HomeMy WebLinkAbout2020-07-13 RM Exhibits Exhibit N.4
Book P4-11- Page..1_912L ,
NEW HANOVER COUNTY BOARD OF COMMISSIONERS
RESOLUTION
RACISM:A PUBLIC HEALTH CRISIS
1
1 WHEREAS, the New Hanover County Board of Commissioners has identified the reduction of Racial
inequity as a critical priority and essential to effective and systemic delivery of health and human services
11 in New Hanover County; and
WHEREAS, the American Academy of Pediatrics states Racism is a socially transmitted disease passed
down through generations, leading to the inequities observed in our population today; and
WHEREAS, Racism unfairly disadvantages specific individuals and communities of color, while unfairly
giving advantages to other individuals and communities,and diminishes the strength of the whole society
through the waste of human resources, New Hanover County's collective prosperity depends upon the
equitable access to opportunity for every resident;and
WHEREAS, Racism has produced and perpetuates poverty through intentional and unintentional policies
that create barriers to economic mobility; and is a social system with multiple dimensions: individual
Racism that is internalized or interpersonal, and systemic Racism that is institutional or structural; and
WHEREAS, Racism causes persistent discrimination and disparate outcomes in many areas of life,
including housing, education, employment and criminal justice; and an emerging body of research
demonstrates that Racism itself is a social determinant of health; and
WHEREAS, social determinants, conditions in which an individual is born and in which he or she lives,
works,learns,or recreates are key drivers of health inequities.For generations,communities of color have
faced vast disparities in job opportunities, income, and inherited family wealth. They are less likely to
have housing security, access to health insurance, quality schools, healthy food, and green spaces, all of
which can undermine physical and mental well-being; and
WHEREAS,it is well-documented that Racism itself has an adverse impact on health.Chronic stress caused
1 by discrimination can trigger a cascade of adverse health outcomes, from high blood pressure, heart
disease,diabetes, immunodeficiency,and accelerated aging,all of which are high in communities of color;
and
WHEREAS,in New Hanover County,the greatest disparity in birth weight is among minority newborns. In
2018,10.3%of Non-Hispanic Black newborns had a low birth weight,followed by 7.7%Hispanic,and 6.4%
Non-Hispanic White; and
WHEREAS, diabetes affects minorities disproportionately. New Hanover County resident deaths due to
diabetes were 5.5% Hispanic,4.4% Non-Hispanic Black,and 1.8% Non-Hispanic White; and
1
WHEREAS, prostate cancer affects minority men disproportionately as well. Deaths due to prostate
cancer were 4.4% Non-Hispanic Black, 1.8% Non-Hispanic White, and 1% Hispanic; and
WHEREAS, microaggressions, defined as brief, commonplace, and often daily verbal, behavioral, or
environmental indignities, whether intentional or unintentional, that communicate hostile, derogatory,
or negative slights and insults have been found to increase suicidal ideation; and !,
WHEREAS,the American Public Health Association has stated that negative law enforcement encounters
among African American youth and men are associated with depression; pregnant African American
women experience stress related to the likelihood that their children will have future negative encounters
with law enforcement. The homicide rate for African Americans is 12 times that for Non-Hispanic White;
and
WHEREAS,the New Hanover County Board of Commissioners stands with the New Hanover County and
City of Wilmington Community Relations Advisory Committee,the New Hanover County Commission on
African American History, Heritage and Culture, the New Hanover NAACP, the New Hanover County
5 Resiliency Task Force,and all residents of New Hanover County.
I
I NOW THEREFORE,BE IT RESOLVED,that the New Hanover County Board of Commissioners believes that
Racism has formed the basis for a public health crisis affecting our entire County and should be treated
with urgency. This resolution calls upon legislators, health officials, and others in our community to
research and analyze data, and make meaningful changes to dismantle systemic Racism. New Hanover
3 County will seek to promote Racial equity through policies approved by the Board of Commissioners and
will encourage other local,state and national entities to recognize Racism as a public health crisis and take
action.
:
ADOPTED this the 13th day of July,2020.
NEW HANOVER COUNTY
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I Julia s Boseman, Chair Patricia Kusek,Vice-Chair PC/� �
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athan Barfiel r., Coun ommissioner Woody White,County Commissioner
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ob Zapple,Count ..sioner
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Ky erleigh G.Cro .2 II, Clerk to the Board ,IS 4°'qa 1^.
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Exhibit
Book [,.Page
July 13, 2020
State of North Carolina
County of New Hanover
To the Collector of Revenue of New Hanover County:
You are hereby authorized, empowered and commanded to collect the taxes set forth in the tax records
filed In the office of the Tax Administrator and in the tax receipts herewith delivered to you, In the
amounts and from the taxpayers likewise therein set forth, effective July 13, 2020. Such taxes are hereby
declared to be a first lien upon all real property of the respective taxpayers in the County of New Hanover
and all jurisdictions therein and this order shall be a full and sufficient authority to direct, require and
enable you to levy on and sell any real or personal property of such taxpayers for and on account thereof,
In accordance with the law.
Witness my hand and official seal this 13th day of July 2020.
Attest:
Kym well, Clerk to the Board
New anover County
Jull son - Boseman, Madam Chair
New Hanover County Board of Commissioners
I, Allison Snell, Collector of Revenue of New Hanover County, hereby acknowledge receipt of tax books
for all real estate and personal property for Cape Fear, Federal Point, Carolina Beach, Kure Beach, Harnett,
Wrightsville Beach, Masonboro, and Wilmington Townships for New Hanover County.
aze'�- - /'//
Allison Snell, Collector of Revenue
New Hanover County
Exhibit
Book )(L-tr Page
New Hanover County Monthly Collection Report for May 2020
Current Year 2019 -2020
Scroll /Billed
Abatements
Adjustments
Real Estate
Personal Property
Motor Vehicles
Combined
$ 146,571,779.81
$ (59,881.61)
$ 10,162.95
$ 14,526,013.82
$ (281,695.63)
$ 311,899.65
$ 10,460,370.81
$
$
$
171,558,164.44
(341,577.24)
322,062.60
Total Taxes Charged
Collections to Date
*Refunds
Write -off
$
$
$
$
146,522,061.15
146,267,473.52
764,024.66
10.06
$
$
$
$
14,556,217.84
13,838,889.39
36,833.72
(1,207.57)
$
$
10,460,370.81
10,460,370.81
$
$
$
$
171,538,649.80
170,566,733.72
800,858.38
(1,197.51)
Outstanding Balance
$
1,018,602.23
$
755,369.74
$
-
$
1,771,576.95
Collection Percentage
(28.55)
99.30
1,096.05
94.81
$
100.00
$
98.97
YTD Interest Collected
$
178,103.03
$
16,753.76
$
83,419.67
$
278,276.46
$
5,480.97
$
623,149.69
*Refunds
$
49,290.15
$
13,878.16
Total 2019 -2020 Collections YTD
170,044,151.80
Prior Years 2009 -2018
Real Estate
Personal Property
Motor Vehicles
Combined
Scroll
$
1,459,819.12
$
4,149,078.44
$
498,544.61
$
6,107,442.17
Abatements
$
(9,775.49)
$
(61,967.19)
$
-
$
(71,742.68)
Adjustments
$
-
$
1,124.60
$
(28.55)
$
1,096.05
Total Levy
$
1,450,043.63
$
4,088,235.85
$
498,516.06
$
6,036,795.54
Collections to Date
$
473,190.76
$
144,477.96
$
5,480.97
$
623,149.69
*Refunds
$
49,290.15
$
13,878.16
$
1,740.86
$
64,909.17
Write -off
$
(23,606.36)
$
(177,620.98)
$
(91,927.03)
$
(293,154.37)
Outstanding Balance
$
1,049,749.38
$
4,135,257.03
$
586,702.98
$
5,185,400.65
YTD Interest Collected
$
86,809.84
$
27,409.31
$
3,363.61
$
117,582.76
Total Prior Year Collections YTD
675,823.28
Grand Total All Collections YTD
$::174;719,375.08'
*Detailed information for Refunds can be found in the Tax Office
NEW HANOVER COUNTY
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Date
Exhibit 3b
Book. ZPage 1qo
New Hanover County Fire District Monthly Collection Report for May 2020
Current Year 2019 -2020
Real Estate
Personal Property
Motor Vehicles
Combined
Scroll /Billed
Abatements
Adjustments
$
Real Estate
$
Personal Property
$
Motor Vehicles
$
Combined
$ 8,768,856.40
$ (1,902.44)
$ 5,408.79
$ 1,224,296.64
$ 1,116.91
$ 201.15
$ 797,027.89
$
$
$
10,790,180.93
(785.53)
5,609.94
Total Taxes Charged
Collections to Date
*Refunds
Write -off
$
$
$
$
8,772,362.75
8,704,315.43
457.71
(29.25)
$
$
$
$
1,225,614.70
1,184,817.18
167.53
(129.33)
$
$
797,027.89
797,027.89
$
$
$
$
10,795,005.34
10,686,160.50
625.24
(158.58)
Outstanding Balance
$
68,534.28
$
41,094.38
$
-
$
109,311.50
Collection Percentage
28,937.61
99.22
333,878.34
96.65
$
100.00
$
98.99
YTD Interest Collected
$
9,924.79
$
962.10
$
6,078.77
$
16,965.66
$
-
$
1,896.02
Write -off
$
(902.88)
$
(8,873.07)
Total 2019 -2020 Collections YTD
Prior Years 2009 -2018
10,702,500.92
Total Prior Year Collections YTD
Grand Total All Collections YTD ,
*Detailed information for Refunds can be found in the Tax Office
NEW HANOVER COUNTY
O IL_ ffm
Cl-Irt-to . the Board
37,872.70
Real Estate
Personal Property
Motor Vehicles
Combined
Scroll
$
81,964.21
$
227,667.50
$
28,940.89
$
338,572.60
Abatements
$
(1,456.29)
$
(3,455.20)
$
(3.69)
$
(4,915.18)
Adjustments
$
220.51
$
0.41
$
220.92
Total Levy
$
80,507.92
$
224,432.81
$
28,937.61
$
333,878.34
Collections to Date
$
22,975.18
$
8,533.57
$
195.68
$
31,704.43
*Refunds
$
791.53
$
1,104.49
$
-
$
1,896.02
Write -off
$
(902.88)
$
(8,873.07)
$
(4,710.18)
$
(14,486.13)
Outstanding Balance
$
59,227.15
$
225,876.80
$
33,452.11
$
289,583.80
YTD Interest Collected
$
4,618.24
$
1,404.69
$
145.34 1
$
6,168.27
Total Prior Year Collections YTD
Grand Total All Collections YTD ,
*Detailed information for Refunds can be found in the Tax Office
NEW HANOVER COUNTY
O IL_ ffm
Cl-Irt-to . the Board
37,872.70
Exhibit ll��
Book . vI �Page �Vlp
New Hanover County Debt Service Monthly Collection Report for May 2020
Current Year 2019 -2020
Total 2019 -2020 Collections YTD $ 2 ,393,386.07
Prior Years 2009 -2018
Real Estate
Personal Property
Motor Vehicles
Motor Vehicles
Combined
Combined
Scroll /Billed
$
19,340,467.56
$
1,907,280.78
$
1,380,066.07
$
22,627,814.41
Abatements
$
(7,901.94)
$
(37,172.66)
$
Adjustments
$
(45,074.60)
Adjustments
$
1,341.07
$
41,158.30
$
$
$
42,499.37
Total Taxes Charged
$
19,333,906.69
$
1,911,266.42
$
1,380,066.07
$
22,625,239.18
Collections to Date
$
19,199,870.81
$
1,813,449.19
$
1,380,066.07
$
22,393,386.07
*Refunds
$
910.33
$
505.20
$
(19.55)
$
1,415.53
Write -off
$
(41.42)
$
(188.57)
186,028.64
$
$
(229.99)
Outstanding Balance
$
134,987.63
$
98,511.00
$
-
$
231,623.12
Collection Percentage
99.30
94.85
100.00
98.98
YTD Interest Collected
$
23,460.86
$
2,152.06
$
10,906.01
Total 2019 -2020 Collections YTD $ 2 ,393,386.07
Prior Years 2009 -2018
Total Prior Year Collections YTD
. Detailed information for Refunds can be found in the Tax Office
NEW HANOVER COUNTY uNTY.
