and beefing up their bargaining power with payors.
HMO penetration has grown by about 5 percent to a 31.6 percent penetration into the under-65 market, while the PPO market share dropped nearly 7 percent to 48.3 percent, according to data compiled by Harkey & Associates, Inc., a research firm that tracks managed care activity. As the HMOs gain market share, the area medical community hopes that by joining forces, they can participate more effectively in determining the direction their industry takes.
“What we’re really looking at is a way to bring physicians and hospitals together to shape the future of health care,” says Margaret Ann Bunce, director of contracting and business development for Novant Health, the owner of Forsyth Memorial Hospital, Medical Park and Davie County Hospital, in Winston-Salem.
Novant Health—formerly Carolina Medicorp, Inc.—is involved in one of the most interesting recent developments in the Piedmont Triad market: The health care system completed a merger with Charlotte-based Presbyterian Healthcare System in the summer of 1997, forming the new company called Novant Health.
The idea for Novant Health emerged from a series of meetings between CEOs of Presbyterian Healthcare System and Carolina Medicorp, Inc., that began in December 1996. “The vision is to link providers in strategic markets that could not only span North Carolina, but parts of South Carolina, Virginia and Tennessee as well,” Bunce says. “We will work very closely with physicians and involve them in the governance and management of Novant to change the system from one that treats illness to one that is focused on prevention and on improving the health of communities.”
Bowman Gray/Baptist Hospital Medical Center in Winston-Salem is also involved in a strategy to link health care systems throughout the state. Bowman Gray/Baptist, Carolinas HealthCare System in Charlotte, UNC Health Care System in Chapel Hill and University Health Systems of Eastern Carolina in Greenville have formed an alliance of their four tertiary care health systems. Currently, they are in the final stages of forming a separate business entity.
Informally called “The Alignment Group,” the four health care systems share similar goals and philosophies. Three of the four organizations are affiliated with medical schools, and Carolinas HealthCare System offers hospital-based physician residency programs in cooperation with UNC. The health care systems are discussing ways to coordinate their marketing efforts, lab services, managed care products, hospital management services, physician groups, information systems and educational programs. Collectively, the group has part ownership in seven different managed care products and affiliate hospitals in North Carolina, South Carolina and Virginia.
“By aligning physicians, hospitals and other affiliates, our group will provide an organized system of high quality, cost-effective health care,” says G. Douglas Atkinson, associate dean and vice president of networks at Bowman Gray/Baptist. “We have a long track record of working with community hospitals, and we see the alignment as the next generation of evolving relationships with each other and our affiliates.
In Greensboro, consolidation of health care services is happening on a more local level at a slightly slower pace. The proposed merger between Wesley Long Community Hospital and Moses Cone Health System—combining Moses H. Cone Memorial Hospital, the Women’s Hospital of Greensboro, Wesley Long Community Hospital and a wide range of outpatient facilities—involves competing hospitals in the same service area. Thus the hospitals sought federal approval, foregoing the alternative of securing a Certificate of Public Advantage from the state.
“From the federal perspective, once you’re approved, the federal government has no continuing interest in monitoring organizational performance,” explains James Roskelly, vice president of corporate planning and development for Moses Cone. “Under a Certificate of Public Advantage, the state is allowed to take over what would be a federal authority by virtue of their continuing monitoring. Our board chose the option of seeking federal approval.”
Roskelly says he hopes to have the merger approved by the federal government by the end of July. Should the government oppose the merger on antitrust grounds, the process could take much longer to complete. If the merger is completed, savings during the first five years are projected to total $53.6 million in capital equipment expenditures, operating expenses and labor. Annual savings of $13.7 million are projected beginning in the sixth year.
Smaller community hospitals in the Piedmont Triad area are adopting more of a wait-and-see approach regarding joining either Novant or The Alignment Group. For Lexington Memorial, the value of remaining independent currently outweighs the benefits of any sort of exclusive affiliation with a provider network, according to John H. Cashion, president of Lexington Memorial. “Financial vulnerability is what stirs most weak-sister hospitals into some sort of alliance relationship,” he says. “We still have a lot of money in the bank—enough to support our operations for a number of years in the future.”
