Two years ago, the New Hanover County Partnership Advisory Group promised the Cape Fear region a hospital that was a leader in care and both patient and staff satisfaction, and that could serve as a regional hub for underserved and forgotten parts of the community.
At the time, county leaders were considering a sale of New Hanover Regional Medical Center, a 700-bed hospital in Wilmington. But hospital leaders feared changes in insurance and regulations would cut into cash flow. New Hanover County told the community it had to sell the hospital to save it.
The 24-member advisory group that New Hanover County officials appointed determined that selling the hospital to Novant Health was the best course of action—a roughly $2 billion sale that won approval in January 2021.
The transition has been anything but smooth.
Since then, issues ranging from complaints over the quality of care to staff shortages and record-setting profits have drawn the scrutiny of state regulators and officials. And the hospital still faces the ripple effect of COVID-19.
Novant issued its own appraisal of progress at the one-year mark. And at the two-year anniversary, former New Hanover Regional Medical Center and Novant Health Coastal Market President Shelbourn Stevens said they are living up to the promises made in the asset purchase agreement despite an uneven transition and stiff headwinds.
“I will not say it hasn’t been a challenge during a merger in a pandemic,” Stevens said in an interview with WHQR and The Assembly in March.
Stevens, who was named as New Hanover Regional Medical Center president after Novant purchased the hospital from the county, was fired last week. Jeff Lindsay, Novant Health’s executive vice president and chief operating officer, is taking over in the interim.
But before that late-breaking news, WHQR and The Assembly examined some of the biggest promises Novant made in the agreement, from $3 billion in capital improvements to merging an independent hospital with a larger system. Is Novant succeeding?
Promise 1: $3 billion Investment
Novant’s promise of over $3 billion in capital investments in the region was likely the most powerful selling point when the Partnership Advisory Group (PAG) and commissioners stacked it up against what other contenders brought to the table.
Over the last two years, Novant has moved forward on a new $210 million hospital in Scotts Hill, a $120 million neuroscience tower, upward of $20 million for surgical offices in Leland, and most recently a $50 million commitment to healthcare in Pender County.
Stevens said Novant was “well on its way” to reaching its investment goals.
The details of the hospital’s strategic plan, which was recently combined with that of Novant’s Brunswick County facility into a “coastal plan,” are largely confidential—so it’s not clear where else the healthcare company plans to invest, or when. The agreement requires $600 million in capital investments in the first ten years—but allows an automatic five-year extension if Novant doesn’t achieve that. For the other $2.5 billion, there’s no timeline at all.
Promise 2: Growing UNC School of Medicine’s Presence in Wilmington
During the sale process, UNC School of Medicine issued an ultimatum: If they weren’t selected “UNC Health and UNC School of Medicine will not be able to continue our current educational and clinical presence in Wilmington.” The school later backed down and partnered with Novant, which unlike some other contenders, lacked an educational partnership.
So far, the Novant-UNC School of Medicine partnership seems to have yielded a modest increase in the size of the residency program. Stevens said there were 21 residents in the latest class, with plans to increase that to 26 and eventually into the 30s. The paperwork has been filed to start a new residency program in psychiatry next year, Stevens said, as well as a grant-funded partnership to start a rural residency program in Pender County.
Promise 3: Merging Information Technology
When Novant completed its purchase of the regional medical center, it was left with two online patient portals—its own, and the center’s legacy portal.
The agreement promised to integrate the medical center into Novant’s broader network, and implement an “omni-channel digital consumer platform”—basically a single website where a patient could log in for bill pay, scheduling, medical records storage, and other features.
Over two years later, the two systems are still separate. They can share data, but the creation of a single portal is on hold.
Stevens said they still hope to complete the merger, “hopefully sometime in 2024.”
Promise 4: Stabilizing Employee Benefits
The agreement says Novant will direct $200 million toward employee benefits. Staff were able to keep the health insurance plan they had through New Hanover Regional Medical Center for a year after the sale closed in February 2021, but then had to get on a Novant plan.
Novant officials told those employees its standard health plan was the most comparable, but WECT reported—and WHQR/The Assembly confirmed—that Novant’s benefits package was not as good as what they’d had before.
Former employees, speaking on the condition of anonymity because of fear of losing their current health care jobs, confirmed they paid more out-of-pocket expenses for treatment under Novant’s Cigna plan because it requires doctors to pay a network fee.
One former employee said she and her family were not willing to switch doctors, particularly since they had received treatment for serious medical issues for an extended period. The employee also said getting appointments with specialists could take up to six months, because there were only a few in the network.
Stevens did not speak about specific cases, but acknowledged that there were differences in the coverage. While the old hospital had only one plan, Novant has multiple options, and some of the nuances were lost during the transition—particularly when a lot of the onboarding was happening via Zoom.