O F
G
CIEUtotheBoard 3?ARLISNEO
#I// 3 n
Date
$ 66,688.81
Real Estate
Personal Property
Motor Vehicles
Combined
Scroll
$
125,664.51
$
202,476.73
$
$
328,141.24
Abatements
$
(1,029.78)
$
(5,312.86)
$
(6,342.64)
Adjustments
$
122.29
$
122.29
Total Levy
$
124,634.73
$
197,286.16
$ -
$
321,920.89
Collections to Date
$
48,776.86
$
12,780.69
$
$
61,557.55
*Refunds
$
1,124.20
$
1,503.62
$
$
2,627.82
Write -off
$
(10.41)
$
(19.55)
$
$
(29.96)
Outstanding Balance
$
76,992.48
$
186,028.64
$
$
262,961.20
YTD Interest Collected
$
6,176.51
$
1,582.57 1
$ -
$
7,759.08
Total Prior Year Collections YTD
. Detailed information for Refunds can be found in the Tax Office
NEW HANOVER COUNTY uNTY.
O F
G
CIEUtotheBoard 3?ARLISNEO
#I// 3 n
Date
$ 66,688.81
Exhibit
�
BookPage 1_q0.
NEW HANOVER COUNTY BOARD OF COMMISSIONERS RESOLUTION
Approving the Letter of Intent (LOI) and authorizing the
development of a definitive agreement between New Hanover
County, NHRMC and Novant Health
WHEREAS, New Hanover County owns the hospital, medical facilities and other assets then leased
to New Hanover Regional Medical Center (NHRMC) to operate as a health care system governed by
the County- appointed NHRMC Board of Trustees (BOT); and
WHEREAS, certain industry trends, challenges, opportunities and related discussions as to the best
course forward for NHRMC have led to the New Hanover County Board of Commissioners passing a
resolution in September of 2019 to move forward in exploring potential future options for NHRMC
through a request for proposal (RFP) process in accordance with State Law (N.C.G.S § 131E -13), and
the BOT passing a corresponding resolution endorsing such County /NHRMC exploration in that same
month; and
WHEREAS, following these resolutions, the Board of Commissioners held a public hearing on October
15, 2019 to receive comments related to the resolution and also, jointly with the BOT, appointed a
21- member Partnership Advisory Group (PAG) that includes: nine community members reflective of
the community's diversity of individuals and interests, five members of the BOT, five physicians as
selected by the Physician Advisory Committee, and the NHRMC CEO and County Manager, to explore
the best way to improve the region's access to high - quality healthcare; and
WHEREAS, the PAG developed a comprehensive RFP that was issued on January 13, 2020 and
received responses from six health care organizations by the due date of March 16, 2020 with a
variety of detailed proposals, all which were well vetted by the PAG with analyses and input from
financial, legal and strategic advisors to NHRMC and the County; and
WHEREAS, at its May 7, 2020 meeting, the PAG unanimously narrowed the list of respondents from
six down to three parties for further due diligence and letter of intent discussions per the PAG
Charter (such narrowing was preliminary, pending further public input at the Public Hearing on June
22, 2020) and communicated its narrowing recommendation to the Board of Commissioners and
BOT; and
WHEREAS, at its May 18, 2020 meeting, the Board of Commissioners endorsed (in alphabetical order)
the following respondents for further due diligence and letter of intent (LOI) discussions (such
narrowing was preliminary, pending further public input at the Public Hearing on June 22, 2020):
Atrium Health, Duke Health, and Novant Health; and authorized the County and NHRMC to have direct
partnership due diligence and LOI discussions with each of these three organizations as part of this RFP
process; and
WHEREAS, in accordance with this Board of Commissioners authorization, the PAG and PAG
Support Team engaged in further analyses of the Atrium Health, Duke Health and Novant Health
proposals and the respective ability of each Respondent to meet the needs of the region and
advance healthcare accessibility, quality, affordability, and equity as outlined in each of the key
goals and objectives tied to NHRMC's Strategic Plan, including through multiple virtual and actual
site visits; and
WHEREAS, this analyses included material due diligence by the PAG's independent Financial Advisor,
Ponder & Co., who delivered a report based on its detailed review of the partnership exploration
process, as well as an analysis of the financial consideration and affordability specific to each of the
Atrium Health, Duke Health and Novant Health proposals; this report concluded that: "For each of the
proposals provided by the three Respondents, Net Total Financial Consideration is within or exceeds
the valuation range," and based on its analysis of "the financial position and capacity of each of the
organizations, all three respondents are well positioned to fund the upfront cash consideration and
capital commitments outlined in their proposals;" and
WHEREAS, in accordance with the PAG Charter, the PAG and PAG Support Team also further
evaluated the pros and cons associated with each of the proposals, together with the pros and
cons of NHRMC continuing status quo, internally restructuring or joint venturing; and
WHEREAS, the Board of Commissioners held a second public hearing on June 22, 2020 to discuss all
six proposals and receive further community input; and
WHEREAS, based on such further analyses, evaluations and community input, on July 2, 2020, the
PAG unanimously voted in favor of recommending to the Board of Commissioners and BOT the
following:
1. That each Board approves moving forward with negotiating a Letter of Intent for a proposed
full strategic partnership as we, the PAG, believe this step preferable to continuing status quo
or pursuing internal restructuring (SystemCo) or another independent or joint venture model
at this time; and
2. That each Board approves focusing such Letter of Intent negotiations with Novant Health as the
PAG's recommended first choice of partner, with its solid proposal and intended partnership
with UNC Health and the University of North Carolina School of Medicine to enhance clinical
services and medical education in this region; and
WHEREAS, following the PAG recommendation and dedicated BOT research and information, the
BOT approved taking the next step in negotiating a partnership between NHRMC, Novant
Health, UNC Health and UNC School of Medicine and endorsed the establishment of a community
foundation and allocation of funds to support NHRMC team and community needs.
NOW THEREFORE, BE IT RESOLVED, based upon the PAG's research, due diligence of all options
available to NHRMC (including the proposals, status quo and restructuring), and final
recommendation, along with the BOT's approval and endorsement, Novant Health's solid proposal
and intended partnership with UNC Health and the University of North Carolina School of Medicine
to expand the existing medical education and pediatric specialty services in Southeastern North
Carolina if NHRMC becomes part of Novant Health, the financial report provided by Ponder & Co.,
the Novant Health LOI summary, and the use of net transactional proceeds (Exhibit D in the 1_01) that
ensures proceeds are protected for the community in perpetuity, the Board of Commissioners
desires that the County and NHRMC move forward with the execution of the Novant Health 1_01,
corresponding further due diligence and drafting and negotiation of a definitive agreement with
Novant Health; and
NOW, THEREFORE, the definitive agreement must further the goals of the healthcare system and
the priorities of the community, must include the use of net transactional proceeds (Exhibit D in the
1_01), and be subject to review and approval of the Board of Commissioners and BOT, with a public
hearing held no less than 10 days after the agreement is made public, and then executed and
implemented by NHRMC and the County, respectively; and
BE IT FURTHER RESOLVED, that the use of net transactional proceeds (Exhibit D in the 1_01) be
included in the definite agreement, as stated above, and must include a clear, definitive outline of
the use of all funds, keeping them protected for the community as follows:
I. $300 Million NHRMC Transition Stabilization Escrow, with $200 million allocated to an
Employee Investment and Resilience Fund (to support a beneficial transition from
NHRMC's existing pension plan to Novant Health's retirement benefits plan and to support
staff and provider resiliency and retention); and $100 million in a liability escrow (to
finance any non - assumed liabilities, wind -down expenses, or tail coverage premiums); and
11. $300 Million County Revenue Stabilization Fund to help protect local taxpayers from
unexpected expenses like emergency response needs from a disaster or pandemic and
economic downturns; for the retirement of voter and non -voter approved debt; to
establish pay -as- you -go financing for certain capital assets and projects; to minimize tax
and fee increases in future years; and
III. $50 Million Mental and Behavioral Health Fund to address one of the county's greatest
challenges, focused on substance abuse treatment programs, sustained grant funding for
existing evidence -based programs, and expanded access to mental health services; and
IV. 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, and — governed by a Board of Directors — provide funding to further the mission
and strategic plan of the County, with the initial endowment supporting and promoting
initiatives in the following focus areas: health and social equity, primary, secondary and
post- secondary public education, community development, and community safety; and
BE IT FURTHER RESOLVED, that the Board of Commissioners approves of the Novant Health LOI by
the County and NHRMC in the form summarized and presented to the Board of Commissioners,
including the use of net transactional proceeds (Exhibit D in the 1_01), as the next critical step towards
ensuring that both the current and future needs of our growing region are met as we would then be
better able to fund and to timely implement advancements in healthcare accessibility, quality,
affordability, and equity for all now and into the future; and
BE IT FURTHER RESOLVED, that the County and NHRMC are authorized to engage in further due
diligence, drafting and negotiation with Novant Health of the Definitive Agreement and other
agreements, documents and arrangements ancillary thereto, which Definitive Agreement would then
be posted publicly and subject to review and approval of the Board of Commissioners and BOT before
it can be executed and implemented by NHRMC and the County, respectively no later than October
19, 2020.
ADOPTED this the 13th day of July, 2020.
NEW HANOVER COUNTY
Julia son- Boseman, Chair
ATTEST:
"171F �.�
K berleigh G. Frowell, Clerk to the Board
4
Exhibit
Book --Y-,-L Page �L
FINAL EXECUTION COPY
LETTER OF INTENT
THIS LETTER OF INTENT ( "LOI ") is entered into this 13th day of July, 2020 ( "Effective
Date ") by and among New Hanover County ( "County "), New Hanover Regional Medical Center,
a North Carolina nonprofit corporation, on behalf of itself and its affiliates ( "NHRMC ") (County
and NHRMC are each a "Seller" and together the "Sellers ") and Novant Health, Inc., a North
Carolina nonprofit corporation ( "Buyer "). Buyer and Sellers may be collectively referred to herein
as the "Parties ", or individually as a "Party ". This LOI sets forth the current understanding of the
Parties in principle with respect to the terms of the Proposed Transaction that are described in this
LOI. This LOI is an expression of the Parties' current intent and, except for the terms set forth in
Part B, is not binding on the Parties.
RECITALS
WHEREAS, the County owns the Hospitals (as defined below), medical facilities, and
other assets leased to NHRMC to operate as a healthcare system governed by the County-
appointed NHRMC Board of Trustees ( "NHRMC Board "); and
WHEREAS, certain industry trends, challenges, opportunities, and related discussions as
to the best course forward for NHRMC have led to the County Commissioners of New Hanover
County ( "County Commissioners ") passing a resolution in September 2019 to move forward in
exploring potential future options for NHRMC through a request for proposals process ( "RFP ")
in accordance with North Carolina law, and to the NHRMC Board passing a corresponding
resolution endorsing such County and NHRMC exploration in that same month; and
WHEREAS, on March 16, 2020, six health care organizations, including Buyer
( "Respondents "), responded to the comprehensive RFP with a variety of proposals, all of which
have been well vetted by the Partnership Advisory Group ( "PAG "), a Joint Subcommittee of the
County Commissioners and NHRMC Board, with analyses and input from financial, legal, and
strategic advisors; and
WHEREAS, in accordance with North Carolina law, a public hearing was held on June 22,
2020 regarding the proposals received in response to the RFP; and
WHEREAS, in conjunction with the PAG's evaluation of the proposals, the corresponding
due diligence and discussions with the finalists, the Parties have negotiated and prepared this LOI;
and
WHEREAS, the PAG and NHRMC Board have recommended the County Commissioners
approve and authorize the execution of this LOI, and the County Commissioners, having reviewed
all of the work of the PAG and the proposals, and having considered the best interests of the County
and the Community, concur with such recommendations; and
WHEREAS, the County Commissioners will use, invest, and manage the proceeds of the
transactions described in this LOI exclusively for public benefit purposes; and
WHEREAS, the Parties each, respectively desire to enter into this LOI, pursuant to the
terms set forth herein.
NOW, THEREFORE, in consideration for the promises, covenants, and commitments set
forth herein, and other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the Parties do hereby enter into this LOI.
PART A — NON - BINDING PROVISIONS
The following sections of Part A of this LOI are non - binding.
1. Proposed Transaction. Buyer, directly or through one or more affiliated entities,
will acquire the Purchased Assets (defined below) (collectively, the "Proposed Transaction ").
The Parties may elect to pursue another fully integrated acquisition model by mutual agreement,
and, with respect to the fully integrated acquisition, agree to explore structuring efficiencies.
