UNC Health Care, Johnston Health finalize partnership

UNC Health Care will provide the Johnston County hospital system with $57.6 million in exchange for partial ownership in the newly formed Johnston Health Services Corp.

The majority of that money will be used to finance an expansion of the Johnston Medical Center in Clayton, which is being converted from an outpatient center to a full service, 50-bed hospital. The new hospital is scheduled to open in January 2015.

UNC and Johnston Health announced the details of their partnership Tuesday, ten months after the community health care provider first chose to align itself with UNC. The two sides have been negotiating the details of their partnership since then.

UNC and Johnston Health also have agreed to work together on a strategic plan to expand care and services in Johnston County. That could include more cardiovascular, oncology, orthopedic, pediatric, obstetric and rehabilitation services.

Johnston Health is just the latest community care provider to align itself with a much larger partner as it seeks to benefit from UNC’s financial stability and bargaining power with insurers. Critics say the wave of hospital consolidation has contributed to growing hospital bills and insurance premiums.

Johnston Health chose UNC as a partner over WakeMed, Vidant Health, Duke LifePoint and Quorum Health Resources.

The deal gives UNC a larger presence in one of the state’s fastest growing counties. It also is likely to benefit Rex Healthcare in Raleigh, which is expected to receive a steady stream of heart and cancer patients as a result of the relationship. Rex is owned by UNC.

The new joint venture will be overseen by a board of 11 commissioners that now serve on the Johnston Health board, plus six members appointed by UNC. The UNC board members include David Strong, preisdent of Rex Healthcare, and Gary Park, president of UNC Hospitals.

The UNC, Johnston Health partnership was finalized last week, after the U.S. Department of Housing and Urban Development gave approval to the agreement. The agency backed a $144 million loan issued in 2008 that financed an addition to the hospital in Smithfield and the construction of the outpatient facility in Clayton.