The Wellness Center

On March 20, 1996, PCMH announced that the state Certificate of Need Section on February 29 had granted PCMH preliminary approval for a $7.2 million wellness center to be built on Stantonsburg Road. Opposition to the project could be registered during the month following the approval, but so far none had been submitted. The hospital was arguing that the facility would focus on wellness, not fitness, so would not compete with private fitness centers. Without opposition, construction could begin in December and barring unforeseen problems, the center could open in March 1998.

Soon after, Athletic Clubs, Inc. of Raleigh appealed the state’s preliminary approval for a wellness center. Following six months of negotiation with Athletic Clubs, PCMH announced that it had agreed not to market its wellness unit as a fitness center, clearing the way to open the center as planned. The hospital began construction on its $8 million, 50,000 square foot wellness center in May, aiming to have it finished by summer 1999. The center was to be clinically oriented, directed mostly at people 40 and older who were in poor health or were in need of rehabilitation.

All members would be required to have health screenings. and their screening results would form the basis of individualized fitness plans, administered by a staff of nurses, exercise physiologists, and dieticians. Serious health problems detected by the screening had to be treated by a physician before the person could join the program. The center would provide rehabilitation services in addition to its wellness programs. For example, the final two phases of cardiac rehabilitation for heart attack victims would be carried out there.
About 2 percent of the members who could not afford membership fees would be admitted free of charge or at a reduced prices.

With construction on its wellness center beginning, PCMH started advising seven other area hospitals in setting up wellness centers. These included Martin General Hospital in Williamston, General Hospital in Kenansville, and Roanoke-Chowan Hospital in Ahoskie.

In the fall of 1999, Hurricane Floyd delayed the opening of PCMH’s wellness center scheduled for January It officially opened in July 2000 to positive reviews.

                                                             Primary and Transitional Care

The medical school administration recognized that the existing state-owned primary care building was too small and not conveniently located for patients coming for treatment. Dr. James Hallock informed the university board of trustees on March 22 that the school needed to expand facilities for primary care physicians. The situation would be further worsened by the addition of more physicians to care for patients and refer to specialists those who needed additional treatment. Other centers across the country had found it necessary to expand, and at ECU the need was heightened by the commitment of the current physicians to teaching, which prevented them from spending much more time with patients.

The medical school was proposing to open a short-term transitional care center in leased property on Firetower Road. It was a suburban location on the opposite side of town from the medical center. At least 10,000 square feet of space was needed, which would cost between $140,000 and $170,000 annually over a period of three years.

The commissioners voted May 6 to support PCMH’s proposal to operate a transitional nursing facility, similar to a nursing home but offering more intensive services than existing centers did. The vote was 7-2, with Gaskins and Savage opposing.

McRae told the board that their approval was not required under the hospital’s bylaws, but that if they supported the request it would make a favorable impression on the Certificate of Need panel when the application was made.

PCMH and four nursing homes entered into competition for 60 nursing home bed slots included in the 1996 State Medical Facility Plan. The hospital proposed to establish a unit in its existing building, with 24 beds dedicated to transition care and six to long-term care. “We really believe it will have an impact on reducing health-care cost because right now we are having to leave patients in our acute care beds, which are more costly,” Kathy Barger, vice president for planning, said. “We think we are best able to provide that service because we have physicians who are right here and who are able to see the patients.”

PCMH’s application was denied by the state Division of Facility Services, the division deciding instead to allow Britthaven, Inc. to build a 60-bed nursing home in Ayden. The applications of two other agencies, Cypress Glen and Tar River Manor, made at the same time had also been denied, and it was not known whether they would appeal or not.

Home Healthcare for Special Needs

In May, PCMH joined with other eastern North Carolina hospitals in creating a home-health agency for patients with HIV and AIDS. The 1996 state Medical Facility Plan suggested that additional home-health agencies were needed in North Carolina to serve special populations such as HIV/AIDS patients, Alzheimer patients, patients in underserved rural areas, and people making transitions to long-term care. The state Department of Human Resources needed to award a joint Certificate of Need to the participating hospitals in order to get the project under way.

University Home Health Care, for which PCMH had endeavored for two years to obtain approval from the state Division of Facility Services, opened on October 1, 1996. Home Health would provide skilled medical and nursing care to patients in their homes, with ECU medical students and residents receiving training in home care through the agency.

