Thomas, J. (2014, May 30). A Long-Term Solution for CaroMont Health. The Charlotte Business Journal. Retrieved from http://www.bizjournals.com/charlotte/print-edition/2014/05/30/a-long-term-solution-for-caromont-health.html?page=all
CaroMont Health wants a 40-year lease for the land its flagship hospital sits on. It’s a strategic move that will allow the Gastonia health-care system to invest for the future amid looming uncertainty surrounding health-care reform, says Doug Luckett, chief executive.
CaroMont leases roughly 88 acres off Court Drive, as well as the hospital buildings, from Gaston County for $1 per year. That includes its 435-bed CaroMont Regional Medical Center, formerly known as Gaston Memorial Hospital. The health-care system owns the equipment and the state-issued certificate-of-need required to operate the facility.
CaroMont has spent nearly a decade trying to purchase that property; the last offer of $45.5 million came in July.
But the system shifted course recently when it submitted a 40-year lease proposal to the county.
On Tuesday, the Gaston Board of County Commissioners directed its attorney to proceed with negotiations to finalize an agreement.
“I think they want to work toward the middle, and we want to work toward the middle,” Luckett says. “I think there’s a spirit of cooperation and a shared vision for what the community needs and the benefits this will bring.”
CaroMont’s proposal will provide roughly $1.2 million annually to the county in compensation.
It would purchase a $20 million corporate bond on behalf of Gaston County, which would generate $800,000 in annual interest payments.
CaroMont also will contribute $450,000 per year to promote community health and invest in the development of active lifestyle options in Gaston County.
In addition, CaroMont would make $200 million in capital investments at its campus over the next decade.
That list of projects includes a renovation and expansion of CaroMont Regional’s emergency room, adding capacity as well as pediatric services. That project is slated to begin in the near future.
CaroMont also is prepping to install the EPIC electronic-health records system.
A bed tower is planned that would increase the size of inpatient rooms to accommodate equipment and support family-inclusive care.
Luckett recently talked to the Charlotte Business Journal about the lease proposal and CaroMont’s plans for the future.
You’ve previously attempted to buy the CaroMont property. Why consider a long-term lease?
We took a look at what the hospital and the health system is to the community and a lot more of the history of it. There’s a sense of pride and ownership in this place. It would be tough for a county commission or anybody to sell that history.
It’s more than a facility. It’s more than an operation. It’s a history. Recognizing that, I think a lease keeps the ownership with the county and the citizens around the county. I think we can accomplish most of the things we were trying to do with an outright purchase.
CaroMont’s current lease is for $1 a year and runs through 2035. Why do this now?
People can question us all day long on why, when, how — and that’s great. At the end of the day, it’s a business decision and a health-care decision.
We’re trying to do this strategically. We don’t know what the future (of health care) is going to hold, and it’s looking very rocky. In 15 years, we may not have anything that resembles what we have now in health care if payment is commoditized, if use rates are different, if hospitals and health-care systems change greatly and have an outpatient focus.
We want as much predictability as we can secure. We’re trying to secure something long term while we still have a little bit of resources and some means to do so.
At some point, we would have had to take a different strategy. We would have purchased a piece of land. We would have paid for the redevelopment of our campus. Fortunately, it doesn’t look like we’re going to have to do that.
Does this deal support your efforts to remain independent?
I believe, absolutely, it helps cement our independence because you’ve got local partners, people who have prided themselves in local accountability for our health. We’re one of like 17 independent hospitals in the state.
There’s not many of us left. It’s difficult every day. Costs, jobs, services — the day we’re not independent, all that changes, and I don’t believe that helps Gaston County at all.
Why invest $200 million in your campus?
We have about 208,000 people that are in our coverage area. We want to be relevant and best-in-class for them. That’s the only thing we’re here for. It’s just making the services that we do have, what we know we need to be relevant for the next 30 to 50 years. That means larger patient rooms, more critical-care rooms and an ER that fits the community need better.
Why is it CaroMont’s role to be involved in community health?
We’re just trying to do our part. Typically, hospitals have been acute-care repair shops for years and years in talking about surgeries and medicine. What are we doing is to make sure Gaston County and the people who live within it have the best fighting chance to live a prolonged healthy and prosperous life.
It’s stepping up with things to promote that in the community. As you build them, people start using this stuff. As you bring greenways and thread trails and exercise stations, it’s amazing what happens. It really knocks the excuses out of why you don’t work out during your day.
There’s a feel of community ownership around CaroMont. How do you bridge that while running the health-care system as a business?
You manage it the best you can. If you want to be honest, everybody wants health care perfect, free and done yesterday.
Economically that is impossible. What we do is try to meet people’s expectations realistically and improve things that may have been a burr in their saddle for years.
What are your biggest concerns about health care moving forward?
I just want to make sure the public’s expectations, the funding, the policy and the execution of it all match together.
I believe and understand the government is the biggest payer of health care. I don’t know where it’s headed, but we’re not doing ourselves a favor in the direction we’re going.
If we’re going to put the (Affordable Care Act) in, put it in. Stop kicking the can down the road. Get more people insured; take the money out of somewhere else to make that happen.
I worry about us weakening our country’s path to research and development, new cures, new technology because we’re going to commoditize the very thing we value
Jennifer Thomas covers retail, health care and education for the Charlotte Business Journal.