Lacking the financial incentive, Cashion says the hospital board has decided to remain independent. “If we aren’t already staked out, we represent future value to all of them,” he explains. “The biggest concern Forsyth or Baptist might have is that we might make a commitment to the other one, so as long as they can help us remain independent, they will. Right now, if we called either for assistance, they’d be more than willing to help us.”
“We get approached by just about everybody who wants to do business in Alamance County,” says Bob Byrd, vice president of strategic management for Alamance Regional Medical Center, which was the result of the 1986 merger of two full-service hospitals and the first merger of its kind in North Carolina. But because of the hospital’s location, Byrd is particularly reluctant to enter into any sort of exclusive agreement with either of the emerging regional groups.
“We’re situated smack in the middle of the Piedmont Triad and the Triangle,” Byrd explained. “There are referral relationships established in all directions, with Duke and UNC to the east and Moses Cone to the west. For us to align ourselves with one system on an exclusive basis would mean we’re going to interrupt a lot of established relationships and fragment the care. So our strategy now is to avoid aligning ourselves exclusively with any one group for the purpose of managed care contracts.”
For High Point Regional Health System, formal affiliation to accommodate managed care is nothing new. The health system is already part of the 10-hospital North Carolina Health Network, formed in October 1995 to negotiate statewide and regional contracts, and improve medical management. Carolina Medicorp, Moses Cone, Presbyterian and University Health Systems of Eastern Carolina were among the co-founders of the network.
High Point Regional is also part of the Triad Health Alliance, along with Moses Cone and Carolina Medicorp. PHOs from the three organizations—Carolina Medicorp’s Carolina Health System, Moses Cone’s Greensboro Health Network and the High Point Health Network—formed the Triad Managed Care Organization to do area-wide risk contracting with HMOs. “The Triad Managed Care Organization is essentially a super-PHO looking at managed care contracting,” according to Darrell Deaton, High Point Regional’s vice president of planning. Deaton says the three PHOs combined represent about 1,000 physicians in 10 counties. Besides operating Advanced Home Care, one of the Southeast’s largest home care agencies, and a joint laundry, the Triad Health Alliance just opened a new reference laboratory near the regional airport. Deaton says the new lab will save the three Triad Health Alliance participants $6 million per year. Currently, the alliance is working with vendors to purchase a managed care information system to provide the three hospitals with the data they need for managing the medical and financial risks of capitated contracting.
While the managed care industry appears to be moving toward consolidation, and the regional provider networks stand ready to negotiate multi-state contracts, many managed care contracts will continue to be negotiated with individual providers on a local basis.
“It’s somewhat premature to predict, but we anticipate some contracting with individual health systems or PHOs will be done at the state or regional level and some at the local level,” Bunce says. “We recognize that market variation exists, and we have to look at what makes sense in a particular market.”
Whether or not many statewide and regional contracts materialize, Bunce believes that by joining forces with other leading providers, Piedmont Triad providers can gain more of the clout needed to determine the future of health care. “As a regional nonprofit health system, Novant will enable providers throughout the region to keep health care local and to create exciting opportunities to improve the health of the people we serve,” she explains. “That’s what we are all about.”
Keeping health care local is also an important part of The Alignment Group’s mission. “Our alliance will not only allow us to offer a new level of health care innovations to the region,” Atkinson says, “but will also allow us to help the community hospitals offer the best possible care close to home for the patients and family members.”
Changing Relationships in the Region
With most managed care companies focusing their initial marketing efforts on North Carolina’s three major metropolitan areas, health systems in the Southeastern and Sandhills Regions are forging new relationships and renewing old ones as they prepare to become the next target markets.
“Up until a few years ago, the large hospitals’ game plan was to put small hospitals out of business,” observes Leo Petit, CEO of Bladen County Hospital in Elizabethtown. “Since then, the big hospitals have realized it’s much easier to let small hospitals get strong and work together to make our communities healthier.”
Managed care in this region has grown fairly steadily. Total HMO penetration is 20 percent, and commercial market penetration is 30 percent, according to National Research Corporation’s Healthcare Market Guide Study 1998. PPOs have 30 percent of the total market and 46 percent of the commercial market.