Neonatal Intensive Care

While the hospital focused on the needs of the adult population, it also recognized a growing shortage of resources for its youngest and most fragile patients. PCMH planned to spend $8 million for a new neonatal intensive care unit. If the state approved, it would also add 10 additional neonatal intensive care beds by converting adult medical and surgical beds. While awaiting approval for the 10-bed expansion, it would open an additional five beds in the NICU that had already been approved. Sharon Bradley, vice president for nursing, told the hospital trustees that the increase to 40 NICU beds would still fall short of providing enough to meet the region’s needs. She said that by a very conservative estimate they were turning away about 60 patients a year. At least 50 beds were needed.

As the referral center for critically ill infants in its 29-county service area, PCMH’s NICU cared for nearly 700 infants in 1995. Most of those admitted were premature births, who had to be sent to the Triangle or Charlotte if they could not be accepted at PCMH. Ms. Bradley said, “It’s horrible. Can you imagine being separated from an infant? When you have a newborn, you definitely don’t want it out of the region.”

The unit would be built beside the existing children’s hospital, and would provide additional support to the new pediatric surgery program. NICU was one of the hospital’s most altruistic pursuits, since many of its tiny patients were from families with limited insurance coverage or financial resoureces. Still, PCMH maintained its commitment to neonatal care. This had started even before the special nursery opened in the summer of 1978 under the direction of Dr. Verbena Sugg, with the active involvement of several Greenville pediatricians, including Drs. Earl Trevathan, Ben Shappley, Edward Davis, Michael Bramley, and Samuel Pepkowitz.

Regional Partnerships

McRae and his administrators continued to look for opportunities to expand services throughout the eastern region. They began discussions with Roanoke-Chowan Hospital in Ahoskie that could lead to some type of formal partnership between the two. Ms. Barger, PCMH vice president for planning and marketing, said on September 23, the partnership should be finalized in about 90 days and involved leasing and not purchasing the Ahoskie hospital.
At about the same time, the hospital began discussions with Martin General Hospital in Williamston concerning a possible lease agreement. It would prove to be a more contentious move than the foray into Ahoskie. By mid-April, 1997, two Tennessee for-profit companies were competing against PCMH to buy the Williamston hospital, invited by the Martin County Board of Commissioners. Their offers ranged from $10 to $15 million up-front, with additional lease payments. The two were offering to invest in capital improvements. PCMH was offering $4 million up-front, $300,000 a year for 30 years and $10 million in capital improvements. At the end of the 30-year lease, PCMH would automatically own the hospital.

Martin General was a 49-bed hospital, and operated three primary-care facilities. The hospital was also a host site for the ECU School of Medicine-PCMH telemedicine system, and participated in training residents and medical students.

McRae said PCMH was best suited to run Martin General because it was a neighbor, was here for the long-term, and knew and understood eastern North Carolina. He suggested the for-profit companies would be more interested in profits than good health care.
Martin’s other suitors disagreed, saying that much of the money they made would be reinvested in the community. They noted that while PCMH was a not-for-profit institution, its revenue between $20 and $30 million a year above expenses was indeed a “profit.” They felt that the issue of for-profit versus not-for-profit was just a tax classification.
By the end of April, a fourth firm had expressed interest in buying Martin General. Adding it to the list gave the other bidders an opportunity to revise their offers.

Martin County commissioners announced in June 1997, that they had agreed to have Community Health Systems take over the Williamston hospital.

McRae said in 1998 that PCMH might continue the partnerships with Martin General that had been set up before Community Health bought it. PCMH provided medical residents for a Martin General clinic, and with assistance from a Duke Endowment grant, funding for the Pediatric Asthma Program and for school nurses in Martin County schools.

Meanwhile, efforts to strengthen relationships with neighboring hospitals were continuing to bear fruit. On August 19 at the PCMH board of trustees meeting Gary White, special projects officer, announced that, effective July 28, Carteret General Hospital had become part of University Health Systems, the umbrella organization of PCMH, the school of medicine, and their affiliates. This formalized a working relationship of several years’ duration. The agreement was designed to enhance cooperation between the two institutions like that already under way in the telemedicine service provided to the Morehead City hospital, and to encourage future joint endeavors.

Fred Odell, president of Carteret General said, “We’ve had a long and successful relationship with Pitt and ECU. We see this affiliation as helping us cope with the changes in the health care industry.” The affiliation agreement with the hospital in Morehead City was the first formal link between PCMH and a hospital in the southeastern area of the state.