2. Purchased Assets; Excluded Assets, Assumed Liabilities.
(a) Buyer will purchase all of the tangible and intangible assets, real property, rights,
privileges and interests and working capital (as further defined in Schedule 3) of Sellers that are
used or held for use as part of, or in conjunction with or in support of, the operations of (i) NHRMC
and its affiliates, including, but not limited to, the facilities set forth on Exhibit A attached hereto
(the "Hospitals "), which the Parties anticipate will include the Hospital Medicare and Medicaid
provider agreements and numbers associated therewith, and (ii) the physician practices, urgent
care centers, imaging centers, ambulatory surgical facilities, medical office buildings and other
ancillary businesses that are used or held for use as part of, or in conjunction with or in support of,
the operations ofNHRMC and its affiliates, which the Parties anticipate will include the associated
Hospital Medicare and Medicaid provider agreements and numbers thereof (such businesses,
together with the Hospitals, the "Business "), including, but not limited to, (A) the real property
listed on Exhibit B (the "Real Property ") and (B) NHRMC's equity interests in or assets of the
joint ventures and subsidiaries set forth on Exhibit C, all as shall be more particularly identified
by the Parties in the Purchase Agreement (defined below) (collectively, the "Purchased Assets ").
All Purchased Assets will be conveyed to Buyer free and clear of all liens, liabilities, encumbrances
and defects in title, other than customary permitted exceptions, as agreed by the Parties.
(b) In addition, Buyer will assume certain specific liabilities of Sellers, which shall be
limited to (i) liabilities arising after the Closing under contracts that are Purchased Assets, such as
employed and contracted physician agreements and leases, but only to the extent that such
liabilities thereunder are required to be performed after the Closing Date, were incurred in the
ordinary course of business and do not relate to any failure to perform, improper performance,
warranty or other breach, default or violation by any Seller on or before the Closing, (ii) any and
all obligations arising after the Closing with respect to transferred Real Property, (iv) current
liabilities that are included in the agreed upon calculation of Net Working Capital, which will
include, but not be limited to, accrued paid time off obligations relating to transferred employees,
subject to a cap to be agreed upon by the Parties, and (v) such other liabilities, if any, as shall be
mutually agreed by the Parties in the Purchase Agreement ( "Assumed Liabilities ").
(c) Notwithstanding the foregoing, the Purchased Assets shall not include any
2
excluded assets, which shall include, but not be limited to (i) cash, cash equivalents and
investments, (ii) materials protected by the attorney - client privilege, work product doctrine or
other similar privilege insofar as such materials relate to the Proposed Transaction or if the
materials relate principally to Excluded Assets or Excluded Liabilities, (iii) restricted funds that
are not capable of being transferred to the Buyer, (iv) third -party payor cost report settlements
related to operations of the Business in or prior to September 30, 2020 and (v) such other assets as
shall be mutually agreed by the Parties in the Purchase Agreement ( "Excluded Assets ").
(d) The following liabilities of Sellers, to the extent such liabilities are not Assumed
Liabilities, will be excluded from the Proposed Transaction: (i) all debts of, guarantees of debt by,
accrued interest, or net interest rate swap liabilities of Sellers or their respective affiliates or
otherwise relating to the Business, (ii) any liabilities related to any pension or supplemental
retirement plan of the Business (funded or unfunded) and any unfunded other employee benefit
obligations of the Business, (iii) liabilities relating to the Excluded Assets, (iv) liabilities and
obligations associated with governmental programs administered in connection with COVID -19
pandemic relief, including but not be limited to (A) future repayments and/or offsets for funds
received through the Medicare Advancement Payment program, (B) CARES Act HHS grants, (C)
Federal Emergency Management Agency grants and (D) Federal Communications Commission
funds (to the extent they are required to be refunded or repaid) and (v) such other liabilities as shall
be mutually agreed by the Parties in the Purchase Agreement ( "Excluded Liabilities ").
3. Purchase Price and Financial Commitments. The purchase price, capital
commitments and other consideration and financial commitments to be paid and made by Buyer
as part of the Proposed Transaction are set forth and detailed on Schedule 3, attached hereto and
incorporated herein by reference.
4. Additional Covenants and Commitments of the Parties. In addition to the other
covenants and commitments of the Parties set forth herein, the Definitive Documents shall also
include certain additional post - Closing covenants and commitments of the Parties, including, but
not limited to, those covenants and commitments set forth below in this Section 4. The Definitive
Documents shall memorialize the particulars and standards regarding each Party's performance of
their respective post- Closing covenants and commitments set forth in the Definitive Documents,
including those set forth in this Section 4, all of which shall be performed as promptly as
practicable, and in any event, unless otherwise specifically stated herein, within not more than five
years following the Closing. As applicable, some of the commitments may be subject to force
majeure provisions, and the commitments shall also be subject to modification with the advance
consent of the Board (defined herein).
(a) Improving Access to Care and Wellness: Buyer shall improve access to care
and wellness in the Business's primary and secondary service areas (presently, New Hanover,
Pender, Brunswick, Columbus, Onslow, Duplin and Bladen Counties) and any other primary or
secondary service areas in to which the Business expands post- Closing ( "Service Area "), as
further summarized in Schedule 4(a), attached hereto and incorporated herein by reference.
(b) Advancing the Value of Care: Buyer shall advance the value of care in the
Service Area, as further summarized in Schedule 4(b), attached hereto and incorporated herein by
reference.
(c) Achieving Health Equity. Buyer shall promote and advance the
achievement of health equity in the Service Area, as further summarized in Schedule 4(c), attached
hereto and incorporated herein by reference.
(d) Supporting and Maintaining Staff. Buyer shall maintain and support the
Business's staff, as further set forth in Schedule 4(d), attached hereto and incorporated herein by
reference.
(e) Partnering with Providers. Buyer shall develop, implement and continue to
enhance provider relationships and partnerships associated with the Business, as further set forth
on Schedule 4(e), attached hereto and incorporated herein by reference.
(f) Driving Quality Care Throughout the Continuum. Buyer shall drive and
improve quality of care throughout the Business's care continuum in the Service Area, as further
set forth in Schedule 4(f), attached hereto and incorporated herein by reference.
(g) Growing the Level and Scope of Care. Buyer shall grow the Business's level
and scope of care in the Service Area, as further set forth in Schedule 4W, attached hereto and
incorporated herein by reference.
(h) Investing to Ensure Long -Term Financial Security. Buyer shall make
investments to ensure the long -term financial viability and security of the Business, as further set
forth in Schedule 4(h), attached hereto and incorporated herein by reference.
(i) Strategic Positioning. Buyer shall advance the Business's strategic position
in the Service Area, as further set forth in Schedule 4(i), attached hereto and incorporated herein
by reference.
(j) Governance. From and after the Closing, the Business, including, but not
limited to, the Hospitals, shall be governed according to the terms set forth in Schedule 4(i),
attached hereto and incorporated herein by reference. Similar to other subsidiaries of Buyer, the
intention of the Parties is that Buyer retain sufficient control over the Business so that it may
consolidate for accounting purposes.
(k) Statutory Requirements. Buyer shall comply in all material respects with all
laws and regulations applicable to Buyer in the Proposed Transaction, including, but not limited
to, the terms of NCGS 131E- 13(a), as further set forth in Schedule 4(k), attached hereto and
incorporated herein by reference. For clarity, all references to "corporation" in NCGS 131E -13(a)
shall be read to include Buyer, notwithstanding any other statutory definitions.
(1) Corporate Administration Charges, Overhead Costs, and Other System
Level Expenses. Prior to execution of the Definitive Documents, Buyer and Sellers shall mutually
agree upon a methodology for Buyer's allocation of any administrative charges or overhead costs
to the Hospitals during the integration period occurring within the first five years following the
Closing. As part of this process and following the Effective Date of this LOI, Buyer shall provide
Sellers with proposed estimates for the post - Closing phasing of such allocations over the five -year
post - Closing integration period. Further, following the expiration of the integration period, Buyer
agrees that any such allocations or charges applied to the Hospitals will be fairly apportioned and
4
consistent with the methodology used by Buyer for similar charges and allocations made to other
operations, divisions or subsidiaries of Buyer.
(m) Tail Insurance. Sellers shall obtain, at Sellers' sole cost, tail insurance for
any claims -made insurance policies that Sellers currently maintain.
Additionally, the Definitive Documents shall include a requirement that Buyer submit, on
an annual basis, a report to the Sellers, or their designee, providing a high -level summary of
progress on the post - Closing commitments undertaken by Buyer pursuant to the Definitive
Documents, including, but not limited to, a summary of the projects funded by the Buyer's capital
commitments; provided, that such reporting obligations shall only remain in effect through the
first 12 years following Closing. The format of such summaries will be as agreed by the Parties
from time to time.
5. Purchase Agreement, Definitive Documents. The first drafts of the purchase
agreement ( "Purchase Agreement ") and documents ancillary thereto (together with the Purchase
Agreement, the "Definitive Documents ") shall be drafted and prepared by Sellers. The Definitive
Documents will include customary terms and conditions, including, but not limited to,
representations and warranties, covenants and certain indemnification obligations of the Sellers
and Buyer. Buyer agrees that, except for the representations and warranties specifically set forth
in the Purchase Agreement, the Purchased Assets shall be transferred on an "AS -IS" basis. Sellers'
representations and warranties (other than customary fundamental representations, which shall be
limited to the representations specifically addressing good standing, due authority, no conflict, title
to assets, and no brokers (the "Fundamental Representations ")) shall not survive Closing.
Fundamental Representations shall survive the Closing for a 10 -year period. On or before
execution of the Definitive Documents, Buyer may at its option procure a buyer -side
representation and warranty insurance policy ( "R &W Policy ") and, in such case, Sellers shall
reasonably cooperate with such effort. Buyer and Sellers shall each be responsible for one -half of
the retention amount under the R &W Policy. Under any R &W Policy, Buyer's portion of the
retention shall be absorbed first and Sellers' portion shall be obtained from the Escrow Amount
(as defined below)). In addition, for any portion of the retention payable by Buyer for a breach of
a Fundamental Representation, such amount shall constitute a Buyer loss to be satisfied from the
Escrow Account. Buyer's sole and exclusive remedy for any liability of Sellers arising from
breach or inaccuracy of any representations or warranties (other than Fundamental Representations
and with respect to Excluded Liabilities) in the Definitive Documents shall be the R &W Policy.
For clarity, in the event Buyer elects not to procure the R &W Policy, Buyer shall have no recourse
against Sellers with respect to any breach or inaccuracy of any representations or warranties of
Sellers in the Definitive Documents (other than Fundamental Representations and with respect to
Excluded Liabilities). At Closing, Sellers shall place One Hundred Million Dollars ($100,000,000)
( "Escrow Amount ") into an escrow account ( "Escrow Account ") maintained by an escrow agent
of national reputation mutually agreed by Sellers and Buyer. Buyer's sole remedy for any liability
of Sellers arising from any (a) breach of any Fundamental Representation for which Buyer does
not have recourse under the R &W Policy, if any, or (b) Excluded Liabilities (the "Excluded
Matters ") shall be a disbursement from the Escrow Account and only to the extent such funds
remain available. The Escrow Account shall be maintained for a period of two years following
Closing. There shall be no deductible or cap in respect of Buyer losses arising from Excluded
Matters. The Definitive Documents shall include provisions setting forth certain mutually
agreeable remedial rights for, and accruing on behalf of, the Sellers in the event of a material
breach by Buyer of the covenants set forth in the Definitive Documents; provided, however, that
repatriation of the Purchased Assets to the County following appropriate cure periods and
opportunities will be an available remedy for a limited number of certain material breaches similar
to those set forth in N.C.G.S. 131E -13 and designated by the Parties in the Definitive Documents
at a purchase price that reflects liabilities assumed and capital investments made by Buyer. Sellers
shall be jointly and severally liable for any losses to Buyer arising from breach of any Definitive
Document except with respect to the break fee set forth in Part A, Section 9, with respect to which
the Sellers shall be severally, and not jointly, liable.
6. Closing. The Parties will use good faith, commercially reasonable efforts to finalize
and execute the Definitive Documents no later than October 31, 2020. The closing of the Proposed
Transaction ( "Closing ") shall occur, unless otherwise mutually agreed, on the month end next
following the satisfaction or waiver of the last condition to closing to be satisfied or waived. The
Parties will use all commercially reasonable efforts to cause the Closing to occur within 180 days
following the execution of the Purchase Agreement.
7. Closing Conditions. Prior to entering into a Purchase Agreement, each Party will
obtain all internal approvals required to consummate the Proposed Transaction and effect the
Closing. The Purchase Agreement will provide that the Closing will occur after receipt of any
required regulatory approvals set forth in the Purchase Agreement and satisfaction of any other
customary closing conditions. Buyer acknowledges that closing certainty is a material
consideration for Sellers to enter into any Purchase Agreement and, therefore, (a) the Purchase
Agreement shall contain no financing contingency and (b) the Closing shall not be conditioned
upon the receipt of third -party approvals or estoppels other than required regulatory approvals and
any third -party consents or estoppels that, if not obtained, would have a materially detrimental
effect on the Business taken as a whole, which such third -party consents shall be identified and
agreed to by the Parties within 60 days of signing this LOI. Notwithstanding the foregoing, Sellers
will use commercially reasonable efforts to obtain other material required third -party consents and
estoppels.