Three Insurers Dominate
“Managed care in the Sandhills/Southeastern Region is dominated by Blue Cross and Blue Shield of North Carolina, United HealthCare of North Carolina and Cigna/Healthsource North Carolina. Based upon figures from the N.C. Department of Insurance, United HealthCare has the majority of the market in the Southeastern Region, while Cigna/Healthsource leads in the Sandhills Region.
Greensboro-based United HealthCare has marketed its products in the region for about 10 of the organization’s 13 years in business. “We moved relatively early in the history of this company down to Fayetteville and Wilmington,” says Roger Rollman, director of corporate communications. “We were invited down there by physicians in that area.”
Rollman says the region offers much opportunity for the HMO, particularly due to the rapid growth in Wilmington and the surrounding counties. “United HealthCare has had great success in New Hanover County,” he says. “And we expect in 1999 to be expanding our presence in Southeastern North Carolina. We look upon the lower Cape Fear and the upper Cape Fear to represent a tremendous amount of promise for us.”
Insurers are finding that PPOs are a popular option in this area made up of smaller towns and rural counties. “Our PPO Select co-pay plan accounts for 95 percent of new sales,” says Jo Ann Wetzel, Blue Cross regional director for southeastern North Carolina.
Alliance Looks for New Options
To prepare for what most regard as the inevitable growth of managed care throughout the Southeastern and Sandhills Regions, health care providers have been aligning themselves into local and regional systems designed to offer the full continuum of care.
Affiliation is nothing new. For the past six years, nine area hospitals have worked together as members of the Coastal Carolinas Health Alliance. “Our goals are to work together to improve health care services in Southeastern North Carolina, avoid duplication and save money [through] economies of scale,” says Bill Clark, CEO of Columbus County Hospital in Whiteville and president of the alliance.
The alliance’s PPO, the Coastal Carolinas Health Plan, currently holds seven contracts covering 4,700 lives. Physicians make up the majority of the alliance board and the plan’s medical management committee.
Initially, alliance members saw the plan as a way to keep community health care under the control of local physicians while keeping premium dollars in the community as well, where they could be used to help enhance the local health care system. These days, however, Clark says, “The health plan is kind of at a standstill, and we are actively looking for a partner.”
While emphasizing that the group has not lost sight of its original community-oriented vision, Clark says, “When you’re building a network and you’re trying to put together a health plan, as it evolves, you have needs and you have to figure out how to satisfy those needs. So we’re looking at different options.”
Southeastern Hospitals Joining Forces
The New Hanover Health Care network is emerging as a major force in the Southeastern Region as it increases its presence in surrounding counties and becomes the only hospital network in the city of Wilmington. Late in 1998, New Hanover closed on its $98 million purchase of Columbia Cape Fear Memorial Hospital from Columbia/HCA Healthcare Corporation. Cape Fear was one of seven North Carolina hospitals Columbia offered for sale in May 1998.
“With the two organizations working together, we believe we can provide more cost-effective care, not only to the insured population, but to the entire population we serve,” says Dick Jones, New Hanover’s vice president for strategic services. “Consequently, we will be looking at services and the location of services, so the community may see some shifting in the future—not immediately, but over the next several years as we work with physicians to see what makes the most sense in terms of delivery of services.”
Jones says he expects Cape Fear to be part of all New Hanover’s managed care contracts, giving covered employees access to both hospitals. “We are moving toward the development of a network—one that is fully integrated,” explains Jones. “By that I mean, the patient has access to a primary and secondary care hospital in Cape Fear and a tertiary, becoming quaternary, level hospital in New Hanover. We have a long-term care facility, we have a home care agency, we have a hospice organization and we have a rehab hospital.”
New Hanover had also offered $36 million to buy Columbia’s $1-a-year operating lease for Brunswick Community Hospital in Supply, but the Brunswick County Hospital Authority, which owns the facility, objected, raising a number of questions about the benefits of the deal to Brunswick County. They also questioned Columbia’s authority to sell the lease and the exclusion of the facility owners from negotiations with New Hanover. Unable to resolve the issues, the sale fell through. Then, in November, Columbia announced an agreement with NetCare Health System to sell NetCare the Brunswick lease. Nashville-based NetCare had also purchased Davis Medical Center in Statesville from Columbia and owns 13 hospitals and four nursing homes in several states.
“Certain parties have agreed to the sale to NetCare,” says Jeff Prescott, spokesperson for Columbia. “We’re hopeful we can work something out.” Prescott says the sale is expected to be completed during the first quarter of 1999.