White said that linkages between PCMH and smaller hospitals in the region were to be a wave of the future.
During fiscal year 1995-96, PCMH admitted 657 inpatients from Carteret Couty, out of 32,000 such admissions.

                                                                Managed Directions

In January, 1997, PCMH had joined three other NC medical centers to become one of the owners of Managed Directions of North Carolina, a Winston-Salem-based physician practice management firm that planned to open offices in Greenville, Chapel Hill, and Charlotte. The Wake Forest University Baptist Medical Center , which retained a 25 percent interest in the company, had owned the company for two years, but needed additional capital.

The new arrangement, with each owner holding a quarter interest in the company, set the stage for Managed Directions to become one of the first physician practice management firms in the country to operate over an entire state. MDNC had served 600 physicians, mostly in northwestern North Carolina, but with the opening of the Greenville office around June, 1998, would extend its services from the mountains to the coast. Practice management firms were growing in importance in the health care field, because they made it possible for doctors to spend their time in treating patients and avoid much of the time-consuming paperwork required with managed care.

Carolina Summit Healthcare

At a meeting on March 26 at Greenville Country Club to review the documents relating to Carolina Summit Healthcare Inc., changes had been suggested that then had to be ratified. On April 2, the CSH board approved the eight documents needed to make the business operational. Three of the eight, the articles of incorporation, the bylaws, and stock offerings, also had to be approved by the PCMH board of trustees. They were expected to approve them during a called meeting on Wednesday, April 8.

Other documents could be filed with the state Department of Insurance without PCMH approval.
When approval came, expected about mid-April, Carolina Summit could begin offering its stock for sale to investors, with the money remaining in escrow until the for-profit HMO was finally approved.

Physicians and nonprofit hospitals were potential shareholders. New Hanover Regional Hospital in Wilmington and Cape Fear Valley Hospital in Fayetteville had members on the Carolina Summit board, and could purchase shares. PCMH would retain about 10 percent of the reorganized HMO. Summit investors would receive no dividends for the first 10 years.

There were 24 HMOs operating in North Carolina at the time, of which only three reported profits in 1997.
Allen Feezor, PCMH vice president of managed care, said he expected it would take three to five years for Carolina Summit to break even.

PCMH’s HMO would serve only about 40 of the 70 counties it was licensed to serve. When its stock offering period ended on September 15, Carolina Summit Healthcare Inc., had received only $8 million of the $10 million it had expected. Mission Hospital in Asheville and several rural hospitals associated with it, and New Hanover Regional Medical Center in Wilmington had decided not to invest in the company.

New Hanover had used its funds to buy two hospitals from Columbia/HCA, and had also hired a new CEO who was against managed care. Cape Fear Hospital in Fayetteville was still involved, and was one of the three hospitals that had invested the $8 million in the HMO, the others being Onslow Memorial in Jacksonville and Nash General in Rocky Mount. The board of Southeastern Hospital in Lumberton had approved investing in Summit, but had not followed through.

The trustees decided on December 15 to approve operating the HMO on a smaller scale than originally planned. This opened the way to licensing by the state Department of Insurance by late in the winter for operation to start by late spring. New bylaws were written, calling for a 13-member board instead of the 18-member one originally planned. A new business plan defined the service area as including counties served by the Cape Fear and Nash hospitals and 29 counties in eastern North Carolina served by PCMH. Cape Fear Valley Hospital in Fayetteville and Nash General Hospital in Rocky Mount had agreed to become equal shareholders with PCMH, each investing $3 million.

                                                                  Still More Partnerships

Since November, 1996, when PCMH took over management of Bertie Memorial, discussions had been going on with the Windsor hospital about PCMH’s leasing it. In December, 1997, Bertie County commissioners asked for offers to take over the hospital and other related assets, and PCMH had filed a formal proposal.

The Windsor hospital, which opened in 1953 to offer a wide range of acute care services, had lost patients to hospitals in nearby counties to a point where in recent years it had operated at a deficit. Because of the shortage of funds, it had not been able to keep abreast of current medical technology or adequately maintain its facilities. The patient population at the hospital had been averaging only nine patients, and the hospital had lost more than $281,000 in fiscal year 1996.