8. Regulatory Review; Cooperation. Sellers and Buyer will reasonably cooperate with
each other in making such filings and in connection with responding to any investigation or other
regulatory inquiry concerning the transaction contemplated by this LOI. To the extent practicable
under the circumstances, no Party shall agree to participate in any substantive call, meeting or
conference with any governmental entity, or any member of the staff of any governmental entity,
in respect of any filing, proceeding, investigation (including any settlement of the investigation),
litigation, or other governmental inquiry related to the Proposed Transaction unless such Party
consults with the other Parties in advance and, where permitted, allows the other Parties to
participate. Each Party shall also use commercially reasonable efforts to obtain any approval or
review required by the Hart- Scott- Rodino Antitrust Improvements Act of 1976. Each Party shall
file any HSR filings required in conjunction with the Proposed Transaction as promptly as
practicable after signing of the LOI and shall respond to any subsequent inquiries from any
applicable government agency regarding such filing as quickly as practicable.
9. Break Fees. The Purchase Agreement shall contain a "break fee" equal to Twenty -
Five Million Dollars ($25,000,000.00). The break fee cannot be funded by any one Party to cover
6
another Party's break fee obligation, and it shall be payable (i) by Buyer to Sellers, collectively, in
the event Sellers terminate the Purchase Agreement based on Buyer's material breach of the
Purchase Agreement, after a commercially reasonable period of time to cure such breach, which
will be mutually agreed by the Parties during negotiation of the Definitive Documents, (ii) by the
County to Buyer in the event Buyer terminates the Purchase Agreement based on the County's
material breach of the Purchase Agreement, after a commercially reasonable period of time to cure
such breach, which will be mutually agreed by the Parties during negotiation of the Definitive
Documents, or (iii) by NHRMC to Buyer in the event Buyer terminates the Purchase Agreement
based on NHRMC's material breach of the Purchase Agreement, after a commercially reasonable
period of time to cure such breach, which will be mutually agreed by the Parties during negotiation
of the Definitive Documents. Such break fee is due, in full, within 30 days following such cure
period if the breach remains uncured, and such amount is separate and apart from any and all
damages resulting from such breach.
10. Due Diligence. Upon execution of this LOI, Buyer will commence, on a timely and
expeditious basis, due diligence of the Business. In the course of this due diligence, Buyer and its
employees, agents, consultants, appraisers and counsel may request certain financial and operating
data, as well as other information related to the ownership and use of the Business. Such due
diligence may include, but not be limited to, review and investigation of the operational, legal,
financial, billing, coding, collecting, employment and other matters of the Business. Sellers will
permit Buyer's employees, agents, consultants, appraisers and counsel to have reasonable access
to its staff and facilities during normal working hours; provided, that all such access shall be
coordinated through a designated representative of the Sellers and Buyer shall not and shall cause
its representatives not to, disrupt the normal operations of Sellers or Sellers' affiliates; and
provided, further, that such access may consist of virtual access in accordance with applicable
state, federal, or local orders or regulations governing social distancing and related matters in light
of COVID -19. The commitments set forth in this LOI assume the completion of Buyer's due
diligence of the Business to Buyer's reasonable satisfaction. To the extent Buyer identifies any
material concerns during the course of due diligence which could reasonably be expected to
materially impact any of the commitments set forth herein (each, a "Material Concern "), Buyer
shall promptly notify Sellers of such Material Concern and provide Sellers with a reasonable
period to address, remedy or rectify such Material Concern. In the event Sellers are unable to
address, remedy or rectify any Material Concern in such a manner that it would no longer
reasonably be expected to materially impact the commitments set forth herein, the Parties
acknowledge and agree that those commitments set forth herein that remain materially impacted
may be modified in good faith upon mutual agreement of the Parties, subject to any and all
limitations and restrictions set forth in this LOI; provided, that the Parties shall use good faith best
efforts to modify any such commitments in as limited of a manner as possible in order to retain as
much of the intended benefit of such commitments as is reasonably possible.
PART B — BINDING PROVISIONS
The terms set forth in this Part B are intended to be legally binding on the Parties with respect
solely and specifically to the matters contained and set forth in this Part B and the matters covered
thereby.
1. Term. Unless terminated earlier by written agreement signed by the Parties, this
LOI shall remain in effect until the earlier of (a) the execution of the Definitive Documents, or (b)
October 31, 2020 ( "Expiration Date "). From the date of execution of this LOI by each of the
Parties until the Expiration Date, the Sellers will not, without the approval of Buyer: (i) offer for
sale the Business (or any material portion thereof) or any ownership interest in any entity owning
or owned by NHRMC or its affiliates, (ii) solicit offers to buy all or any material portion of the
Business or any ownership interest in any entity owning or owned by NHRMC or its affiliates,
(iii) hold discussions with any party (other than the Buyer) looking toward such an offer or
solicitation or looking toward a merger or consolidation of any entity owning NHRMC or its
affiliates, or (iv) enter into any agreement with any party (other than the Buyer) with respect to the
sale, lease, or other disposition of the Business (or any material portion thereof) or any ownership
interest in any entity owning NHRMC or its affiliates or with respect to any merger, consolidation,
or similar transaction involving any entity owning NHRMC or its affiliates. At the expiration of
the term of this LOI, all provisions and obligations hereof shall terminate, except for the Binding
Provisions (defined below), which are explicitly intended to survive expiration or termination of
this LOI, as further set forth below.
2. Efforts. Buyer acknowledges that Buyer's commitment to completing due diligence
and negotiating and entering into Definitive Documents in good faith and in a timely manner is a
material consideration for Sellers to enter into this LOI. Sellers acknowledge that Sellers'
commitment to providing due diligence material on a timely basis and negotiating and entering
into Definitive Documents in good faith and in a timely manner is a material consideration for
Buyer to enter into this LOI. The Parties agree to work together so that Buyer may complete its
due diligence review of the Business, as described in Part A, Section 10 of this LOI, within
approximately 90 days following the Effective Date.
3. Confidentiality. The Parties acknowledge and agree that, upon execution, this LOI
shall be publicly available. The Parties further acknowledge and agree that Sellers shall make the
final draft of the Purchase Agreement, as well as executed copies of the Definitive Documents,
publicly available consistent with applicable law. Notwithstanding the foregoing, however, the
Parties agree to keep confidential all information, communications, negotiations, draft documents
and any other documents, information or materials exchanged that concern or relate in any way to,
the Proposed Transaction and other actions of the Parties contemplated hereunder, all pursuant to
the terms of that certain Confidentiality Agreement between Buyer and Seller, dated January 15,
2020, which shall remain in effect and shall be binding upon the Parties hereto in accordance with
its terms. The provisions of this section shall survive expiration or termination of this LOI for any
reason.
4. Expenses. Each Party will bear its own legal, accounting, financial advisor and
other fees and expenses related to the Proposed Transaction, subject to the other terms below. Any
unpaid transaction expenses of Sellers shall be Excluded Liabilities. Notwithstanding the
foregoing, Buyer shall pay (a) all costs of title commitments and title policies (with endorsements),
surveys and other site diligence, in each case with respect to the real property to be acquired, (b)
any transfer, documentary or other taxes or assessments associated with the transfer of the real
property or other assets to be acquired and (c) all filing fees under the Hart- Scott- Rodino Antitrust
Improvements Act of 1976. The provisions of this section shall survive expiration or termination
of this LOI for any reason.
5. No Violation. Each of Buyer, on the one hand, and Sellers, on the other, represents
and warrants that: (i) such Party is duly authorized to enter into this LOI and (ii) entering into this
LOI will not conflict with any of its organizational documents or any commitment or contract to
which it is a party.
6. Non - Binding. This LOI summarizes certain terms under discussion relating to the
Proposed Transaction. The terms and conditions of this LOI shall be non - binding, in all respects;
provided, however, that the terms set forth in Part B of this LOI (the "Binding Provisions ") shall
be legally binding on all Parties with respect solely and specifically to the matters set forth therein.
Except for the Binding Provisions, all other terms, including the terms set forth in the exhibits and
schedules hereto, are for discussion purposes only. Each Party acknowledges that, except with
respect to the Binding Provisions, neither this LOI nor any prior or subsequent course of conduct
or dealing between the Parties, is intended to create or constitute any legally binding obligation,
an enforceable contract or create any rights, express or implied, between any of the Parties. Except
with respect to the Binding Provisions, no Party shall have any liability to any other Party based
upon, arising from, relating to, or with respect to this LOI, or any term herein, unless and until
such terms and provisions are included in Definitive Documents that are prepared, authorized,
executed and delivered by each of the applicable Parties in their respective sole and unrestricted
discretion. No Party, entity, or individual shall take any action, or refrain from taking any action,
in reliance on any term set forth herein or upon any negotiation of such terms or other exchange
between the Parties prior to the execution of Definitive Documents, if any. Any Party taking any
action, or refraining from taking any action, in reliance upon the terms herein or any negotiation
or exchange between the Parties related hereto, does so at their own risk. No subsequent oral
agreement or consent of any Party (including partial performance) shall be deemed to impose any
such obligation or liability.
7. Miscellaneous. This LOI has been negotiated at arms- length between the Parties
and shall not be construed for or against any Party by virtue of draftsmanship. This LOI and all
matters arising out of, or related in any way to, the terms or scope of this LOI shall be governed
by and subject to the laws of the State of North Carolina, without application of any conflicts of
laws principles. With respect to any and all claims, controversies, disputes or conflicts of any type
and of any manner among the Parties regarding or relating to this LOI (each, an "Action ") the
Parties agree to waive a jury trial. If a Party initiates an Action, it must be designated as a complex
business case to be assigned to a special superior court judge of the North Carolina Business Court
case to the fullest extent permitted by N.C. Gen. Stat. § 7A -45.4, Rules of General Practice 2.1
and 2.2 and the North Carolina Business Court Rules. This LOI may not be assigned by any Party
without the prior written consent of the other Parties. This LOI may be executed in separate
counterparts, including through the exchange of electronic signature or PDF copies, each of which,
when taken together, shall constitute one instrument. The provisions of this section shall survive
expiration or termination of this LOI for any reason.
[SIGNATURE PAGE ATTACHED]
C
ACCEPTED:
New Hanover County
By: C
Title:
Date:
Novant Health, Inc.
Title:
Date:
Signature Page for Letter of Intent
New Hanover Regional Medical Center
10
Signature Page for Letter of Intent
ACCEPTED:
New Hanover County New Hanover Regional Medical Center
By: By:
Title: Title:
Date: Date:
Novant Health, Inc.
By: o5 .
Title: ri/ESijapn+ 4,
Date: 6>07 % / 3 zaza
H
Exhibit A
Facilities
1. New Hanover Regional Medical Center
2. Pender Memorial Hospital
3. Betty H. Cameron Women's & Children's Hospital
4. Behavioral Health Hospital
5. New Hanover Regional Medical Center Orthopaedic Hospital
6. New Hanover Regional Medical Center Rehabilitation Hospital
Exhibit A -1
Exhibit B
Real Property
1. 2131 S. 17th Street, Wilmington, NC
2. 2221 S. 17th Street, Wilmington, NC
3. 2001 S. 17th Street, Wilmington, NC
4. 1923 Glen Meade Road, Wilmington, NC
5. 9104 Market Street, Wilmington, NC
6. Autumn Hall Medical Park, Wilmington, NC
7. 1415 Physicians Drive, Wilmington, NC
8. 1523 Physicians Drive, Wilmington, NC
9. 5301 Wrightsville Avenue, Wilmington, NC
10.5302 Wrightsville Avenue, Wilmington, NC
11. 5313 Wrightsville Avenue, Wilmington, NC
12. 5305 -D Wrightsville Avenue, Wilmington, NC
13. 5305 -H Wrightsville Avenue, Wilmington, NC
14. 5305 -K Wrightsville Avenue, Wilmington, NC
15. 5305 -L Wrightsville Avenue, Wilmington, NC
16. 5305 -M Wrightsville Avenue, Wilmington, NC
17.2221 JR Kennedy Drive, Wilmington, NC
18. 151 Scott's Hill Medical Drive, Wilmington, NC
19. 1612 Medical Center Drive, Wilmington, NC
20.2026 S. 16th Street, Wilmington, NC
21. 5220 Oleander Drive, Wilmington, NC
22. 2507 Delaney Avenue, Wilmington, NC
23.2511 Delaney Avenue, Wilmington, NC
24. 2514 Delaney Avenue, Wilmington, NC
25.2516 Delaney Avenue, Wilmington, NC
26. SENCA Property, including those certain Land Tracts of 8.03 acres, .87 acres, .71 acres,
4.22 acres, 3.53 acres, 2.44 acres in New Hanover County & Pender County
27. Parking lot at the corner of Glen Meade & Delaney Avenue, Wilmington, NC
28. Condominiums 1803, 1805, 1807, 1809, 1819, 1835, 1837, 1839, 1841, 1849, 1853,
1857, 1861, 1865 located in Savanna Court, Wilmington, NC
Exhibit B -1
Exhibit C
Acquired Subsidiaries
1. New Hanover Regional Medical Center
2. Carolina Healthcare Associates, Inc. d/b /a NHRMC Physician Group
3. Physician Quality Partners, LLC
4. New Hanover Health, LLC
5. ASC, LLC
6. Pender Memorial Hospital, Inc.
7. New Hanover Home Care, Inc.
8. South Atlantic Radiation Oncology, LLC
9. Porters Neck Imaging, LLC
10. Dosher/NHRMC, LLC
11. Assuring Affordable Quality Healthcare in NC, LLC
12. Provider -Led Patient - Centered Care, LLC
13. Diagnostic Imaging Partners, PLLC
14. New Hanover Regional Medical Center Foundation, Inc.
Exhibit C -1
Exhibit D
Use of Net Transaction Proceeds
As will be further set forth in the Definitive Documents, upon Closing, out of the aggregate
net proceeds otherwise accruing to the County as a result of the Proposed Transaction, the Sellers
will first allocate and distribute funds for the purposes and in the general amounts set forth in
Attachment D -1, attached hereto (the "Initial Allocations ").
