January 18, 2019
One of the largest sales of nonprofit assets to a for-profit company in North Carolina history, the $1.5 billion acquisition of Mission Health by Nashville-based HCA Healthcare, is set to take place by the end of the month after getting the go-ahead from state Attorney General Josh Stein. During a surprise Jan. 16 press conference at the Murphy-Oakley Recreation Center in East Asheville, the state’s top lawyer said he will not object to the deal — before adding the important caveat, “as it is being rearticulated.”
Stein announced that his office had developed a new asset purchase agreement after months of “extensive negotiations” involving Mission, HCA and the Dogwood Health Trust, the nonprofit foundation that will administer the proceeds of the sale. He explained that the changes would strengthen HCA’s community commitments, make the DHT board more representative of its service area and ensure greater accountability for both organizations.
“I would like to say a special word to the people of Western North Carolina in expression of my appreciation,” Stein said. “It was through the public forums that my office attended, delegations of your folks who came and met with me and folks in my office, hundreds of letters, dozens if not hundreds of phone calls — it was through your input that you helped to shape our objectives and priorities for what constituted a fair deal.”
Decisions of the decade
“First and foremost” among the deal’s new provisions, Stein said, was the doubling of HCA’s commitment to provide services at Mission’s rural hospitals from five to 10 years. Those services, such as obstetrics and gynecology at Mission Hospital McDowell in Marion, will also be more precisely defined.
Stein emphasized that HCA will have fewer legal options to default on those commitments. An independent monitor, in addition to a rural hospital’s local advisory board, will now need to sign off on service reductions, and the agreement’s “force majeure” clause — a provision by which HCA could cancel services due to government actions or economic downturns — has been curtailed.
“HCA is making commitments, but then on the other hand, they have outs,” Stein explained. “What we wanted to do was to make the commitments stronger and the outs tighter, and that’s what I think we’ve achieved.”
Should the health system violate those commitments, Stein added, his office will now have the power to “hold HCA’s feet to the fire.” Instead of handling disputes through forced arbitration under Delaware law, which is generally regarded as favorable to corporate interests, HCA will face any legal action concerning its promises in the North Carolina Business Court.
“We want to get a fair fight if we have to go to court. My lawyers are expert in North Carolina law, less expert in Delaware law,” Stein said. “The people of Western North Carolina, whom we would represent, deserve a day in court.”
Trust in Dogwood
In response to community criticism of the Dogwood Health Trust (see “Get on board,” Xpress, Dec. 12, avl.mx/5l6), Stein pushed for revisions to the foundation’s board and operational transparency. The nonprofit agreed to several changes that will give WNC residents outside of Buncombe County much more of a say in how it distributes an estimated $75 million per year to improve social determinants of health.
By January 2021, Stein said, the DHT must cut its board’s Buncombe County contingent from seven members down to four. It must also add two new members from the McDowell Hospital region and five new members from counties other than Buncombe, thereby inflating to 15 members from its current 11.
“Buncombe is a wonderful county, but there are a lot of counties in Western North Carolina that also have invested in their local hospitals,” Stein said. “My primary concern was to make sure that we had a broader array of people on the board, and I think by reducing by three the number who hail from Buncombe County and come from a Mission background, we’re going to achieve that.”
As the DHT develops its plans over 2019, Stein noted, the foundation has committed to hold three public meetings across WNC to inform the interpretation of its mission. It will also hold an annual open meeting to receive community input; all of the board’s previous meetings have been closed to the public, and the media were not invited to a Sept. 30 information session for area nonprofits.
Risa Larsen, a leader of Mitchell and Yancey county health advocacy SEARCH, said the revised deal “totally exceeded” her group’s expectations. “There are huge improvements for rural hospitals and the governance of the various foundations,” she said. “We are proud that we had such an important impact on the agreement.”
After his press conference, Stein posed for a photo with Larsen and other community members, including state Sen. Terry Van Duyn and Highlands Mayor Patrick Taylor. No representatives of Mission, HCA or DHT were in attendance.