The new facility would provide 24-hour urgent and emergency care, same-day surgery, anesthesia, respiratory therapy, primary care, specialty clinics, radiology, pharmacy and laboratory services. Under the new arrangement, there would be six short-stay beds for patients who required hospitalization for up to 72 hours. There would also be six beds for patients recovering from outpatient surgery.

PCMH would continue to provide indigent care at Bertie Memorial, and Bertie County would continue to fund charity care. A major element of the lease proposal was PCMH’s agreement to construct a 37,880-square-foot hospital to be dedicated to outpatient and short-stay services, at a cost of about $10 million. The building was to be financed by Bertie County and leased to the health system for payments equivalent to the debt service. At the end of the 20-year lease period, University Health Systems would own the hospital.

Bertie County and PCMH filed a Certificate of Need to build the short-stay facility. If the state approved, construction could begin in 1999 and be completed by April 1, 2000.

Community Healthcare Initiatives

The hospital energized its community-based healthcare initiatives in the mid-1990s, under the guidance of Vice President Diane Poole and coordinator Catherine Nelson. The main community health initiatives for PCMH were school-health, community health, and pediatric asthma. The comprehensive school health program had helped bring about improved absenteeism rates for chronically ill children, had found healthcare providers for children who had no primary physician, and enabled many of them to avoid emergency department visits. During the first 18 months of operation, the program’s six school health specialists had met with 1,981 individual students, found health care providers for 500 students in kindergarten through 5th grade, presented health lessons to 255 classes, and managed the care of 91 children with chronic disease and other special needs.

PCMH was honored at a leadership conference in April 1998, of more than 1,600 health care organizations devoted to integrating health care delivery and improving its quality and efficiency. At this meeting in Nashville, TN, PCMH was formally presented the annual Leadership Award. The hospital was one of only two organizations in the country to be recognized for community health improvement activities.

In the Pediatric Asthma Program, PCMH had instituted a comprehensive program with school-based, outpatient, and inpatient components. For this No. 1 chronic childhood illness, the program brought about a 40 percent decrease in emergency department visits, a 50 percent decrease in absences from school, while cutting the cost of inpatient care of asthmatics in Pitt County by nearly 50 percent.

The third component of the program, Pitt Partners for Health, organized in 1995 to explore the most important healthcare needs of Pitt County, was also recognized in the award. A community health survey carried out by PPH was to be used to plan and bring about collaborative health interventions in the county. Dr. Therese Lawler, a member of PPH who was also chairman of the Pitt County Board of Health, described PCMH as a leader in community health. She said “PCMH has shown strong leadership as evidenced by this award and the initiatives such as the school health program and Pitt Partners for Health, which will be a prime mover in identifying health care needs.”

Strategic Planning

On October 9 and 10, 1997, the hospital held its annual planning retreat, attended by about 150 members of the hospital’s management, by local and regional physicians, regional hospital leaders, and government leaders. Two invited speakers were Harry Nurkin, president and chief executive officer of Carolina HealthCare Systems in Charlotte, and Neil Peyser, vice president of the Tiber Group, a Chicago consulting firm that had helped formulate the hospital’s five-year strategic plan.

In 1992, while she was at home on bed rest in her second pregnancy, the hospital’s vice president for planning, Kathy Barger, had combined her ideas and those of McRae and other hospital leaders into what eventually became the strategic plan expressing the PCMH vision for the future. It focused on the broad strategies required to create an integrated healthcare delivery system. “That was really the only way I had time to think about the changes that PCMH would need to make,” Ms.Barger said. “I don’t think we envisioned owning other hospitals. That document relayed the conviction that we can’t stand by; we need to be a leader for this region. ...It’s not a question of can we beat out the competition next door, but can we make a positive impact.”

In a later interview, Ms. Barger reflected on the vision document, “We wondered how to make that connection back with local medical communities, and in that vision document that was produced in 1993 and actually approved in 1994, we really set the stage for saying that we really just can’t be worried about what happens to us. We have to be worried about what happens to the other providers in eastern North Carolina because we are very connected to them... .The ability to make this medical center grow in Greenville and flourish really depends on economic viability of all eastern North Carolina and the healthcare providers being as strong as they could be in the local medical communities,” she said.