Following the Initial Allocations, the Sellers shall grant the entirety of the remaining net
proceeds from the Proposed Transaction, which remaining amount is currently estimated to be
approximately $1.25 Billion (subject to adjustments) ( "Fund Assets "), to a newly established
public - benefit community foundation, which shall be organized as an independent tax - exempt,
non - member, non - stock, nonprofit corporation ( "Foundation "). The, County will form and
establish the Foundation prior to the Closing.
Purpose. The Foundation shall manage the assets and consider as such sacred and protected
for the community in perpetuity. The Foundation will provide financial support to benefit
the residents of New Hanover County ( "Defined Beneficiaries "). The Foundation will
establish an Endowment (as defined below), and the Endowment shall be designated to
provide financial support in the following areas in furtherance of the mission and initiatives
of the County: (i) public primary, secondary, and post- secondary education, (ii) health and
social equity, (iii) community development, and (iv) community safety. Except for those
monies required for the administration of the Foundation, all other Fund Assets shall be
allocated to the Endowment.
2. Foundation Board of Directors. The Foundation will be governed by an 11- member Board
of Directors ( "Foundation Board "). The County Commissioners shall appoint five of the
Directors, and the local Hospital Board (defined in Schedule 4(i)) shall appoint six of the
Directors. All Foundation Board members shall be subject to satisfaction of applicable
governance best practices, core competencies, and diversity considerations. No member of
the Foundation Board may simultaneously hold an elected office. Routine actions of the
Foundation Board shall require the vote of a majority of the Foundation Board. The
adoption or modification of policies and procedures regarding the investment or
distribution of Fund Assets (defined below), and the retention or termination of the
Investment Manager (defined below) shall each require supermajority approval of the
Foundation Board, which shall be defined as not less than 75% of the Foundation Board
( "Supermajority Vote "). Further, the governing documents of the Foundation shall
provide that the establishment or modification of the Endowment, or the amendment or
modification of any governing or charter documents applicable to the Endowment, shall
require a Supermajority Vote of the Foundation Board, as well as the affirmative vote of
the County Commissioners. The Foundation shall not assign, transfer or otherwise convey
any Foundation assets except as defined herein.
3. Administration and Fund Mana eg ment. The daily operations of the Foundation shall be
overseen by the Foundation Board. The Fund Assets shall be invested under the supervision
and management of an experienced institutional investment manager ( "Investment
Exhibit D -1
Manager ") chosen by the Foundation Board, which Investment Manager role may, but
does not have to be, contracted through a third -party firm.
4. Endowment. In conjunction with its formation, the Foundation will establish a single
endowment ( "Endowment ") consisting initially of the Fund Assets. In addition to the
Fund Assets contributed by the Sellers, the Foundation may also accept donations. The
Endowment will make annual Unitrust payments not to exceed Four Percent (4 %) of the
fair market value of the Endowment, based upon a rolling five (5) year average of the fair
market value as of December 31 for the prior five (5) years, or until 2025, for as many prior
years as the Endowment has existed. Distributions may be paid quarterly or monthly, as
the Board may decide. Fund Distributions shall only be paid pursuant to the strictly
prescribed purposes and rules to be a part of the Endowment charter and governing
documents ( "Fund Distributions ").
Fund Distributions shall take the form of grants and other financial support for projects and
initiatives of non - profit, governmental, or community organizations that are specifically
focused on, and shall use such funds exclusively in furtherance of, the explicit purposes of
the Endowment. For the avoidance of doubt, 100% of all Fund Distributions shall be used
exclusively for purposes benefiting the Defined Beneficiaries. The specific purposes of the
Endowment shall be to make available Fund Distributions to support community wellbeing
and other public purposes that are consistent with the then - current New Hanover County
Strategic Plan and for the benefit of the Defined Beneficiaries. Notwithstanding the broad
purposes described in this Section 4, it is intended that Fund Distributions shall be made
only to supplement existing governmental programs that are primarily funded by a
governmental agency, Fund Distributions shall not be used to replace governmental
support of projects, and this limitation shall be incorporated into the Foundation's
governing documents. By way of further illustration, and subject to adjustment based on
the then - current New Hanover County Strategic Plan, the initial Endowment shall support
and promote the following focus areas:
a. Public Primary, Secondary and Post - Secondary Education. The following are
illustrations of possible initiatives:
i. High quality universal pre- kindergarten with wrap- around services
ii. Comprehensive, no -cost broadband connectively county -wide
iii. Comprehensive access to modern technology for all learners
iv. NHC Teacher Fellows program for traditional and charter school
graduates committed to returning to local public schools
V. Access to scholarships for post- secondary education attainment
vi. School facilities designed for mid -21 st Century education delivery
b. Health and Social Equity. The following are illustrations of possible initiatives:
i. Eradicate food deserts across the county
ii. Expand access to high quality, fair cost physical and mental health clinics
for county residents
iii. Funding support to eliminate disparities in health outcomes focused
initially on diabetes and obesity
iv. On- demand, cost effective transit system for dependent and choice riders
Exhibit D -2
V. Funding for new senior resource centers and other support for senior
citizens based on the county's strategic master plan for aging adults
C. Community Development. The following are illustrations of possible initiatives:
i. Workforce housing trust fund
ii. Small business micro -loan program
iii. Minority and Women Owned Business support programs
iv. Open space and public water access preservation
d. Community Safety The following are illustrations of possible initiatives:
i. Next generation 911 services developed and deployed
ii. Rapid response fire rescue and emergency medical services
iii. Support and resources for community -led restorative justice programs
iv. Modern development and training of law enforcement, to include cultural
competency and implicit bias
V. Comprehensive flood, storm surge and wind mitigation investments
Miscellaneous.
a. In the event of dissolution of the Foundation, all net assets of the Foundation shall
accrue solely to the benefit of the County.
b. The Foundation shall provide the County with an annual report summarizing the
Foundation's activities and grants in the prior year.
With the exception of the appointment authority for Directors and the limited
approval requirements explicitly set forth in Section 2, the Hospital shall not, nor
shall any other third -party, have any reserved powers or governance rights or
benefits associated with the Foundation. For clarity, notwithstanding the Hospital's
appointment authority for Directors, the Foundation shall not be considered an
affiliate, unit or division of the Hospital, and the Hospital shall not be permitted to
consolidate.
d. The Fund Assets held in the Endowment shall never be used as collateral nor be
pledged as any form of security for any type of loan or guarantee.
All Fund Distributions must be made pursuant to and accompanied by a plan of
accountability to ensure that Fund Distribution is used in full for the designated
purposes (the "Plan of Accountability" or "POA "). The POA shall be accepted,
agreed to and signed by the individual at the recipient organization who will be
responsible for the use of the funds and for accounting for the funds. The POA shall
require that the individual provide an acceptable and complete accounting to the
Foundation, submitted and signed under penalty of perjury. Further, the misuse of
the funds by any person, or the failure of the responsible person to provide a
complete accounting within six (6) months after the end of the year in which the
Fund Distribution occurred, may result in both civil and criminal penalties.
Exhibit D -3
£ The Officers and Directors of the Foundation shall be subject to a Conflicts of
Interest Policy and each such person will be required to sign the Policy annually to
confirm his or her understanding and acceptance of the Policy's requirements.
g. The Foundation's Articles of Organization shall provide for the broadest
indemnification and reimbursement provisions for the actions of the Officers and
Directors made in good faith and allowed under NC law.
Exhibit D -4
Attachment D -1
Initial Allocations
Out of the aggregate net proceeds accruing from the Proposed Transaction, the Sellers shall
make Initial Allocations at Closing as follows:
NHRMC Transition Stabilization Escrow. Funds in the aggregate estimated amount of
approximately $300 Million shall be deposited into an escrow account or reserve fund
established and controlled by NHRMC to address transition stabilization initiatives
associated with post - Closing matters, including, but not limited to:
a. A Team Investment and Resiliency Fund providing funds necessary to (i)
administer NHRMC's existing pension plan following its transfer to the County,
(ii) provide for certain payments to be made, over time, to affected NHRMC
employees to mitigate adverse impacts associated with such employees' transition
from NHRMC's existing pension plan to Buyer's retirement benefits plan, (iii)
provide stabilization payments for NHRMC employees to facilitate the transition
of the Business from Sellers to Buyer, and (iv) address the staff and provider
resiliency funding needs of the organization; and
b. Payments for tail insurance associated with terminated NHRMC policies; and
C. The $100 Million Escrow Amount required to be deposited in the Escrow Account,
as further described in Part A, Section 5 of the LOI, with any escrowed amounts
remaining at the end of the escrow period transferring at such time to the NHRMC
Foundation and the community Foundation defined in Exhibit D - each Foundation
shall receive 50 percent of any remaining escrowed amounts; and
d. Funding for certain support administrative services necessary to facilitate the wind -
down of NHRMC, as well as other miscellaneous costs and expenses associated
with the transition and wind -down.
2. County Revenue Stabilization Fund. Funds in the aggregate amount of $300 Million shall
be deposited into a reserve fund or escrow account established and controlled by the
County for revenue stabilization purposes. Any initiative would require a supermajority
vote, i.e., four out of 5 minimum, of the county commission.
a. The revenue stabilization initiatives may include:
i. Retirement of voter and non -voter approved debt;
ii. Establish pay -as- you -go financing for certain capital assets and projects;
Reserve for unexpected emergency spending needs (e.g.,., natural
disasters, pandemics);
iv. Reserve funds to address budget shortfalls during economic downturns;
and
V. Minimize tax and fee increases in future years.
b. Distributions from the Revenue Stabilization Fund shall be made from interest
earned on such funds, and draw -downs from the principal of the Revenue
Attachment D -1 -1
Stabilization Fund shall only be for specifically defined purposes and shall be made
only on the affirmative vote of the County Commissioners.
Mental and Behavioral Health Fund. Funds in the amount of $50 Million shall be
earmarked and allocated to the following mental and behavioral health initiatives:
a. Capital funding for long -term, residential substance abuse treatment programs;
b. Sustained grant funding commitments to support evidence -based programs, e.g.,
Tides, Inc.; and
C. Expanding access to mental health services independent of state assistance.
Attachment D -1 -2
Schedule 3
Purchase Price and Other Financial Consideration
In consideration for Buyer's purchase of the Purchased Assets and assumption of the
Assumed Liabilities, Buyer agrees to pay to Sellers the Purchase Price and make those certain
other funding and capital commitments as further set forth in this Schedule 3.
a. Purchase Price: The purchase price for the Purchased Assets will be One Billion Five
Hundred Million Dollars ($1,500,000,000.00) (the "Purchase Price "), which amount the
Parties acknowledge and agree is intended to be consistent with fair market value and
subject to the adjustments set forth in Section 2 below. The Purchase Price shall be payable
at the Closing by wire transfer of immediately available funds to an account(s) designated
by Sellers. Other than as set forth in this LOI, no portion of the Purchase Price shall be
withheld, offset against, or placed in escrow.
b. Adjustments: The Purchase Price will be adjusted at Closing as follows (the "Purchase
Price Adjustment "): (a) a reduction for the amount of any Excluded Liability that is
assumed or paid by Buyer (which shall include any costs and expenses associated with the
assumption or payment of any Excluded Liability), if any, (b) a reduction for the amount
of any Seller transaction expenses associated with the Proposed Transaction that are
assumed by Buyer, paid by Buyer, or unpaid by Sellers and (c) an increase (or reduction)
to the extent Net Working Capital as of Closing exceeds (or is less than) a target amount
to be mutually agreed upon in the Definitive Documents. For purposes of this Section,
"Net Working Capital" means an amount equal to the difference between those current
assets of Sellers to be purchased by Buyer as of the Closing (including patients account
receivables, less allowance for bad debts, other receivables, usable inventories, assumable
and useable prepaid expenses) and those current liabilities of Sellers to be assumed by
Buyer as of the Closing (including accounts payable and other liabilities, accrued salaries
and wages, including accrued paid time off obligations, subject to a cap to be agreed upon
by the Parties, and other non - interest - bearing current liabilities to be mutually agreed by
the Parties). Attachment A contains an exemplar calculation of Net Working Capital based
on the Business's September 30, 2019 audited financial statements. In the Definitive
Documents, the Parties will negotiate a mutually agreeable escrow, to be used solely for
purposes of the Net Working Capital adjustment process and to be held until completion
of the Purchase Price Adjustment process memorialized in the Definitive Documents.
