News: CJ Exclusives

WakeMed, Rex Hospitals Declare Truce

Charity care, mental health services, financial transparency all part of deal

In a formal agreement brokered by state lawmakers, in late May WakeMed Health and Hospitals withdrew its offer to purchase Rex Healthcare in exchange for Rex’s parent organization – UNC Health Care – carrying a larger share of charity care in Wake County.

WakeMed – a private, nonprofit hospital system – had complained that Rex — a subsidiary of the state university hospital system — had an unfair advantage because of its quasi-governmental status, and that it was not providing enough charity care in Wake County to justify its tax-exempt status.

To put an end to the perceived threat Rex posed, WakeMed offered to buy its rival. Neither Rex nor UNC Health Care was happy about the offer, seeing it as an attempt at hostile takeover. Nonetheless, state lawmakers considered the offer at several meetings of the House Select Committee on State-Owned Assets over the last year.

Instead of selling the hospital, May 22 committee member Rep. Harold Brubaker, R-Randolph, and Sen. Tom Apodaca, R-Henderson, announced an agreement they helped negotiate.

The agreement spells out what might be seen as a list of concessions UNC Health Care made to prevent the sale of Rex to WakeMed.

Mental health and emergency care

The agreement notes that WakeMed is the predominant provider of Medicaid and uncompensated care in Wake County, which includes treating patients in need of psychiatric treatment and services in its emergency department.

To help meet the need, the agreement directs UNC Health Care to invest approximately $40 million on an inpatient psychiatric facility and other mental health services “to decrease the unnecessary use of emergency room, crisis, and inpatient services within Wake County.”

Financial transparency, education

The agreement also requires UNC Health Care to file IRS Form 990s for all of its private, nonprofit affiliates, including Rex and the Triangle Physician Network.

Although all private nonprofits are required to disclose financial information on a 990, Rex, until now, had been exempt because of its affiliation with UNC.

UNC Health Care also must “support” WakeMed’s application for the Council of Teaching Hospitals.

WakeMed concessions

For WakeMed’s part, the hospital’s employees or directors can no longer publicly say anything “criticizing or demeaning” about UNC Health Care’s funding sources, appropriations, provision (or lack thereof) of charity care or the transparency of its operations.

The agreement instructs the hospital to add no new content to its blog — TheWakeMedXRay.com — which criticized the operations of UNC Health Care and Rex, and which appears no longer to be accessible.

Both health care systems agreed to drop all pending public records requests against one another and not to file future records requests “for the purpose of harassing” one another.

Of course, the biggest compromise on WakeMed’s part was to stop soliciting the sale of Rex.

“We are pleased with the agreement,” said Rex Healthcare spokeswoman Lisa Schiller.

WakeMed President and CEO Bill Atkinson called the agreement a “compromise” and a “step in the right direction.”

“They do not address all concerns raised over the past 18 months, but are a positive step toward an improved working relationship between WakeMed and UNC Health Care, which will ultimately benefit the patients both organizations serve,” he said.

Sara Burrows is a contributor to Carolina Journal.