The Five-Year Strategic Plan, summarized in a brochure with that title and subtitled, “Preparing for the
Future 1997-2000,” had been put into final form during 1996, with the help of the Tiber Group, and set forth in a set of strategic priorities, as follows:

1. Build partnerships with physicians—It is critical to establish mutually beneficial relationships with physicians and allied health professionals who are involved in primary, specialty and subspecialty care. These providers are a key point of access to patient education and care, a primary source of referrals and serve increasingly as healthcare resource managers.
2. Provide the highest quality care at the most reasonable cost—Our plans and strategies must reinforce     our commitment to provide appropriate, high quality care as efficiently and effectively as possible.
3. Build partnerships with hospitals and delivery systems—UHS must use a range of strategies to build     relationships with other providers in the region. The strategy for forging these relationships is based on                three broad categories:
    a. Informal relationships or affiliations to provide students with experience in healthcare delivery.
              b. Institutional partnerships, built around joint ventures for clinical programs, information links, and         eventually, joint contracting.
    c. Sponsored institutions to support local delivery systems, ensure community-based services and resist                   encroachment by uninvited outsiders.
4. Develop a comprehensive continuum of care, including many elements–wellness, prevention and public health, and extending through tertiary inpatient, rehabilitation and home-care services. The elements of the continuum are linked through care management protocols contracting to provide patients with efficient, appropriate, and effective care information.

5. Build payer/purchaser relationships—UHS is the center of choice for tertiary services in eastern North Carolina, a region just beginning to feel the effects of managed care. To deal with changes brought on by managed care, physicians in the region are beginning to organize, and UHS is develoing the capabilities needed to manage risk contracts. These efforts must intensify over the next few years if UHS is to maintain its position as the provider of choice.

McRae told the group, “We’ve done a lot in the past year, but still have a long way to go.” During that year, there had been some progress, but not enough, toward the primary objective of the five-year plan, building an integrated healthcare delivery system to serve eastern North Carolina.

The retreat’s discussions focused on such topics as building relationships in the region with physicians, insurance companies, and HMOs, building networks with other hospitals in the region, and improving community health throughout PCMH’s service area.

Nurkin, the keynote speaker, opened the retreat with an account of the growth of Carolinas HealthCare from a single hospital to one of the largest healthcare systems in the Southeast. He said that a major problem in dealing with the increasing integration of health care had been the variety of opinions on how to achieve a unified system. He said, “The continued fragmentation of health care is the thing which bothers me most. Each one has an idea how the system should come together, and we haven’t been able to do it.”

On the next day, there were discussions of improving access to health care through regional relationships. The sessions were led by Doug Atkinson, vice president of networks at N.C. Baptist Hospital in Winston-Salem, Austin Letson, president of the Carolinas Hospital Network, and Jim Ross, chief operating officer of PCMH and head of the hospital’s subsidiary, East Carolina Health.

Ross stated that the past practice at PCMH had been to provide help to regional hospitals when they asked. Currently, the hospital was shifting to a more active approach, leasing, managing, affiliating or forming joint ventures with hospitals. He said that when someone called and asked for support, PCMH responded, but in the future would favor setting up a more formal relationship.

Quentin E. Baker, executive director of the Center for the Advancement of Community-Based Public Health, talked about community involvement. He said the hospital should help people create or run health initiatives for their own communities. Without this, healthcare agencies would not succeed in meeting the needs of the communities they served. Baker said, “You partner with those communities. You don’t determine what they need to be healthy. You can tell the citizens of west Greenville you have the number-one rate of breast cancer and cervical cancer, and they look at you and say ‘So what?’ there are more basic health issues for people living in west Greenville and rural Pitt County. To be whole is to be about all that affects me and my community, not just a broken leg or a bad heart. Can I be healthy if I have no food … no place to live?”

Baker was a Harvard graduate who grew up in west Greenville. His center, founded in 1997, was a national nonprofit membership organization dedicated to promoting community health and well-being through partnerships among health professionals, academic institutions and community groups. His remarks challenged the healthcare community to think more broadly about its stated mission.

As Far as the Outer Banks

The breadth of that mission was no better illustrated than in the medical center’s ventures to the Outer Banks, 150 miles to the east of Greenville. The Outer Banks attracted hundreds of thousands of tourists each year, and had many drownings, boating injuries, and automobile collisions. Medical facilities in the area were inadequate, and any seriously ill or injured patients had to be transported many miles inland or taken to southeastern Virginia for treatment. Under McRae’s guidance, the hospital sought to extend its reach into the region. Numerous healthcare experts had recommended such a strategy as a means of preserving PCMH’s position in the east. In the late 1990s, discussions were going on with at least six smaller hospitals in the region about everything from leasing or buying to managing the smaller hospitals.