Even without purchasing Brunswick Community Hospital, New Hanover has a strong presence in the county. “It is still very important for us to be a part of the Brunswick County community,” Jones says, commenting that New Hanover has a strong working relationship with J. Arthur Dosher Memorial Hospital in Southport.
New Hanover’s commitment to the Brunswick County health care market is part of the system’s larger commitment to serve Columbus, Bladen, Pender, Duplin and Onslow counties as well. “Over 50 percent of the care we deliver at this medical center is to people who live outside New Hanover County,” says Jones. “So we see ourselves, and the community sees us, as a regional provider of care.”
Late in 1998, the Bladen County Hospital board asked New Hanover Regional’s trustees to formalize the affiliation between the two hospitals, and New Hanover Regional agreed. “We’ve had an ongoing relationship, but we wanted to put some definition to it,” Petit says. “The new agreement more clearly defines the kind of relationship we have and says it more publicly”
In the immediate future, Petit wants to enhance the working relationship with New Hanover’s Emergency Department. “We don’t have a deep well of specialists,” he explains, “so we do a lot of stabilization and transfer. The agreement should help lock in the kind of relationship we have and make the transfer process easier.”
Looking to enhance services, make capital improvements and get help with managed care contracting, Pender Memorial Hospital in Burgaw is negotiating details of a proposed affiliation with New Hanover Regional. “We were looking to affiliate with another hospital in our region, and we asked both New Hanover and Onslow Memorial Hospital to submit proposals to us for our consideration,” says Larry Bishop, CEO of Pender Memorial. “The committee’s decision—after reviewing the proposals from both hospitals—was that New Hanover Regional could probably provide a broader array of services.”
Reaching Out to Employers
To the west in the Sandhills Region, FirstHealth of the Carolinas is also building a regional system to provide a comprehensive range of health care services. Created in 1995 when Moore Regional Hospital in Pinehurst merged with Montgomery Memorial Hospital in Troy, FirstHealth also operates 15 family care clinics, three emergency medical systems, three fitness centers and a home health agency.
In an effort to integrate another of the region’s community hospitals into its system, FirstHealth announced plans to pay $44 million for Richmond Memorial Hospital in Rockingham and its affiliates, with closing expected by early October. However, Health Management Associates, Inc., of Naples, Fla., which owns and operates nearby Hamlet Hospital, made an unsolicited offer of $55 million for Richmond Memorial, and filed a lawsuit against the county and the hospital after hospital trustees refused to consider the HMA offer. The FirstHealth/Richmond Memorial deal is now on hold, pending the outcome of the litigation.
Meanwhile, FirstHealth is moving forward with FirstCarolinaCare, a managed care point of service plan now available only to 2,600 FirstHealth employees. “A number of companies are pulling out of the small business market, so we’re trying to develop our product to offer the smaller employers,” says T. Robert Ward, Jr., FirstHealth’s vice president for managed care.
To the north of Pinehurst in Lee County, Central Carolina Physicians Hospital Organization (CCPHO) offers self-insured employers a regional health care option through its Direct Employer Contracting Initiative. Formed in 1994, CCPHO’s 50 physicians and Central Carolina Hospital are committed to being a leader in service excellence in health care. In addition, strategic partnerships with Duke University Health System and UNC Health Care System enable CCPHO to offer the regional tertiary care arrangements employers seek.
CCPHO sees its comprehensive provider network, competitive fees, commitment to service excellence and ability to manage care as a way to assist employers in recognizing an achievable balance of choice, cost containment and quality. “We believe that health care should be a local choice for our employers and their employees,” says Todd Holder, director of CCPHO. “Our providers are committed to an integrated delivery system, which offers high-quality, cost-effective health care services to our community.”
Scotland Health Care System in Laurinburg serves Scotland County and the surrounding area with its hospital, nursing home, hospice, home health and five family practice centers. The system’s PHO, Scotland Regional Comprehensive Care, is a non-profit joint venture with local physicians that has tertiary care arrangements with Duke University Health System and UNC Health Care System. The PHO contracts directly with self-insured employers.
