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1999-07-08 Special Meeting NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 27 MINUTES OF SPECIAL MEETING, JULY 8, 1999PAGE 352 ASSEMBLY The New Hanover County Board of Commissioners met in a Special Session on Thursday, July 8, 1999, at 10:15 a.m. in the County Administration Building, Room 501, 320 Chestnut Street, Wilmington, North Carolina. Members present were: Commissioner Buzz Birzenieks; Commissioner Charles R. Howell; Vice-Chairman Robert G. Greer; Chairman William A. Caster; County Manager, Allen O’Neal; County Attorney, Wanda M. Copley; and Clerk to the Board, Lucie F. Harrell. Commissioner Ted Davis, Jr. was absent. Chairman Caster called the Special Session to order and announced that the purpose of the meeting was to hear a status report from Dr. William K. Atkinson, President/CEO, New Hanover Regional Medical Center, regarding the affiliation of the Medical Center with Pender Memorial Hospital. Dr. Atkinson expressed appreciation for the opportunity to discuss the proposed affiliation agreement between Pender Memorial Hospital and New Hanover Regional Medical Center. He informed the Board that Mr. Ken Johnson, Chairman of the Pender Memorial Hospital Board of Trustees, would be present at the Board of County Commissioners meeting scheduled for July 12, 1999, at 6:30 p.m. He advised that he would like to recognize Mr. Johnson and other trustees present. Dr. Atkinson reported the Pender County Board of Commissioners approved the affiliation agreement between Pender Memorial Hospital and New Hanover Regional Medical Center on the evening of July 7, 1999. If the affiliation agreement is approved by the New Hanover County Board of Commissioners on July 12, 1999, New Hanover Regional Medical Center will begin operating Pender Memorial Hospital on July 18, 1999. Pender Memorial Hospital, Inc., the group that now operates the hospital for Pender County, will be modified into a membership corporation with New Hanover Regional Medical Center being the sole managing member of the corporation. This corporation will have a separate Board of Trustees to be responsible for overseeing the quality of care in the facility and to credential physicians and other health care professionals. All other matters related to actual operation of the facility will be addressed by the New Hanover Regional Medical Center Board of Trustees. Pender County will continue to own the hospital as an asset. Pender Memorial Hospital, Inc. will enter into a 20-year lease with Pender County with an option to renew for an additional ten years. The New Hanover County Board of Commissioners will be requested to expand the Medical Center Board of Trustees by two members to include two Pender County residents with one being the Pender Memorial Hospital Chief of Staff to serve as ex-officio members. Discussion followed on how equipment would be purchased. Dr. Atkinson explained that New Hanover Regional Medical Center has equipment that can be transferred to Pender Memorial, Inc. with the understanding that Pender Memorial will pay for the equipment or lease the equipment. Any major improvements to Pender Memorial Hospital, Inc., will be financed through hospital related revenue bonds in Pender County because the property is owned by that county. Finances for the two entities will remain separate. New Hanover Regional Medical Center will make a $980,000 investment in Pender Memorial Hospital, Inc. to be used for capital and operational expenses. Pender Memorial Hospital, Inc. will continue to make payments, approximately $84,000 per year, to Pender County to retire the existing Home Health debt. Upon retirement of the Home Health debt, Pender Memorial Hospital, Inc. will make payments of $50,000 to Pender County unless the annual operations of Pender Memorial Hospital, Inc. meets or exceeds the designated performance parameters. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 27 MINUTES OF SPECIAL MEETING, JULY 8, 1999PAGE 353 The lease will require Pender Memorial Hospital and New Hanover Regional Medical Center to adopt the following performance parameters which will be designed to achieve the goals of the affiliation: (1) a minimum annual operating margin; (2) an annual increase in the number of inpatient acute admissions; (3) an annual increase in the number of outpatient surgical procedures; (4) an annual increase in emergency department visits; and (5) an acceptable employee turnover rate. The lease includes a provision to require New Hanover Regional Medical Center to fund any annual operating deficit of Pender Memorial Hospital, Inc. that occurs during any fiscal year in which the lease is in effect. However, if either of the two following events occur, Pender Memorial Hospital, Inc. or New Hanover Regional Medical Center can terminate the lease upon compliance with notice and negotiation procedures set forth in the lease: (a) If Pender Memorial Hospital, Inc. experiences negative cash flows for two consecutive fiscal years; or (b) If Pender Memorial Hospital, Inc. fails to maintain positive annual operating margins for two consecutive fiscal years. These performance parameters will not be measured until the beginning of the fourth fiscal year of the lease term; therefore, no termination rights may occur prior to the end of the fifth fiscal year during the lease term. In concluding the presentation, Dr. Atkinson said that New Hanover Regional Medical Center is now the largest provider of health care in Pender County; therefore, it is logical to move forward with the affiliation. He offered to answer any questions. Chairman Caster asked if the employees would be under Pender Memorial Hospital, Inc. or the Medical Center. Dr. Atkinson responded the employees will work for Pender Memorial Hospital, Inc. Commissioner Birzenieks commented on the transfer of $980,000 by New Hanover Regional Medical Center to Pender Memorial Hospital, Inc., and he requested an explanation of how this process will be handled. Dr. Atkinson explained that a portion of the money will be used to upgrade the Emergency Department with establishment of a portable operating room until a determination can be made as to whether an