Representatives of Pitt Memorial and of Albemarle Hospital in Elizabeth City met during February, 1996, to consider as a joint venture opening a primary healthcare center in Nags Head on the remote Outer Banks. The undertaking was, from the viewpoint of PCMH, part of its extension of service into the northeast region of NC, where patients had traditionally tended to go to hospitals in southeastern Virginia. To implement it, the hospital would purchase an existing medical practice, First Flight Family Practice Center, currently headed by Dr. Charles Davidson and his nurse-practitioner wife. Dr. Tom Irons, project coordinator and senior associate dean in the school of medicine, said that the hospital would provide two or three additional doctors. Albemarle Hospital’s specialists would share space in the new facility, according to Don Witosky, Albemarle’s chief executive officer, enabling them to expand their services to Nags Head, where their small center was already at full capacity. He anticipated that it would strengthen programs at both Pitt and Albemarle hospitals if they could operate jointly.

No Certificate of Need was required for this Nags Head enterprise, because it involved only doctor’s offices. There were no medical facilities in Dare County in the 65 miles between Nags Head and Hatteras. In a second proposal, Irons said, PCMH would fund the practice of a physician in Avon with funds from the School of Medicine Generalist Physician Program. He would be a part of the staff of the Hatteras Medical Center, which would share the cost of constructing a building in Avon.

Over the years, Dare County citizens had lobbied unsuccessfully for their own hospital. Their efforts were futile, however, until Senator Marc Basnight (D-Dare) threw his considerable political clout behind the project. To attend a state public hearing in Raleigh, more than 100 Dare County citizens rode three buses without air conditioning for several hours to demonstrate their support for developing an Outer Banks hospital. Following lengthy, emotional comments and much discussion, the project won state approval.

In April, 1998, PCMH and three other medical centers in eastern North Carolina and Virginia considered jointly building a $15 million hospital in Dare County. The nearest inpatient facilities were 45 minutes to an hour away from Dare County.

The other three hospitals were Chowan Hospital in Edenton, Albemarle Community Hospital in Elizabeth City, and Chesapeake General Hospital in Chesapeake, VA. PCMH was leading the discussion and would assume about 60 percent of the project’s cost. “It is important for us to fulfill our mission of improving healthcare services for all of eastern North Carolina. That’s the reason the hospital and the medical school are here,” McRae said. The project would be too financially risky for a single institution to undertake. Since Dare County had such a large tourist population in the summer, use of the facility would drop significantly in the off season.

The hospitals had to get approval from the state to start the project, along with the concurrence of the Dare County Board of Commissioners. It would be a critical-access hospital with limited services and only 12-16 beds.
In the project to build a medical center in Dare County, PCMH lost its partner, Albemarle Hospital in Elizabeth City. Albemarle decided to support Sentara Health System of Norfolk in its competing application to build a $14 to $16 million hospital. The Children’s Hospital of the King’s Daughters, also in Norfolk, would participate but would not be an owner, Albemarle president Phil Bagby said. Albemarle, Sentara, and King’s Daughters served about 60 percent of Dare County patients.

Both PCMH and Sentara were preparing certificate of need applications to submit to the state by a June 15 deadline.

Bagby said one reason for the decision to join Sentara in the project was their existing relationship. Probably 80 percent of Albemarle’s referrals went to Sentara, which would be more accessible to Dare County patients needing tertiary care than PCMH would. He said Albemarle would renovate and expand a facility that they already owned in Kitty Hawk for the 20-bed acute care hospital they proposed. Albemarle would pay 51 percent of the cost of the new facility, and Sentara the rest.

Ms. Barger, vice president for planning, said that PCMH and Chesapeake would build their 18-bed, limited access hospital from scratch. PCMH would pay 60 percent to 70 percent of the cost and Chesapeake the remainder. If they were approved, PCMH and Chesapeake planned to have their hospital in operation by January 2001.

