Vidant Pungo Hospital Director's Council Releases Statement

Below is a letter that Vidant Pungo Hospital is sending to area residents. In it, the Director's Council responds to the past challenges and the future of their hospital. The Director's Council is formerly the Board of Trustee members for Pungo District Hospital.

Dear Community Members:

We, as members of the Vidant Pungo Hospital Director's Council, would like to share factual information with you related to past challenges and the future of our hospital.

Over the past 10-15 years, our hospital has faced many difficult situations. You may remember that back in 2001, Pungo District Hospital filed Chapter 11 bankruptcy due to the severe financial crisis that we faced. Our hospital was in deep financial debt, costs to deliver health care were rising, and our 50 year old hospital was in need of many major repairs.

What you may not know is University Health Systems of Eastern Carolina (UHSEC) came to us at that time and offered to assume our debt, repair our building and manage our hospital; an offer that unfortunately was not supported by our community as a whole. As a result, UHSEC walked away and our hospital filed for Chapter 11 bankruptcy.

After bankruptcy, we were fortunate to receive various grants that helped us to keep operating in spite of an ongoing difficult financial situation. Managing the hospital continued to be very challenging as we emerged from the bankruptcy. There were many challenges including:
• Grant money was decreasing.
• The hospital continued to lose money on operations.
• The cost of providing care continued to rise.
• Our building was now in need of major, critical repairs.
• The expense of providing uncompensated care continued to rise.
• New rules and regulations of the 2010 Affordable Care Act were coming our way including reductions in Medicare and Medicaid reimbursements and the requirement that all hospitals have electronic health records, a cost that would exceed $2 million.
• Concerns about the ability to recruit and retain doctors and other health care workers to our community, a problem that many rural communities all across the country were facing.

It became very clear to our hospital leadership and to the Board of Trustees that Pungo District Hospital would need to find a partner or risk shutting down; leaving little to no access to health care for our community. We also recognized that small rural hospitals, as well as doctors all over the country, were aligning with larger facilities in order to survive. The future did not look hopeful if we continued to go it alone.

We talked to many potential partners. There were only two who would even consider coming into our area to operate a hospital with our large needs. Our board studied both organizations carefully. We approached the one with the most resources that our community and residents would need in the future. That organization was University Health Systems of Eastern Carolina (now called Vidant Health), an organization that called eastern North Carolina home and one that was successfully operating similar sized rural hospitals in our region.

We talked with them about a partnership that would ensure health care services remain available for Belhaven and surrounding communities for many years to come. In October 2011, we made a decision, with the unanimous consent of the private Pungo District Hospital Membership Corporation, to sign an agreement with UHSEC.

Due to all of the restructuring going on in health care, UHSEC was clear during our negotiations they could not guarantee a hospital; however, they would guarantee appropriate sustainable health care services for our community going forward. We, as trustees, were hopeful a hospital would always remain, but our most important focus was being sure that there would always be health care services available here, including doctors and outpatient services.

It is important to know that since October 2011, Vidant Health has:
• At the request of our local Belhaven physicians, assumed responsibility for their offices.
• Spent $2.3 million on an electronic health record system for Vidant Pungo Hospital that is required of all hospitals.
• Spent over $1 million on facility repairs and equipment at Vidant Pungo Hospital that were necessary to be in compliance and keep the doors of the hospital open.
• Spent approximately $2.3 million in providing uncompensated care at Vidant Pungo Hospital.
Let's fast forward to today and what we know now. The issues have not changed since 2011, but they have gotten worse.
• The physical condition of the hospital is poor. There are structural and safety concerns and we cannot continue on a long-term basis to provide health care in our current building.
• Vidant Health lost over $2 million providing medical services to the Vidant Pungo community in 2013.
• The changes associated with health care reform, especially related to how hospitals are paid for services, have changed drastically. The impact related to the Affordable Care Act and Sequestration will result in an additional $174,000 in payment cuts to Vidant Pungo alone for 2014.

It was not easy for our Director's Council to accept the recommendation of a multispecialty clinic with 24/7 urgent care service, and not a small hospital. When we met with Vidant Health leadership and reviewed the projections for various models of care, we understood the changes that had to be made. We fully support the 24/7 multispecialty clinic option and appreciate Vidant Health staying the course and not abandoning our community. The clinic will provide primary and urgent care 24 hours a day, 7 days a week. This was not the least expensive model reviewed. It is expected that the clinic will lose approximately $1 million per year for the foreseeable future, which Vidant Health will continue to fund.

We want you to know that Vidant Health is living up to the agreement that they made to our board and to our community in 2011. We hope this background gives you a better understanding of the challenges our hospital has faced both as an independent hospital and now as a part of Vidant Health. We promise you that this decision was not made lightly and we focused on what we thought was best for the people of eastern Beaufort and mainland Hyde County.


Vidant Pungo Hospital Director's Council