operating room is needed. Part of the money will be in subsidies for placing emergency department doctors on call until the volume increases. Last week, some of the emergency room doctors from New Hanover Regional Medical Center signed a contract with Pender Memorial, Inc. and are rotating to provide quality physicians in the Emergency Department. If the affiliation agreement should not be approved, the emergency physicians will remain because a contract has been signed, and this would be a major upgrade for Pender Memorial Hospital, Inc. Chairman Caster asked if volunteers are used in Pender County to operate Emergency Medical Services. Dr. Atkinson responded that Pender County has multiple providers of Emergency Medical Services. One of the best units in the State of North Carolina is Pender East under the operation of Mr. Woody Sullivan. A full-time service is provided with a supplemental volunteer component. There are also a number of volunteer rescue squads and volunteer fire department rescue squads with the capability to cover as far as Atkinson, N. C. Pender County has advanced life support capability with paramedics in the eastern part of the county, but there are no paramedics in the western part of the county including Burgaw, N. C. County Manager O’Neal requested an explanation of how the residents in Pender County will be informed about the major upgrades to the Pender Memorial Hospital Emergency Department. NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 27 MINUTES OF SPECIAL MEETING, JULY 8, 1999PAGE 354 Dr. Atkinson responded that Ms. Judy O’Neal, Vice-President of Public Affairs, has a plan in place to inform the public about the change. Also, the New Hanover County Regional Medical Center letterhead and other marketing documents will include the name of Pender Memorial Hospital, Inc., which will provide a great deal of exposure. Physicians and members of the hospital on-site team will attend meetings of various committees and organizations in Pender County to inform the citizens about the positive upgrades that will be made at Pender Memorial Hospital, Inc. Discussion was held on the how the rates will be established. Dr. Atkinson explained that rates will be set by the New Hanover Regional Medical Center Board of Trustees. The rates will be based upon Pender Memorial Hospital, Inc. being a separate corporation. In closing, Dr. Atkinson commented on New Hanover Regional Medical Center being the major provider of medical services in southeastern North Carolina, and he stated the proposed agreement with Pender Memorial Hospital, Inc. is the most economical way to provide quality health care to citizens living in Pender County. The Medical Center will continue to promote cooperative working relationships with hospitals throughout southeastern North Carolina so the public health needs can be met. A lengthy discussion was held on amending the Medical Center By-Laws. Dr. Atkinson explained that only two changes will be recommended at the meeting of the Board of County Commissioners on July 12, 1999: (1)An official request to change the By-Laws of New Hanover Regional Medical Center Board of Trustees. (2)Expanding the Board of Trustees by two ex-officio members. Vice-Chairman Greer suggested removing the following clause from the proposed By-laws because the Board of County Commissioners should be able to appoint themselves as trustees if some difficulty should occur. He said this was done by the Cumberland County Board of Commissioners when problems were experienced at that hospital. Section 3: No person serving as an elected public officer shall be appointed to serve as a member of the Board of Trustees with the exception of the ex-officio trustee who serves by virtue of his position as a member of the New Hanover County Board of Commissioners. County Attorney Copley suggested that the Board consider adopting the recommended amendments to the By-laws as submitted by the Medical Center Board of Trustees contingent upon the Trustees being requested to delete this language under Section 3 of the By-laws. Dr. Atkinson said this item can be considered at a later date. The Medical Center Administrative Staff will work closely with the County Attorney in developing amendments to the New Hanover Health Network. He said all issues of concern can be addressed at this time. Further discussion was held on the term of office for Trustees. Dr. Atkinson explained that since the terms are already staggered, the new appointees would fall into the same sequence. Ms. Rountree questioned the three-year terms and said she would prefer changing the term from three years to five years because a three-year term is not sufficient time for a member to learn about the operations of the Medical Center. Commissioner Birzenieks explained that currently the Medical Center Board of Trustees by- laws require a unanimous vote by the New Hanover County Board of County Commissioners to deny reappointment of a member to serve another three-year term. This requirement obstructs a majority of County Commissioners from not reappointing a trustee who they feel has been negligent in attending and participating in meetings. Also, the three-year term with eligibility for reappointment NEW HANOVER COUNTY BOARD OF COMMISSIONERS BOOK 27 MINUTES OF SPECIAL MEETING, JULY 8, 1999PAGE 355 is the standard procedure used by other committees, boards, and commissions appointed by the Board of County Commissioners. In closing, Dr. Atkinson reported when the Medical Center moves forward with a new hospital affiliation, there are always some risks involved; however, the potential gain is to provide a higher level of health care to Pender County and New Hanover County. Pender Memorial Hospital, Inc. will remain a small rural hospital. No operations of Pender Memorial, Inc. will be merged with the Medical Center. Vice-Chairman Greer said the cooperative attitude of New Hanover Regional Medical Center is an example of how regional services can be provided. Chairman Caster, on behalf of the Board, expressed appreciation to Dr. Atkinson and Staff for the presentation and effort given to make this affiliation become a reality. Respectfully submitted, Lucie F. Harrell Clerk to the Board