‘Everybody’s doin’ a brand new dance, now’ — profiting in non-profit health care

Mayor Adam O’Neal and Rev. William Barber walking to Washington. Image Credit: WITN/ThinkProgress (2014).

Two years ago a 49-bed “critical access hospital” serving 15,000 people in rural North Carolina was closed, resulting in a 130 mile gap between hospitals for residents two and a half hours south east of the state capital in Raleigh. Having walked to Washington twice in protest, once with “Moral Mondays” leader William Barber, and to Raleigh to lobby for a change in the state’s “Certificate of Need” law, Mayor Adam O’Neal now says he expects the hospital in Belhaven to reopen with ten inpatient beds and 24x7 emergency room services within six months.

The town’s path to reopening Pungo District Hospital involved lawsuits, changes in state legislation, and a declaration of a state of emergency by the town as recently as May of this year. Now the facility is being sold to Strategic Health Care, a health care consulting firm in Florida, who plans to reopen it and expand with new services for veterans. When I spoke recently to Mayor O’Neal, he was resolute in his conviction that Vidant Health is to blame for the crisis his small town has faced over the last two years.

“Our town has been destroyed by Vidant Health…It was an absolute fraud, a scam that Vidant perpetrated on our community.” — Mayor Adam O’Neal

Vidant Health operated Pungo Hospital from 2011 to 2013. According to their talking points, they agreed to take over the failing, bankrupt “critical access hospital” in Belhaven “with the understanding that Vidant Health was committed to providing sustainable health care in the community, but not necessarily hospital services.” The NAACP alleges that Vidant took over the hospital with an intention to shut it down and replace it with more profitable ambulatory services.

The “new ambulatory model of care” is now in place. In June, Vidant opened a new $5.5 million, 12,000 square foot multispecialty 24x7 health clinic in the town with primary and prenatal care, cardiac consults, X-rays and ultrasound services — as well as a helipad. Of course helicopters don’t fly in bad weather, and patients aren’t always ambulatory, but it’s hard to argue with the executive director of the Belhaven Chamber of Commerce when she says that the new Vidant Multispecialty Clinic “enhances and improves our quality of life and the vitality of northeastern Beaufort County.” With their hospital now on track to reopen soon, and expand into veteran services, everyone finally appears to be getting what they want and need in “The Beautiful Safe Harbor” of Belhaven.

Vidant is a non-profit hospital system and the largest private employer in Eastern North Carolina. They operate eight other hospitals, physician practices, home health, hospice, wellness centers and other health care services available to 1.4 million people in 29 counties. According to their 2015 annual report, Vidant completed another strong fiscal year last year “earning an operating margin of 4 percent on revenues of approximately $1.6 billion” and $62.7 million in income. Yet they recorded total net losses of almost $1 million last year due to a significant downturn in the market during the last quarter of the fiscal year. In other words, their investment portfolio — worth $777 million at the end of September 2015 — declined by 0.1% in the fourth quarter due to a dip in the market.

There are big profits in non-profit health care. They are required to reinvest earnings in their non-profit missions, but these private organizations also often offer multi-million dollar a year compensation packages to top executives. And they aren’t required to spend a single dollar on charity care in many states — including in North Carolina. Compared to Catholic Charities USA, which provides other services in addition to health care, Vidant Health demonstrates the significant role that health care services alone can serve in funding the missions of private, non-profit interests.

Data Sources: Forbes and Vidant’s 2015 Annual Report

It’s probably not what songwriters Gerry Goffin and Carole King had in mind when they wrote them, but one can’t help but imagine both Vidant Health and Strategic Health Care executives singing in their board rooms the words first made famous in 1962 by a native of Belhaven, Eva Narcissus Boyd — Little Eva.

There’s never been a dance that’s so easy to do
It even makes you happy when you’re feeling blue
So come on, come on, do the Loco-motion with me
Little Eva performs ‘The Loco-Motion’ (1962). Video Credit: Sironaca (YouTube)

Mayor O’Neal and Rev. Barber, as well as the people in and around Belhaven, may even feel like singing this same tune when the hospital finally reopens. Aside from some pesky issues with timely emergency services over the past two years, it’s starting to look like a “win-win” situation in today’s corporate jargon — which increasingly seems to be the best language to use to describe modern health care in America.

But the long saga to reopen this rural “critical access hospital” should shine a spotlight on the profitable big business of private, non-profit health care in our country and remind us that it may sometimes be necessary to walk to the halls of power to stop dancing crowds trying to maximize private profits from harming the public interest.

Note: Vidant Health did not return my calls for an interview, but I want to thank Mayor O’Neal as well as several personal friends (including a few medical professionals in North Carolina) for talking to me about this issue.

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