C. Additional Contributions to be made by Bu ye .
One -Time Contribution to New Hanover Regional Medical Center Foundation. At
the time of Closing, Buyer shall contribute a one -time, lump -sum payment in the
total amount of Fifty Million Dollars ($50,000,000.00) to the New Hanover
Regional Medical Center Foundation ( "Foundation ").
Schedule 3 -1
ii. Contribution of Novant Health Brunswick Medical Center. As soon as practicable
following the Closing, and assuming approved by applicable regulatory authorities,
Buyer shall contribute all, or substantially all, of the assets and operations of Novant
Health Brunswick Medical Center ( "NHBMC ") to the operations of the Business,
and Buyer shall cause NHBMC to be operated as a component hospital and division
of the Business following the Closing. Following the closing, NHBMC shall be
governed by the Board (as defined in Schedule 4(i)). The Parties acknowledge that
NHBMC will have some level of representation on the Board.
d. Additional Funding Commitments. In addition to payment of the Purchase Price and the
other commitments set forth in this Schedule 3, Buyer shall make the following Capital
Expenditures to the Business from and after the Closing:
i. Routine Capital Commitment. Buyer agrees to make a commitment to spend no
less than Six Hundred Million Dollars ($600,000,000.00) during the 10 -year period
immediately following the date of Closing to fund routine Capital Expenditures of
the Business (the "Routine Capital Commitment ") but, in all cases, such routine
Capital Expenditures must be commercially reasonable; provided, further, that in
the event the full amount of such Routine Capital Commitment cannot be expended
within such 10 -year period due to the lack of commercially reasonable routine
Capital Expenditures, such Routine Capital Commitment period shall automatically
extend for an additional five -year period.
ii. Strategic Capital Commitment. In addition to the Routine Capital Commitment,
Buyer agrees to make a commitment to spend no less than Two Billion Five
Hundred Million Dollars ($2,500,000,000.00) in Capital Expenditures following
the Closing to implement (i) the strategic projects set forth in, and in a manner
materially consistent with the timeline established in, NHRMC's Strategic Master
Plan dated as of April 23, 2019 as further reflected in the PAG's February 20, 2020
presentation (collectively, the "Strategic Plan "), (ii) such other capital- intensive
projects similar to those in the Strategic Plan as may be approved by the Board from
time to time, as well as (iii) any other strategic capital projects as may be agreed
upon and set forth in the Definitive Documents. In conjunction with implementing
the foregoing, the Parties agree to discuss opportunities to optimize the overall
capital plan taking into consideration the contribution of NHBMC.
e. Definition of Capital Expenditures. "Capital Expenditures" shall be defined in the Purchase
Agreement to mean expenditures made in the Business or in the Service Area that are
limited to: (i) those capitalized in accordance with generally accepted accounting
principles, (ii) reasonable incremental operating losses associated with ambulatory growth
strategies (including, physician practices), subject to certain limits to be defined in the
Purchase Agreement, (iii) reasonable costs arising from information technology, data
analytics and digital strategy integration, implementation and/or improvement, (iv)
reasonable expenses for right -of -use assets related to NHRMC's Strategic Master Plan, (v)
reasonable expenses related to medical education in excess of those incurred by Sellers in
the last full fiscal year prior to Closing, (vi) reasonable costs arising from deployment of
value -based care arrangements and (vii) merger and acquisition and joint venture activity
Schedule 3 -2
entered into for the benefit of the Business. Notwithstanding the foregoing, Capital
Expenditures: (A) shall not include routine day -to -day operating losses not associated with
investment in the Business; (B) may include funding for operating losses solely to the
extent such operating losses arise out of commercially reasonable working capital and
operating expenses incurred in connection with implementing the capital projects described
in subsections (ii) -(vi) of this Section 5 for the corresponding reasonable start-up period;
and (C) shall be for the specific benefit of the Business and shall not include any allocation
of corporate or system -wide capital expenses or overhead that is not incurred for the
specific benefit of the Business.
f. Capital Commitments. For purposes of this LOI, the obligations set forth in Sections 3 and
4 of this Schedule 3 shall be known as the "Capital Commitments ".
Schedule 3 -3
Attachment A to Schedule 3
Sample Net Working Capital Calculation
[To Be Attached]
Attachment A to Schedule 3
Schedule 4(a)
Improving Access to Care and Wellness
Continuation of Services. For a period of not less than 10 years following the Closing,
Buyer shall use commercially reasonable efforts to ensure that the Business continues to
expand and enhance the scope, level and areas of services, including, but not limited to,
inpatient and outpatient Hospital services, as are offered by the Hospitals and Business as
of the Closing. Further, Buyer shall commit not to perform any action set forth on Schedule
44JU, Section 3(a) at any time following the Closing without the prior written agreement of
the Board. As of the Closing, Buyer shall implement a "hub- and -hub" model under which
the Business shall retain primary responsibility for patient care within its Service Area and
region, and Buyer shall make commercially reasonable efforts to make available specialty
medical services and patient care support by consultation or otherwise in furtherance of
such model.
2. Service Line Commitments. Buyer shall use commercially reasonable efforts to further
develop, upgrade and expand the Business's clinical service lines, which such expansion
and development shall include, but not be limited to, the development and expansion of
clinical service lines to fill needs identified in the Strategic Plan and the Business's most
recent provider needs assessment, upgrades to the Hospital campuses and expanding the
Hospitals' tertiary and quaternary capabilities.
Investment in Pender Memorial Hospital. Unless Pender (defined below) is sooner more
fully- integrated into the Business, or NHRMC and Pender County otherwise agree to
another structure with respect to Pender (subject to Buyer's approval), for a period of not
less than three years following the Closing, Buyer shall use commercially reasonable
efforts to ensure the continued maintenance and further development of the existing
arrangement with Pender Memorial Hospital ( "Pender "), including, at a minimum, Buyer
assumption of that certain Management Services Agreement between NHRMC and Pender
( "Pender MSA ") and its corresponding contractual commitments regarding an investment
of resources and capital into Pender operations, which such Pender MSA shall be assumed
by Buyer at Closing. Following the Closing, Pender shall continue as part of the Business
consistent with NHRMC's and Pender County's commitments, unless Pender County and
NHRMC agree to a fuller integration of Pender or another appropriate structure (subject to
Buyer's approval).
4. Integration with Regional Hospitals. Buyer shall use commercially reasonable efforts to
integrate the Hospitals into Buyer's existing network of health facilities and hospitals
within the region to improve patient access to care. Buyer shall further enhance and expand
the Hospitals' existing ambulatory network in accordance with the objectives and timelines
identified in the Strategic Plan.
Consumer - Centric Platform Implementation. Within not more than 18 months following
the Closing, Buyer shall deploy or otherwise provide the Hospitals and the Business access
Schedule 4(a) -1
to Buyer's or Buyer's affiliates' suite of electronic consumer - facing tools and shall cause
and facilitate the Business's implementation of such tools.
6. Telemedicine Platform Implementation and Infrastructure. Within not more than 18
months following the Closing, Buyer shall use commercially reasonable efforts to
implement Buyer's or Buyer's affiliates' existing telemedicine platform at the Hospitals
and the Business. Buyer shall provide ongoing support and expertise to the Hospitals
relating to such telemedicine program, which shall include, without limitation, the
following: (i) technology infrastructure and support; (ii) coding, billing, reimbursement
expertise and support; (iii) clinical workflows and protocols; and (iv) access to clinicians,
providers and legislative leadership.
Telemedicine Reimbursement Support. With respect to telehealth services, Buyer shall use
commercially reasonable efforts to integrate into the Business's existing contracted payer
relationships coverage for on- demand and scheduled virtual visits and office visit parity
for synchronous video visits. For patients without coverage, Buyer shall support the
Business's development and implementation of an out -of- pocket payment solution. Buyer
shall continue to work with legislators at the state and national levels in support of
telehealth coverage, including expanded broadband access in rural communities within the
Service Area. Buyer shall, through its physicians and leadership team, provide education
on the benefits of telehealth to payer partners and work with the Hospitals' internal
standing committees to ensure revenue cycle and compliance best practices with respect to
telemedicine.
8. Regional Headquarters Development. Within not more than 18 months following the
Closing, Buyer shall, in collaboration with the Board, develop and implement a plan
establishing the Hospitals as a regional headquarters in the Service Area to service the
Business. Buyer further agrees to share, develop and implement at the Business best
practices, existing capabilities and innovative tools and dashboards during the development
and implementation of the headquarters.
9. Price Transparency Tools. Buyer shall use commercially reasonable efforts to provide to
the Business and cause and facilitate the Business's implementation of, the Buyer's and
Buyer's affiliates' existing price transparency tools, including, without limitation, patient
cost and point of care price estimation platforms and shall further collaborate with the
Hospitals to develop and implement enhanced price transparency tools based on the needs
within the Service Area.
10. Omni - Channel Consumer Experience. Buyer shall use commercially reasonable efforts to
implement an omni- channel digital consumer platform at the Business, which is scalable
and customizable based on consumer needs and shall include, at a minimum, online
provider and location directories, virtual triage services, online patient scheduling, online
bill payment and secure portals for sharing of information with patients.
11. Partnerships with Local Employers. Buyer shall use commercially reasonable efforts to
develop and implement corporate health and wellness programs customized to meet the
Schedule 4(a) -2
various needs of local employers, including, but not limited to, the development and
implementation of effective systematic approaches to bring employer services to market.
12. Post -Acute Development. Buyer shall use commercially reasonable efforts to create and
enhance Buyer's existing partnerships in the region for post -acute care and optimize the
current capabilities and practices of Pender and New Hanover Regional Medical Center
Rehabilitation Hospital.
13. Use of Purchase Price. The Purchase Price shall be used by Sellers as set forth in Exhibit
D.
Schedule 4(a) -3
Schedule 4(b)
Advancing the Value of Care
Infrastructure to Enhance the Value of Care. Buyer shall provide access to and shall use
reasonable best efforts to integrate into the Business, shared infrastructure, value -based
capabilities and corporate services, including, but not limited to, patient access solutions,
care management, behavioral health and primary care integration, telepsychiatry,
documentation excellence, clinical solutions and analytics.
2. Value -Based Contracting and Access to System- Owned/Invested Health Plans. Buyer shall
use commercially reasonable efforts to apply Buyer's health plan and value -based
contracting experience to advance NHRMC's strategy regarding value -based care options.
To the extent applicable, Buyer shall use commercially reasonable efforts to provide the
Business with access to health plans that are owned by Buyer or health plans in which
Buyer has a material ownership interest and facilitate the Business's use of such plans.
3. Expansion and Partnership Network Offering. Buyer shall use commercially reasonable
efforts to expand its partnership network offering within the Service Area.
4. NHRMC Medicare Advantage Plan. Buyer shall assume and use commercially reasonable
efforts to further develop NHRMC's existing Medicare Advantage plan and continue to
operate the Business in accordance with NHRMC's Medicare Advantage strategy.
5. Inclusion in Entemrise ACO/CIN Infrastructure. To the extent applicable, Buyer shall
include and use commercially reasonable efforts to fully- integrate appropriate segments of
the Business, including the Business's existing ACO, within Buyer's accountable care
organization and clinically integrated network structures or through a new legal entity.
6. Patient Satisfaction Programs. Within not more than 18 months following the Closing,
Buyer shall use commercially reasonable efforts to (i) provide the Business with full access
to all of Buyer's and Buyer's affiliates' patient satisfaction programs and resources and (ii)
upon the request of NHRMC, fully- integrate the Hospitals and Business, or applicable parts
thereof, into Buyer's and Buyer's affiliates' existing patient satisfaction initiatives. Buyer
shall use reasonable best efforts to position and maintain NHRMC in the top 10%
nationally in patient satisfaction.