“We are also beginning to look at affiliating with another IPA or hospital network to be able to offer more managed care services to our community,” says Greg Wood, Scotland’s president and CEO. “We are early in the discussion stage both with the PrimaHealth IPA affiliate at Duke, as well as the MidCarolinas PO and FirstHealth out of Pinehurst.”
Fayetteville-based Cape Fear Valley Health System has been growing and streamlining for more efficient care. The health system opened a chest pain center, which is a seven-bed dedicated unit within the emergency department where patients experiencing symptoms of a heart attack can receive prompt diagnosis and treatment. Cape Fear Valley also opened an expanded Cancer Center that provides additional treatment space for radiation oncology and medical oncology patients.
To provide more services to its younger population, Cape Fear Valley finished a $412,000 renovation to create an eight-bed pediatric special care unit. The center also has a 44-bed neonatal intensive care unit and opened a nine-bed pediatric emergency department. “Our population has a very young average age,” explains Cape Fear Valley spokesman Clinton Weaver. “Previously, people had to go to a hospital several hours away for the level of pediatric care we now offer, so it’s a real convenience.”
Cape Fear Valley also recently introduced “Well On Your Way,” a preventive medicine program for area employers. “We provide health screening at the work site, followed by appropriate education,” explains Cape Fear Valley’s associate administrator of business development Bill Belanger. “For employers, the program helps keep employees well and at work.”
Other recent initiatives at Cape Fear Valley include MedReach, a mobile unit that the medical center’s occupational health department uses to bring services to area employers’ locations. “The equipment on board varies, depending on the employer’s needs,” Belanger says.
In Robeson County, Lumberton’s Southeastern Regional Medical Center has joined forces with approximately 100 area physicians to create Southeastern Health Network, a for-profit PHO. “What we are attempting to do is integrate services and programs in a seamless fashion in order to positively impact both the quality and the economics of health care,” says Lou Orban, the network’s executive director and director of managed care for Southeastern Regional. “It no longer is appropriate for the hospital and physicians to contract separately rather than work together to build efficiencies through an integrated network of care, which can be offered to managed care plans and other payers.”
Orban says one of the network’s major goals is to select at least one health plan to partner with to assist with greater geographic coverage and help build the necessary structure of the PHO.
The medical center has also developed a wellness program, which is designed to take preventive medicine and health education to the community. The program’s staff conduct education and health screening programs in conjunction with community and employer groups.
In a related project, Orban says Southeastern is developing an occupational health program, which is directed toward helping employers deal with workers’ health and injury problems by emphasizing case management and improved access to appropriate levels of care.
Projects for Lexington Memorial Hospital
- 1988-1989, 1989-1990 and 1990-1991 annual reports
- "Health Care Connection" brochure
- Speakers Bureau brochure and speaker guide
- Visitor Information brochure
- Emergency Department brochure
- "Personal, Progressive Care" brochure
- "Advances in Gallbladder Surgery" brochure
- Lexington Memorial "Health Matters" newsletter for area employers
- News and feature releases
Other Health Care Related Brochures & Flyers
- Acadiana Hospitalist Services brochure and flyer
- Baron Vision Center flyer, print ad and Optical Plus flyers and folder
- Columbia Life Rehabilitation brochure
- Direct Vision Benefit brochure and flyer
- Healthshare Enterprise brochure
- Lexington Memorial Hospital brochures
- North Carolina Hospital Association Leaders Forum brochure and flyer
- Piedmont Home Care brochure
- Piedmont HomeHealth brochures
- Primavera Adult Day Health Care Center flyer
- West Coast Life Sciences flyers
Health Care Related News & Feature Articles
- Piedmont Triad Hospital Guide and Moses Cone Hospital Guide articles on home health care, durable medical goods, hospice and palliative care, adult day care services, assisted living, nursing centers
- Piedmont Triad Newcomer hospitals profile
- North Carolina Healthcare Buyer managed care market overviews for the Piedmont Triad, Triangle and Southeastern/Sandhills regions and "Choosing a Third-Party Administrator"
- Georgia Healthcare Buyer managed care market overviews for the Central, Southwestern and Western regions
- Virginia Healthcare Buyer managed care market overviews for Richmond and the Central, Shenandoah and Southwest regions
- South Carolina Healthcare Buyer article on choosing a third-party administrator
- Medical Life Publishing community hospitals article
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