Two CON applications were submitted at a public hearing in August 12, 1998, each supported by about 1,000 pages of documentation. One was by PCMH in partnership with Chesapeake General in Virginia, and the other by Health-Carolina, an alliance of Albemarle Hospital of Elizabeth City and Sentara Health Systems of Norfolk. The Children’s Hospital of the Kings Daughters, also in Norfolk, was listed as a nonequity partner.
PCMH-Chesapeake proposed building a new 63,000-square-foot hospital with 18 beds in Kill Devil Hills, at a cost of $20 million. HealthCarolina proposed building a 20-bed, $18-million expansion of an existing clinical facility in Kitty Hawk, owned by Albemarle Hospital.

HealthCarolina brought in two bus loads of supporters to the August hearing, so that most of the over 200-person audience were wearing buttons and waving paper fans to tout the Virginia partnership. Pitt-Chesapeake supporters carried no advertisements and were in a minority, but were just as convinced that their partnership would provide a better hospital. The formal presentations mirrored the differences in approach of the two petitioner groups. HealthCarolina gave an elaborate multimedia presentation focusing on the biographies of the partners, featuring Albemarle CEO Phil Bagby and executives from Sentara and Children’s Hospital of the King’s Daughters. Pitt-Chesapeake presenters, McRae, Ross and Sue Collier from PCMH, and Don Buckley, president and CEO of Chesapeake General, emphasized the hospital they proposed to build.

The Dare County Board of Commissioners and municipal boards of Kill Devil Hills and Nags Head endorsed the Pitt-Chesapeake partnership. The boards of Kitty Hawk and Southern Shores endorsed HealthCarolina.
About half of the citizens who spoke, including the county’s senior physician, endorsed the Albemarle-Sentara plan. A main concern was that patients and their families would have to travel the 150 miles to Greenville for tertiary care if the Pitt-Chesapeake partnership were chosen. That group responded that existing patterns of referral would not be influenced by the ownership of the Dare County hospital, since it was usually the result of consultation between patients and their physicians.

Emergency physicians from the area who served on the 20-mile strip from Corolla to Whalebone Junction were concerned with the many head-on collisions, drownings, and near-drownings during the peak tourist season. They spoke in favor of the Pitt-Chesapeake proposal because of its larger emergency department, 9,500 square feet versus the 3,500 square feet in the Albemarle-Sentara plan. The larger area for emergency treatment would be a decisive advantage, considering the preponderance of trauma cases in the area.

On November 25, the N.C. Division of Facility Services awarded a certificate of need to PCMH and Chesapeake General to build an $18 million, 18-bed hospital on 14 acres of land along US Highway 58 in Kill Devil Hills. PCMH would pay 60-70 percent of the cost and Chesapeake the rest. Building could start as early as the summer of 1999.

The Division of Facility Services turned down the applications of the Sentara-Albemarle partners, who chose not to appeal the decision, clearing the way for construction to begin.

In June, 1999, PCMH re-examined the location of Kill Devil Hills hospital. Outer Banks Hospital Inc, the partnership between Pitt and Chesapeake General, filed a request with the state Division of Facility Services to rule that changing the location would not amount to a substantive change in the Certificate of Need application approved in November 1998, so would permit construction to proceed without having to resubmit the CON request. The partnership had not looked at a property in Nags Head which was somewhat smaller than the two adjacent properties in Kill Devil Hills, but provided about the same amount of usable space. Also, the Nags Head site had other advantages: it cost between $1.5 and $2 million less, it had access to an existing sewage system, and was two feet higher. With the modification in the CON, the hospital could be ready to open in early 2001.

Collaboration continued, this time toward the southeast, as the hospital affiliated with Onslow Memorial Hospital in Jacksonville. The agreement linked the two institutions, encouraging further collaboration without involving PCMH in managing, leasing or buying Onslow Memorial.

Heritage Hospital

In mid-1998, word leaked out that PCMH was seeking to buy Heritage Hospital in Tarboro for $80 million. Heritage was owned by a major Tennessee-based chain, Columbia/HCA. The hospital’s officials confirmed that Columbia wished to sell it, but had not named a buyer. Rumors had also circulated about potential buyers. Since Columbia/HCA was a publicly traded company, it was a criminal offense to reveal any information that might affect its stock price.

