Novant Health Inc.’s attempt at establishing a third flagship in North Carolina would include a $5.2 billion financial commitment to New Hanover Regional Medical Center.
As part of its bid to manage or own the Wilmington hospital, Novant has agreed to form its first-ever medical education partnership with UNC Health and its medical school.
UNC Health already provides educational and clinical services to the New Hanover system, which is comprised of 855 licensed beds at three hospital campuses.
“Maintaining and expanding medical education at (the hospital) will allow Novant Health to best serve the Wilmington community, while continuing to build the pipeline of physician talent for North Carolina,” Carl Armato, Novant’s chief executive and president, said in a statement.
The New Hanover Regional Partnership advisory group has vetted six proposals. It voted unanimously Thursday to forward the letter of intent to the New Hanover Board of Commissioners and hospital management.
Atrium Health of Charlotte and Duke Health are the other finalists.
N.C. Health News said the attempt to find a new management team or owner has drawn opposition from community members, including forming the Save Our Hospital advocacy group that is pursuing internal financial options.
The commissioners have three options with Novant and UNC Health: an affiliation; joint venture; or sell the facilities to Novant. An answer is expected by early July.
Novant operates Brunswick Medical Center in neighboring Bolivia, where it opened a $100 million 78-bed community hospital in July 2011.
Armato expressed confidence that New Hanover Regional’s familiarity with Novant through collaborations with the Brunswick hospital will play a key role in the commissioners’ decision.
Novant and UNC Health declined to provide the letter of intent on Tuesday.
However, a March 16 proposal from Novant to the advisory group remains largely unchanged even with the financial impact of the COVID-19 pandemic, Dr. Pam Oliver, president of Novant’s Physician Network, said Tuesday.
Novant valued the total community commitment at $5.3 billion: $2 billion in upfront cash to the county; $2.5 billion from a “strategic master/capital plan”; $600 million capital commitment at $60 million annually for 10 years; $150 million contribution by the hospital; and $50 million to the hospital’s foundation.
The overall pledge would enhance “information technology and quality initiatives, improvements to existing facilities, new construction and other strategic capital.”
“We will commit to fund 100% of (New Hanover Regional’s) routine and strategic capital needs (or a significant percentage in the case of a joint venture, joint operating company or management services agreement),” Novant said.”
When asked if the Novant-UNC Health partnership is a one-time project, Oliver said “there is a benefit in the blending of models to bring the best of the two worlds together. There have been successful partnerships across the country in this regard that can be models for how to proceed.
“There’s so much to gain from an academic program and partnership with respect to the training, the research, the innovation from being connected to a university system.
“On the other hand, there is a lot of operational day-to-day patient care and community care that health systems and medical groups bring to the table,” Oliver said.
Daily management decisions would remain locally based, according to the Novant proposal.
Novant said the New Hanover hospital would have a representative on Novant’s board if a joint venture is formed, or two members “with a fully integrated partnership” with the health care system as the parent company.
Novant listed in the proposal having $3.1 billion in cash and investment, and generating more than $550 million in average annual operating cash flow over the past five years.
The system said it “anticipates funding any up-front cash payments ... with a combination of cash on hand and external financing.”
“We maintain excellent relationships with many global investment and commercial banks that are willing and ready to provide bridge financing for a transaction. Ongoing capital investments will be financed from operating cash flow and debt issuance where appropriate.
“Novant Health will not require a financing contingency as part of any partnership.”