Schedule 4(b) -1
Schedule 4(c)
Promoting Health Equity
1. Charity Care Policies. Subject to changes in applicable law, Buyer shall use reasonable
best efforts to expand, and in any event shall maintain, the Business's current policy on
charity and indigent care and shall continue to increase and expand the scope and level of
care provided to indigent and low- income patients beyond the scope and level historically
provided by the Business, consistent with Buyer's policies on charity care.
2. Prohibit the Use of Liens and Wage Garnishment. Buyer shall not, with respect to any
patients of the Business, engage in any extraordinary debt collection practices, including,
without limitation, placing a lien on an individual's primary residence or real property,
seizing of bank accounts or other personal property, bringing civil action against an
individual or garnishing of wages.
3. Teams and Infrastructure Focused on Expanding Health Equity. Buyer shall use reasonable
best efforts to fully develop and expand the Business's existing partnerships and to
establish new partnerships focused on expanding health equity in the Service Area. Buyer
shall use commercially reasonable efforts to collaborate with identified key stakeholders
to determine optimal community benefit for local residents and to place social workers,
case managers, or other care management professionals within clinics of the Business in
accordance with demonstrated need for increased patient support. Buyer shall use
commercially reasonable efforts to collaborate with identified key stakeholders to expand
existing community outreach programs and social services partnerships in the region.
4. Community Outreach Programs and Partnerships with Social Services Organizations.
Buyer shall expand and enhance the Business's community outreach efforts and
engagement beyond historical levels and scope. Buyer shall continue to expand and
enhance the Business's existing community benefit programs and partnerships, including,
but not limited to those related to financial assistance and health education. The adoption,
termination, or amendment of policies and procedures regarding community outreach
programs, social services partnerships and other similar programs shall be subject to the
approval of the Board for five years following the Closing.
Anti- Discrimination and Diversity Programs. Buyer shall continue and fully -fund and
support, the Business's inclusion, anti - discrimination and diversity programs, or shall
replace the Business's programs with Buyer's programs which shall be comparable or
better in all material respects.
6. Social Determinants of Health. Buyer shall expand and enhance the Business's efforts to
identify social determinants of health and the impacts thereof, in the Service Area. Buyer
shall further develop and implement comprehensive strategies to address and mitigate the
impacts of such social determinates of health, which shall include, but not be limited to,
development and implementation of a data analytics platform and related solutions
designed to facilitate the implementation, monitoring and improvement of such strategies.
Schedule 4(c) -1
Schedule 4(d)
Supporting and Maintaining Staff
Employee Retention. Buyer will offer employment to all employees of the Business,
whether in active or leave of absence status, at their then-current salaries, job title, reporting
structure and responsibilities, subject to compliance with Buyer's policies and procedures,
including standard background and compliance checks. Other than with the consent of the
Board, Buyer shall retain all such employees for a minimum of 24 months following the
Closing, subject to Buyer's ability to terminate any such employee for cause, including,
but not limited to, conviction of a felony, exclusion from participating in a federal health
care program, loss of medical staff privileges (if applicable), or failure to comply with
Buyer's policies and procedures.
2. Enhance Compensation and Benefits. For a minimum of three years following the Closing,
Buyer shall (i) provide a comprehensive and competitive wage and benefits package that
is, in the aggregate, at least comparable in all material respects to the wage and benefits
package currently being provided by NHRMC to all such employees for each such
employee's applicable job category, (ii) to the extent permitted under the applicable plan,
recognize such employees' length of service for the purpose of benefits vesting in Buyer's
benefit plans and (iii) accept assignment of, or otherwise honor the material terms of,
employment, severance, or other contracts for those employees who have such agreements.
3. Diversity Hiring Resources. Buyer shall continue and further develop the Business's
current policies and programs regarding diversity, inclusion and antidiscrimination. Buyer
further agrees to expand the Business's efforts regarding diverse hiring, including but not
limited to, access to Buyer's diversity related trainings, resources, programming and best
practices.
4. Nursing Education and Training. Buyer shall at a minimum, for a period of not less than
three years following the Closing, maintain all existing nursing education programs at the
Hospitals and thereafter shall use commercially reasonable efforts to enhance and expand
such programs. Within 18 months following the Closing, Buyer shall use reasonable best
efforts to cause and facilitate the Hospitals' implementation of the Buyer's nursing
education and training programs, including those through local partnerships or distance
education and shall, as applicable, use its nursing education platform to enhance and
expand the current training programs at the Hospitals.
5. Nursing Staff Recruitment and Retention. Buyer shall use commercially reasonable efforts
to cause and facilitate the Business's adoption and implementation of Buyer's resources
and tools focused on nursing staff recruitment and retention and continuing and enhancing
a shared governance approach.
6. General Recruiting Infrastructure. Buyer shall use commercially reasonable efforts to cause
and facilitate the Business's adoption and implementation of Buyer's resources and tools
focused on staff recruitment and retention, including, as applicable and without limitation,
Schedule 4(d) -1
Buyer's career development programs, predictive hiring models, talent acquisition services
and recruitment staff.
7. Leadership Recruiting Infrastructure. Buyer shall use commercially reasonable efforts to
cause and facilitate the Business's adoption and implementation of Buyer's resources and
tools focused on staff recruitment and retention.
8. Leadership Education and Professional Development Programs. Buyer shall ensure that all
hired employees are eligible to participate in career and leadership development programs
offered by Buyer and Buyer's affiliates to the same extent as any other similarly situated
employees of Buyer or Buyer's affiliates.
9. Shared Services Located in Wilmington. On a timely basis and in any event within not
more than three years following the Closing, Buyer shall, in collaboration with NHRMC,
establish a shared services center and corporate department in the Service Area, which shall
provide the Hospitals and Business with access to all of Buyer's enterprise shared services,
technological capabilities, specialized knowledge and operational performance expertise.
10. Tuition Reimbursement Expansion. Buyer shall, for a three -year period, continue and
enhance NHRMC's existing tuition reimbursement programs and thereafter shall, to the
extent they offer advantages above and beyond NHRMC's current programs, extend
Buyer's existing tuition reimbursement programs to any eligible employees of the
Hospitals. Buyer shall not restrict or otherwise limit the ability of any active employee or
medical staff member to participate in state and federal tuition forgiveness programs. To
the extent practicable, Buyer shall reasonably support the efforts by employees or medical
staff members to participate in such tuition reimbursement programs.
11. Retention Programs. Within not more than 12 months following the Closing, Buyer shall
use commercially reasonable efforts to cause and facilitate the Business's adoption and
implementation of Buyer's existing recruitment, retention, career development, health and
wellness and leadership training programs and shall make all such programs available to
all employees of the Business.
Schedule 4(d) -2
Schedule 4(e)
Partnering with Providers
Medical Group Management. Buyer shall provide comprehensive administrative and
management services for the medical groups and practices associated with the Business.
Buyer shall use commercially reasonable efforts to provide such services with minimal
disruption to such medical groups and practices. The Parties agree to negotiate and enter
into an appropriate written agreement(s) with a third -party for such management and
support services to the extent required, including, but not limited to, as necessary to
transition existing medical group management services from a third -party to Buyer.
2. APP Recruiting and Care Model Development. Buyer shall use commercially reasonable
efforts to cause and facilitate the Business's adoption and implementation of Buyer's APP
recruitment and retention resources, including, but not limited to, APP recruitment and
retention programs and the deployment of team -based care practices emphasizing practice
at the top of license for all APPs.
3. Provider Needs Assessment. Upon Closing, Buyer shall cause and facilitate the Business's
adoption and implementation of Buyer's recruitment infrastructure in order to recruit
physicians to fill positions identified in NHRMC's most recent provider needs assessment.
Within not more than three years following the Closing, Buyer shall use commercially
reasonable efforts to ensure the recruitment of physicians to fill at least 75% percent of the
positions identified in NHRMC's most recent provider needs assessment.
4. Graduate Medical Education. From and after the Closing, Buyer shall (i) assume and
maintain an academic affiliation with the University of North Carolina School of Medicine
on behalf of the Hospitals pursuant to and consistent with that Term Sheet for Proposed
Academic and Clinical Affiliation for the New Hanover Region between Novant Health,
UNC Health, and UNC School of Medicine, dated June 23, 2020; (ii) continue to operate
a Graduate Medical Education program ( "GME Program ") at the Hospitals, which GME
Program shall be, at a minimum, commensurate in quality, size and scope with the
Hospitals' current GME Program; and (iii) expand or otherwise make additions to the GME
Program, as reasonably requested by NHRMC. Buyer shall further develop, implement and
expand a comprehensive medical resident and fellow recruitment program, including, but
not limited to, the establishment of appropriate fellowship programs at the Hospitals.
5. APP Graduate Medical Education Expansion. Buyer shall develop, implement and expand
upon the Hospitals' existing APP graduate medical education program in accordance with
the needs identified by NHRMC regarding the same.
6. Virtual Health Staff Augmentation. Within not more than 12 months following the Closing,
Buyer shall provide and facilitate access to the Business Buyer's specialty physicians for
electronic consultation on an as- needed basis and in accordance with applicable Business
policies and procedures.
Schedule 4(e) -1
7. Process Improvements. Buyer shall cause and facilitate the Business's adoption and
implementation of Buyer's process improvement policies, procedures and initiatives,
including, but not limited to, by implementation of electronic health record system
enhancements, clinical workflow management, clinician availability and room utilization
and other clinical and administrative tools that operationalize new growth and drive quality.
8. Medical Staff. To ensure continuity of care in the Service Area, Buyer shall ensure that the
Hospitals' medical staffs will be substantially unchanged as a result of the Proposed
Transaction, subject to Buyer policies and procedures. The medical staff of the Hospitals
shall remain an open medical staff and the Proposed Transaction shall not affect or
materially change the medical staff privileges held by members of the medical staffs of the
Hospitals as of the Closing; the medical staff bylaws, rules and regulations, or credentialing
procedures of the Hospitals as of the Closing; or any agreements with members of the
medical staffs, so long as all such relationships are in compliance with applicable state and
federal laws.
9. Provider Leadership Development Programs. Buyer shall use commercially reasonable
efforts to provide all eligible employees and medical staff members of the Hospitals with
access to its provider and executive leadership development programs and shall facilitate
such providers' utilization of such programs.
10. Maintenance of Provider Arrangements. Buyer shall, subject to compliance with
applicable state and federal law and Buyer's compliance standards,: (i) assume all
employment agreements for Sellers' directly - employed physicians and mid -level providers
per existing terms and cause each such agreement to remain in place for a period of not
less than three years following Closing and (ii) enter into new agreements, with initial terms
of not less than three years, with those providers engaged by the Hospitals through
agreements with third - parties on terms substantially similar to those terms included such
providers' agreements with such third - parties. Further, Buyer shall not propose any
material amendment to any such practitioner agreement, except for such amendments as
are necessary to comply with applicable law or as are otherwise agreed to in writing by the
applicable practitioner. Subject to compliance with applicable state and federal law and
Buyer's compliance standards, Buyer shall, to the extent agreed to by the applicable third -
party, assume, maintain, and enhance, all existing arrangements between the Hospitals and
community providers, including (A) contracts with independent providers, for a period of
not less than three years, and (B) joint venture arrangements for so long as such joint
venture arrangements reasonably remain a net benefit to the Business.
11. Extension of ACO /CIN Participation to Independent Providers. Within not more than 12
months following the Closing and subject to reasonable due diligence, Buyer shall use
commercially reasonable efforts to extend and facilitate, as applicable, the opportunity to
participate in Buyer's accountable care organization or clinically integrated network to all
independent providers who maintain an active arrangement with the Hospitals.
12. Support Infrastructure for Independent Providers. Subject to compliance with applicable
state and federal law and Buyer's compliance standards, Buyer shall use commercially
Schedule 4(e) -2
reasonable efforts to cause and facilitate the Business's adoption and implementation of
the Buyer's physician alignment models, including by making available to community
providers in the Service Area opportunities for shared investments and co- management
arrangements.
13. EMR Support to Independent Providers. Buyer shall use commercially reasonable efforts
to cause and facilitate the Business's adoption and implementation of Buyer's electronic
health record support services and connectivity capabilities, including but not limited to
electronic health records connectivity, referral management connectivity, technical
consulting and analytics to independent community providers in the Service Area.
Schedule 4(e) -3
Schedule 4(t)
Driving Quality Care Throughout the Continuum
Accreditation. Buyer shall cause the Hospitals to continue to be accredited by DNV GL
Healthcare following the Closing.
