Becker's Hospital Review

18 CFO / FINANCE Turf war flares up as 3 providers look to expand in North Carolina By Alia Paavola S everal healthcare providers in North Carolina are challenging Chapel Hill, N.C.-based UNC Health's plan to build a $252 million hospital in south Durham, N.C., according to the Triangle Business Journal. North Carolina's 2021 state medical facilities plan found that Durham County/Caswell County is in need of 40 new acute care beds and four operating rooms by 2023. Durham, N.C.-based Duke Health, Southpoint Sur- gery Center and UNC Health all applied to provide services in the area to meet that need. In particular, Duke Health is looking to add 40 acute care beds and four operating rooms to projects it already has in the works. South- point Surgery Center is looking to develop four operating rooms. UNC Health wants to build the new hospital with 40 acute care beds and two operating rooms, according to the report. As a result, Duke Health and Southpoint Sur- gery Center have both submitted statements to the department claiming their rivals' applica- tions should not be granted a certificate of need. WakeMed Health and Hospitals in Raleigh, N.C., also submitted comments oppos- ing UNC Health's proposed hospital, even though it didn't submit plans to expand in the area. WakeMed argued that UNC said in its appli- cation that it expects to maintain its market share in the area, but it believes it is seeking to grow it. "It would appear farfetched to assume that the applicant is committed to spend over $250 million to develop a facility that will simply maintain its existing market shares in Durham County," the WakeMed challenge states, according to the Business Journal. n UnitedHealthcare must permanently rescind ER policy, hospitals demand By Morgan Haefner W hile UnitedHealthcare paused a controversial emergency room coverage policy, hospitals want it "immediately and permanently" rescinded. On June 10, UnitedHealthcare said it would delay the policy until at least the end of the national public health emergency. The ER policy could have led to retroactive denials for ER claims that UnitedHealthcare consid- ered nonemergent. UnitedHealthcare made the move to temporarily delay the policy "based on feedback from our provider part- ners and discussions with medical societies." In a June 10 letter from the Federation of American Hospitals, President and CEO Chip Kahn wrote that while the delay is ap- preciated, "this temporary pause does not address the underlying policy that poses harmful and unnecessary risk to patients, re- gardless of its date of implementation." The American Hospital Association also called for the policy's full reversal in a June 10 statement sent to Becker's. n How a PE firm made $800M from buying up struggling hospitals By Alia Paavola A New York private equity firm quadrupled its money, making around an $800 million profit from its initial investment to buy six struggling hospitals, Bloomberg reported May 27. In 2010, Cerberus Capital Management paid $246 million in cash to pur- chase the six-hospital Caritas Christi Health Care in Boston. The buyout created Dallas-based Steward Health Care, which has since become one of the largest for-profit hospital chains with hospitals in nine states. When Cerberus purchased the Massachusetts hospitals in 2010, they were in a precarious financial condition and had substantial pension obligations, according to the report. However, despite purchasing hospitals that were struggling, the buy- out giant made some clever financial moves and ended up quadru- pling its money over a decade, according to Bloomberg, which cited company financial documents. In particular, Cerberus made a lot of its money through a series of transactions involving Birmingham, Ala.-based Medical Properties Trust. In 2016, most of Cerberus' money was made by selling hospital property to the trust, which then leased it back to the hospitals. The deal allowed Cerberus to extract hundreds of millions for its investors. Medical Properties Trust now also owns about 10 percent of Steward. Cerberus told Bloomberg that its involvement with Steward enabled the organization to invest hundreds of millions into infrastructure, tech- nology and top personnel, which helped restructure and transform failing hospitals. Cerberus has since exited its investment in Steward, selling its owner- ship to a group of Steward physicians. n

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