Commissioners Vote to Begin Negotiations with Novant Health, UNC Health and UNC School of Medicine

July 13, 2020
"This has the power to change lives and help our community thrive

New Hanover County Commissioners voted, 4-1, at this evening’s meeting to move forward with negotiations between New Hanover County, New Hanover Regional Medical Center (NHRMC) and Novant Health, which would also lead to an expanded relationship with UNC Health and UNC School of Medicine. The Board of Commissioners’ resolution can be viewed here.

The 21-member Partnership Advisory Group unanimously recommended a partnership with Novant Health, UNC Health and UNC School of Medicine at its meeting on July 2 after nine months of evaluation; and the NHRMC Board of Trustees agreed and voted to proceed with this recommendation at its meeting on July 7.

The Commissioners’ vote authorizes the county and NHRMC to execute a letter of intent with Novant Health and then negotiate and develop a legally-binding, definitive agreement that furthers the goals of the healthcare system and the priorities of the community. The definitive agreement will be evaluated by the Board of Commissioners, NHRMC Board of Trustees, and the Partnership Advisory Group to ensure it is consistent with the LOI and furthers its expectations. A final version of the agreement will then be shared publicly at least 10 days prior to a public hearing and a vote of the Board of Commissioners on whether to execute the agreement, likely in October of this year.

“Our community and our healthcare system have an incredibly rare opportunity that has the power to transform and touch every single person’s life in New Hanover County,” said Board of Commissioners Chair Julia Olson Boseman. “I appreciate the work of the advisory group, their months of research, and the critical insight they have developed to reach a unanimous agreement that a partnership is necessary, and another unanimous recommendation that Novant Health and UNC Health are the best fit for our community and our healthcare system. I know there are questions and considerations that still remain, and I look forward to learning more and defining all of the details in the coming months so that we can secure and ensure an agreement that will benefit our entire county for generations to come.”

In making its recommendation, the advisory group noted that Novant Health is a recognized national leader in health equity, being named one of the first healthcare systems to receive the Centers for Medicare and Medicaid Services (CMS) Health Equity Award, and they have achieved one of the lowest per member, per month costs for patients managed through its Accountable Care Organization (ACO) when compared to other large system ACOs. They also expressed that Novant’s culture and vision are directly aligned with NHRMC, and their dedication to employees and providers is strong. In addition, UNC’s agreement with Novant to expand medical education and pediatric specialty services in Southeastern North Carolina if NHRMC and Novant merge is seen as bringing unparalleled clinical services and medical education to the region. View additional details about the PAG’s recommendation here.

Novant Health’s proposal includes an offer to purchase NHRMC from New Hanover County for $1.5 billion, with the county also retaining around $440 million in the hospital’s current net assets – for a total of around $1.9 billion in proceeds going to the county, as the owner of the hospital. Novant Health’s proposal also commits more than $2.5 billion in capital improvements and new services in the area.

The approved LOI outlines the use of the net $1.9 billion in proceeds and provides direction on the allocation of money if a definitive agreement is reached, to include:

  • $300 million NHRMC Transition Stabilization Escrow: with $200 million allocated to an Employee Investment and Resilience Fund (to support a beneficial transition for employee pensions and to support staff and provider resiliency and retention) and $100 million in wind-down costs and liability escrow,
  • $300 million County Revenue Stabilization Fund: for the county to use as a reserve fund for emergency response, debt relief, and tax and fee stabilization,
  • $50 million Mental and Behavioral Health Fund: to be used by the county for mental and behavioral health initiatives, and
  • Community Foundation: established by the county using the estimated $1.25 billion in proceeds after the above allocations, to benefit in perpetuity all New Hanover County residents

The community foundation, as outlined in the LOI, would allocate funding each year to local nonprofit, government and community organizations to carry out the mission and strategic plan of New Hanover County – focused initially on health and social equity, education, community development, and community safety. The foundation would be governed by a Board of Directors that would be diverse and comprised of five members appointed by the Board of Commissioners and six by the hospital’s local board.

“It’s important that any proceeds we receive through this process are invested in a definitive, clear and strategic way to benefit everyone in our county for years to come, and setting up a community foundation with an endowment and investment criteria that ensures the assets are protected will do that,” said Chair Olson-Boseman. “It will keep the money out of the hands of politicians, and go directly to the people we serve. This initial funding framework also helps bridge any gap for NHRMC employees who have been the back-bone of our healthcare organization, ensures the county can weather storms and pandemics and be financially stable, and invests in initiatives focused on mental health and substance abuse – which is such an important need that we have. This has the power to change lives and help our community truly thrive, at a time when we need it most.”

The final framework for the use and allocation of the proceeds will be included in the negotiated agreement with Novant Health. The final agreement will be shared publicly, likely in September or October, and a public hearing will be held prior to a final vote of the NHRMC Board of Trustees and Board of Commissioners, on or before October 19.

The approved Letter of Intent, which includes “Exhibit D” that outlines the use of the net proceeds, can be viewed here. For more information, including the PAG’s exploration process, meeting information and video presentations, visit NHRMCfuture.org.