2. Care Coordination and Management. From and after the Closing, Buyer shall use
commercially reasonable efforts to deploy, cause and facilitate the Business's
implementation of Buyer's care management coordination programs, capabilities and
resources in accordance with a mutually agreed -upon work plan between the Parties.
3. Clinical Transformation Guidelines and Programs. Buyer shall, in coordination with the
Board, use commercially reasonable efforts to assume and further develop and expand any
existing quality improvement initiatives and best practices identified for continuation by
NHRMC. Buyer shall, in addition to the foregoing, cause and facilitate the Business's
adoption and implementation of the following: (i) Buyer's clinical transformation
guidelines, including, but not limited to, preventive guidelines, evidence -based protocols
and safety initiatives; (ii) Buyer's quality improvement infrastructure and resources,
including, but not limited to, care redesign teams and quality analytics and scorecard; and
(iii) other identified quality initiatives.
4. Access to Emerging Technologies. Buyer shall cause and facilitate the Business's adoption
and implementation of available emerging technologies regarding the quality and safety of
care.
Quality Metrics. Buyer shall use reasonable best efforts to cause the Hospitals to satisfy
appropriate quality metrics, consistent with Buyer's system -wide quality and safety
metrics, which shall include, but not be limited to, measures relating to patient safety,
clinical effectiveness, patient - centeredness, timeliness, efficiency and equity as may be
implemented in consultation with the Board from time to time. The Parties agree to discuss
and memorialize in the Purchase Agreement approval for implementation of Buyer's
system -wide quality and safety metrics to the extent such metrics materially differ from
those currently in place at the Hospitals. Buyer further shall adopt and implement
appropriate protocols for measuring and monitoring such measures and shall further
implement appropriate technology infrastructure to facilitate such measurement and
monitoring, which shall include providing a quality connection to its electronic medical
records system to the Business and independent community physicians in the Service Area.
Buyer shall use reasonable best efforts to position and maintain the Business in the top
10% nationally with respect to each such quality metric implemented for the Business.
Schedule 4(f) -1
Schedule 4(2)
Growing the Level and Scope of Care
1. Access to Advanced Specialty Care and Transfer Infrastructure. Buyer shall use
commercially reasonable efforts to facilitate the Business's access to and adoption and
implementation of, appropriate resources and infrastructure, including, but not limited to,
a fully- staffed call center, to facilitate the transfer of patients among providers and to
coordinate expedited transfers. Buyer shall ensure such resources and infrastructure are
available to the Business consistent with Buyer's current operating hours.
2. Innovating Care Solutions and Technologies. Buyer shall use commercially reasonable
efforts to cause and facilitate the Business's adoption and implementation of any existing
and emerging innovative care solutions and technologies, subject to further definition in
the Definitive Documents and shall further facilitate the Business's adoption and
implementation of Buyer's current innovation infrastructure.
Clinical Research Capabilities. Except as otherwise set forth in the Definitive Documents,
Buyer shall use commercially reasonable efforts to further develop and expand the
Business's current clinical research capabilities and shall continue and further develop any
existing clinical research efforts of the Business. In addition to the foregoing, Buyer shall
facilitate the Business's access to and utilization of, Buyer's expertise, resources and
infrastructure related to clinical trials and research. Buyer shall use commercially
reasonable efforts to educate and inform providers within the Service Area of clinical trials
in which Buyer is participating and, to the extent permitted by law, shall make available
such clinical trials to patients of the Business. As appropriate, Buyer shall use
commercially reasonable efforts to provide the Business the opportunity to participate as a
clinical trial site in ongoing clinical trials to facilitate local access to treatments.
4. Grant Funding Capabilities. Buyer shall use commercially reasonable efforts to cause and
facilitate the Business's adoption and implementation of Buyer's clinical research and
grant - funding capabilities, including, without limitation, pre -award and post -award support
for local investigators.
Schedule 4(g) -1
Schedule 4(h)
Investing to Ensure Long -Term Financial Security
1. Scalable Shared Services. Buyer shall cause and facilitate the Business's adoption and
implementation of certain corporate services and economies of scale, to be further defined
in the Definitive Documents, but to include, at a minimum, supply chain and access to
group purchasing organizations.
2. Treatment of GME Expenses. For a period of no less than five years following the Closing,
Buyer agrees that it shall not allocate to the Business any overhead expenses related to the
maintenance and operation of Buyer's graduate or undergraduate medical education
programs outside the Service Area, including any programs maintained through Buyer's
partnership with an accredited medical school.
Schedule 4(h) -1
Schedule 40)
Strategic Positioning
Integrated Health System. Upon Closing and except as otherwise provided in the Definitive
Documents, Buyer shall use commercially reasonable efforts to fully integrate the Business
into Buyer's existing integrated health care system.
2. Partnership with Regional Hospitals. In furtherance of supporting the availability of quality
care in the region and to position the Hospitals as a regional referral center, Buyer shall use
commercially reasonable efforts to cause the Hospitals to develop and enter into
appropriate and desirable clinical affiliations, partnerships and arrangements with
unaffiliated hospitals, health systems and other facilities and providers in the region.
Brand Enhancement. Buyer shall not alter, modify or otherwise change the branding
associated with the Hospitals or the Business without the prior consent and approval of the
Board, except that Sellers acknowledge and anticipate that over time the Parties will brand
the Business consistent with Buyer's current brand. Buyer shall work in collaboration with
NHRMC to align branding strategies and marketing initiatives.
Schedule 4(i) -1
Schedule 40)
Governance
Local Governance. From and after Closing, the Business shall be governed by a local
community- based, board of trustees (the "Board "). The Board shall be comprised of 15
trustees. No fewer than 12 trustees appointed to such Board shall be community residents
of the Service Area. Of those 12, no fewer than three members of the Board shall be
physicians with active privileges on the Hospital's medical staff. The initial members of
the Board shall be set forth in the Definitive Documents. All Board members shall be
subject to satisfaction of applicable governance best practices, core competencies, and
diversity considerations and ratification (not to be unreasonably withheld) by the Buyer's
Board of Trustees ( "Novant Board "). Subject to the foregoing sentence, the Board shall
retain sole power and authority to nominate and appoint all subsequent trustees to the
Board. The Parties agree to amend or modify the governing documents of the Business,
including, but not limited to the articles of incorporation and bylaws, as necessary to
effectuate the covenants contained in this Section.
2. Appointment of Trustees to Buyer's Governing Board. Within not more than 90 days after
Closing, the Board shall nominate and Buyer shall appoint, subject to approval by the
Buyer's governing board, two of the Board's then - current trustees to serve as trustees on
Buyer's parent governing board. Buyer agrees to amend or modify its governing
documents, including, but not limited to its articles of incorporation and bylaws, as
necessary to effectuate the covenants contained in this Section.
3. Appointment of Physician to Novant Health System Physician Leadership Council. Within
not more than 90 days after the Closing, the Board shall nominate and Buyer shall appoint,
one of the Board's then - current physician members to serve on the Novant Health system
physician leadership council or other similar system -level physician leadership body.
Buyer agrees to amend or modify the governing documents and charter of such council as
necessary to effectuate the covenants contained in this Section.
4. Board Powers. Subject to the terms and conditions of the Definitive Documents, following
the Closing, the Board shall retain certain rights and powers associated with the Business
( "Reserved Powers ") to include, at a minimum, the following:
(a) Approval of the elimination of core clinical service lines, which will be agreed upon
in the Definitive Documents, and development and recommendation of (i)
elimination of non -core clinical service lines, (ii) establishment of new clinical
service lines or (iii) expansion of existing clinical service lines;
(b) Development and recommendation of major operational plans;
(c) Approval of the Business's initial CEO immediately following the Closing, as well
as (i) ongoing participation in the evaluation, as well as recommending employment
and termination, of the CEO, and (ii) participation in the evaluation of candidates
Schedule 40) -1
and making recommendations for any CEO appointment subsequent to the initial
CEO immediately following the Closing;
(d) Oversight and recommendation of management accountability, evaluation, and
succession;
(e) Approval of any material workforce reduction that would qualify as a "plant
closing" as defined in 29 U.S.C. § 2101;
(f) Development and approval of annual operating and capital budgets, which budgets
shall also be subject to the ratification and approval of Buyer;
(g) Oversight and approval of medical staff matters, including credentialing, adverse
actions, and adoption and amendment of medical staff bylaws and policies;
(h) Development and recommendation of policies for physician compensation;
(i) Development and recommendation of physician organization strategies,
development, and recruitment;
0) Oversight of political and community interaction;
(k) Selection and engagement of hospital -based physicians;
(1) Approval and development of the Strategic Plan or any other strategic or
development plans of the Business, including approval of any modifications
thereto;
(m) Approving modifications to the Business's charity care and indigent care programs
in consultation with Buyer;
(n) Approving the termination or amendment (other than with respect to extension of
the term) of the Pender MSA or any successor agreement thereto;
(o) Approving the adoption, termination, or amendment of policies or procedures
regarding community outreach programs, social services partnerships, and other
similar programs in consultation with Buyer;
(p) Oversight and approval of quality and accreditation matters in consultation with
Buyer;
(q) Approving any direct or indirect sale, transfer, or conveyance of all, or substantially
all, of the assets then associated with, or the control of, the Business to a for - profit
system or, for a 10 -year period after Closing, to a buyer other than a for - profit
system; provided, however, that approval of the Board shall not be required for any
system -level change of control of Buyer;
Schedule 40) -2
(r) Approving any modifications to any post - Closing commitments set forth in the
Definitive Documents;
(s) Approving any alterations or modifications to the branding associated with the
Business or any component thereof in consultation with Buyer; and
(t) Oversight of the Business's compliance program.
2. County Right of First Refusal. Following Closing, in the event Buyer at any time receives
a bona fide offer to sell, transfer or assign all or substantially all of the assets or the control
of the Business to a third -party purchaser, and wishes to effect such a sale or transfer, the
County shall have a right of first refusal to purchase such assets or controlling interest of
the Business, including the Purchased Assets and any improvements or additions made by
Buyer thereto, upon the- same terms and conditions as are offered by the third -party
purchaser, subject to any additional terms set forth in the Definitive Documents regarding
the same. For the avoidance of doubt, the foregoing shall not apply to any potential
transaction involving a system -level change in control of Buyer.
Schedule 40) -3
Schedule 4(k)
Statutory Requirements
A municipality or hospital authority as defined in G.S. 131E- 16(14), may lease, sell, or convey
any hospital facility, or part, to a corporation, foreign or domestic, authorized to do business in
North Carolina, subject to these conditions, which shall be included in the lease, agreement of sale,
or agreement of conveyance:
1. The corporation shall continue to provide the same or similar clinical hospital services to
its patients in medical- surgery, obstetrics, pediatrics, outpatient and emergency treatment,
including emergency services for the indigent, that the hospital facility provided prior to
the lease, sale, or conveyance. These services may be terminated only as prescribed by
Certificate of Need Law prescribed in Article 9 of Chapter 131E of the General Statutes,
or, if Certificate of Need Law is inapplicable, by review procedure designed to guarantee
public participation pursuant to rules adopted by the Secretary of the Department of Health
and Human Services.
2. The corporation shall ensure that indigent care is available to the population of the
municipality or area served by the hospital authority at levels related to need, as previously
demonstrated and determined mutually by the municipality or hospital authority and the
corporation.
3. The corporation shall not enact financial admission policies that have the effect of denying
essential medical services or treatment solely because of a patient's immediate inability to
pay for the services or treatment.
4. The corporation shall ensure that admission to and services of the facility are available to
beneficiaries of governmental reimbursement programs (Medicaid/Medicare) without
discrimination or preference because they are beneficiaries of those programs.
5. The corporation shall prepare an annual report that shows compliance with the
requirements of the lease, sale, or conveyance. The corporation shall further agree that if it
fails to substantially comply with these conditions, or if it fails to operate the facility as a
community general hospital open to the general public and free of discrimination based on
race, creed, color, sex, or national origin unless relieved of this responsibility by operation
of law, or if the corporation dissolves without a successor corporation to carry out the terms
and conditions of the lease, agreement of sale, or agreement of conveyance, all ownership
or other rights in the hospital facility, including the building, land and equipment associated
with the hospital, shall revert to the municipality or hospital authority or successor entity
originally conveying the hospital; provided that any building, land, or equipment associated
with the hospital facility that the corporation has constructed or acquired since the sale may
revert only upon payment to the corporation of a sum equal to the cost less depreciation of
the building, land, or equipment.
This section shall not apply to leases, sales, or conveyances of nonmedical services or commercial
Schedule 4(k) -1
activities, including the gift shop, cafeteria, the flower shop, or to surplus hospital property that is
not required in the delivery of necessary hospital services at the time of the lease, sale, or
conveyance.
Schedule 4(k) -2