“Whether you have chronic medical conditions, or you’re very healthy, there are different choices and options,” Stevens said. “I think there was a gap that people didn’t understand the various options. This year we were able to do a better job by being in person and answering team members’ questions.”
Promise 5: Supporting Pender Memorial
Novant inherited a management contract for Pender County’s hospital—Pender Medical Center, formerly Pender Memorial—which New Hanover Regional Medical Center had held for two decades. The Pender hospital had long been in need of upgrades, which were a part of a strategic plan Novant also inherited.
After the sale, Novant set about investing in the Scotts Hill facility, just across the county line in New Hanover. That heightened uncertainty about Novant’s commitment to Pender’s hospital and pushed Pender County commissioners to explore other options, which would have challenged Novant on its promise to deliver healthcare to the region.
However, eventually, Novant put a serious $50 million commitment on the table as part of a deal that will involve Novant’s eventual ownership of the hospital and improved healthcare access for rural Pender County.
Promise 6: Addressing Staffing Concerns
Novant agreed to hire all New Hanover County Regional Medical Center employees for at least two years. That moratorium expired February 1, 2023—and Novant made cuts almost immediately not just in Wilmington, but across the Novant system.
Dr. Philip Brown, a Wilmington native who was New Hanover Regional Medical Center’s chief physician executive and executive vice president before becoming the chief community impact officer at Novant, was let go. A total of 50 positions were cut, including the chief consumer officer, chief transformation and digital office, and the vice president of innovation enablement.
Stevens, who was let go in June, said the cuts were necessary “because health care has been impacted so negatively” since the pandemic. Some of them were removing positions that were vacant at the time, he said, and it was just 50 positions out of 35,000 positions across the network. “Those were choices we had to make really to help on return on cost,” he said.
None of the employees laid off agreed to speak to us for the story because of nondisclosure agreements or fear of losing severance and benefits.
Novant—like most health systems during and after the pandemic—has struggled to staff up. Employees told us whole floors had to be closed over the last two years because of a lack of nurses. And in 2022, a 77-year-old patient died after waiting hours to be admitted to the emergency department, which led to a federal agency threatening to cut the hospital’s Medicaid and Medicare contracts if conditions didn’t improve. A former employee said patients were at one point treated for several days in the emergency room as opposed to being admitted.
“That is unnerving to know that,” the former employee said, on the condition of anonymity. “But I do know that if you don’t have enough help to run a floor, you can’t run a floor.”
A former employee who’d spent time in the emergency department with a sick family member earlier this year said the staff was doing the best job they could with limited resources, but didn’t “think there’s enough staff to give every patient the care that they need.”
Novant has spent serious money trying to come back from a cascade of issues that have depressed staff and concerned patients, including raising its living wage from $15 to $17. Over $65 million total has been put into the hospital’s workforce and Novant brought on traveling staff to fill the gaps, which costs up to four times more than hiring permanent employees. The plan was not financially viable and tanked morale, John Gizdic, who was New Hanover Regional Medical Center’s CEO before joining Novant after the sale, told reporters last year.
“We were used to stability and having, you know, almost like a family in each of our departments,” Gizdic said about New Hanover Regional Medical Center. “And with this unique labor market, this labor shortage that we’re facing, this gig economy that we find ourselves in, we don’t have those same circumstances that we were once used to. And so it is tough. It’s very difficult and challenging times.”
The hospital’s emergency department is fully staffed and some of the traveling nurses have been recruited into permanent positions, Amy Akers, vice president and chief nursing officer, told the StarNews. The hospital has held numerous recruiting events to fill vacancies. That’s putting a dent in its staffing shortages, according to hospital officials, and the situation is less dire than it was last year.
So, Is It Succeeding?
WHQR and The Assembly asked Stevens directly whether Novant is profitable.
“In 2022, no, we were operating at a loss at our acute care facilities,” Stevens said.
As it turns out, Novant may have just limped into the black—but only through a one-time sale of part of its business to the global alternative asset management firm TPG. But in general, it was a financially tough year.
Financial stability is but one measure of success; others are tougher to quantify. Even if Novant’s balance sheet still isn’t great, many point to something else—something more ephemeral—that has been lost in the sale.
WHQR and The Assembly spoke to at least a dozen former employees from many divisions of the hospital on background for this report. One common thread in their stories was the way hospital staff—from janitors to cardiologists, nurses to executives—rallied during the chaotic aftermath of Hurricane Florence. Now, that esprit de corps is gone. It’s just another corporate entity instead of a community hospital.
“It’s not the same hospital anymore,” one former employee said. “I wish I could say it was a huge improvement for our community, but I honestly don’t think it has been.”
Novant is living up to the promises, for the most part, made in the asset purchase agreement and have navigated through the pandemic. In the wake of a leadership change, a new president inherits a hospital in transition but with the potential to return to its former glory.