Lawmakers hear Rex Hospital complaints

Panel receptive to WakeMed's gripes

mlocke@newsobserver.comJanuary 24, 2012 

WakeMed CEO Bill Atkinson finally found his audience Monday at a legislative committee charged with deciding whether the state should own Rex Hospital, WakeMed's cross-town rival.

For more than a year, Atkinson has lodged the same litany of complaints against Rex and its owner, UNC Health Care. Atkinson's list of grievances is long: Rex doesn't pick up its fair share of charity care, Rex competes unfairly in Wake County with advantages harnessed through ties to UNC, Rex and UNC stole away a cardiology practice that helped offset losses at WakeMed.

Those complaints registered well with a committee dominated by Republicans who have trimmed state spending and vowed to scale back government involvement in areas where it competes with the private sector.

Legislators questioned why Rex is slated to receive 100 percent cost reimbursement for treating Medicaid patients, while WakeMed gets 83 cents on the dollar. And they struggled to understand Rex's standing as a hospital.

"What is it: public or private?" asked Rep. Edgar V. Starnes, a Republican from Caldwell County.

Atkinson said WakeMed has had trouble relating to UNC Health Care since the state's public university bought Rex in 2000. At the time, the attorney general ruled that Rex would remain a private nonprofit even though it would be owned by a state entity.

But, over the years, Rex and UNC leaders have lobbied to be considered public to get higher Medicaid reimbursement rates and for an exemption on filing a 990 tax form that divulges certain financial information.

"You need to be one or the other," Atkinson said. "You can't be one thing on Monday and another on Tuesday."

No resolution imminent

Atkinson's presentation Monday stoked a fire that seemed to be dying out over the past two months. After an explosive 2011 that included WakeMed issuing an unsolicited $750 million bid to buy Rex, leaders from both hospitals finally met in private in November to find common ground.

Leaders for WakeMed, UNC Health Care and Rex Hospital have kept the talks quiet and refused to discuss terms and tone with the media. Atkinson signaled Monday that a resolution is not imminent. "We're still a long way from the finish line on those discussions," he said.

Rex and UNC officials declined to elaborate on Atkinson's remarks.

"We will continue to work toward a partnership with WakeMed because we believe it is in the best interest of the people of Wake County," said Alan Wolf, a spokesman for Rex Hospital.

'We need a solution'

Any resolution brokered by the hospitals' leaders would be moot if the legislature decides to move forward with a sale of Rex.

When asked if WakeMed was still in the market to buy Rex, Atkinson hedged before saying that, if the state went ahead with a sale, WakeMed would make a bid. He also said the legislature could intervene and manage some of the troubling aspects of Rex's structure, such as its reimbursement levels for Medicaid patients or the amount of charity care it offers.

"We need a solution," Atkinson said.

Rep. Michael Wray, a Democrat and small business owner from Halifax, suggested the legislature ought to find a way to prevent UNC from expanding in the future and competing with local hospitals across the state.

The committee will review dozens of state-owned properties to figure out whether the state should sell off certain assets. Last summer, Rex was put on the list for consideration.

A report is due to the full legislature when it convenes this spring.

Locke: 919-829-8927

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