PCMH, in cooperation with Novant Health Network in Winston-Salem, purchased Heritage Hospital in Tarboro and clinics in Macclesfield and Oak City. The negotiations were completed in early July, and PCMH expected to take possession on October 1. The current president of Heritage, Janet Mullaney, would continue to lead the facility, with few major organizational changes. Most employee benefits would remain unchanged, except that employees would no longer be able to buy stock in the company, as it had become nonprofit through the buyout. Ms. Mullaney said, “It’s going to be absolutely the best option of all the options Columbia could have chosen for our future.” She and her co-workers were eager to learn more about PCMH and become part of University Health Systems.

AESOP

PCMH’s cardiac program continued to advance. Dr. W. Randolph Chitwood, Jr., chief of surgery, performed the first robotically-assisted mitral heart valve procedure in the United States on June 9, 1998. He repaired the mitral valve in the heart of a 34-year-old woman with advanced inflammation of her pericardium, the membrane that encloses the heart. He was assisted by Computer Motion Inc.’s voice-controlled Automated Endoscopic System for Optimal Positioning or AESOP 3000. AESOP is a surgical robot controlled by the surgeon’s voice, which he records before the operation with such commands as “move left” or “up,” on a card that is inserted into the robot’s computer control. The small movements that the robot’s instrument-holders make are activated only by the surgeon’s voice. Chitwood also employed a three-dimensional visualization system during part of the operation.

“In this patient,” he said, “I did the operation totally videoscopically rather than using direct vision. AESOP was consistently steady and allowed me to track my instrument movements more quickly than in the past. This approach also allowed me to use much smaller incisions, which benefited the patient greatly.” Before using AESOP, he had performed more than 60 mitral-valve operations using television and such equipment as the three-dimensional Advanced Visualization and Information System that he also employed during part of the mitral-valve surgery on June 9. That system provided the realistic depth perception and high resolution images essential for minimally invasive cardiac surgery.

Departure of a Pillar

Charles Fennessey retired from his position as PCMH’s vice president for human resources on August 14, 1998. He had worked at the hospital for 17 years, having joined the hospital’s administration after working at a hospital in Indianapolis. His 25-year career in health care had begun in the medical corps as an Air Force officer.
When he came to PCMH, it was a 350-bed hospital with few regional connections. However, then-President Jack Richardson and McRae, then vice president for patient services, had told Fennessey they wanted him to put together a human resources division that would be adequate for the large regional medical center they planned. By the time of his retirement, the Human Resources division had grown from its initial 11 to more than 60 persons, matching the expansion of the hospital to a 731-bed tertiary care center whose presence was felt all across the Southeast.

Fennessey made many innovations during his tenure at PCMH: instituting a 401(k) plan to enable employees to build deferred-tax retirement accounts, a flexible benefits plan, construction of an on-site child-care center, a nationally recognized wellness program, healthcare and childcare reimbursement accounts for employees, and the Home Grown education program. He was a major force in laying the groundwork for the 50,000-square-foot wellness center.

Community Access

In the fall of 1998, state health officials chose University Health Systems and Cabarrus County as sites to test a state-initiated community-oriented health plan, the Community Care Plan, to improve access to treatment for Medicaid recipients. The plan’s objectives were to provide appropriate care economically, aiding physicians in furnishing the best possible service through a system that they helped develop themselves. The proposal from Pitt County had been prepared by Pitt Memorial and by the staffs of the Eastern Carolina Health Organization (ECHO), a corporation of 730 physicians in the region who had joined to develop better approaches to health care.

Pitt and Cabarrus Counties had been chosen earlier in the year on the basis of their proposals, which state healthcare officials then helped to put together into the complex plan that would guide the pilot program. State officials hoped the two pilot programs would give some understanding of how to bring a stop to the steady increase in Medicaid costs, while giving patients improved access to healthcare. Dr. Charles Willson, a physician at Greenville Pediatric Services and medical director of the Community Care Plan, said the public-private association was important to the program’s success.

The partners in the plan included ECHO, University Health Systems, the Pitt County Health Department and Department of Social Services. The health department would coordinate care and provide prevention services. Social Services would begin patient education and assist in doing a health-risk appraisal at the time a patient was enrolled in the plan.

The initial focus was on women and children’s programs. “That group,” said Dr. Walter Pories, president of ECHO, and chief of surgery at the hospital, “is the largest fraction of Medicaid recipients, but not the most complex. Our next challenge will be how to help the aged and disabled.” The first step was for the Pediatric After-Hours Clinic to begin seeing patients in the ECU Pediatric Outpatient Center. The clinic saw 575 patients during its first six weeks of operation. There were 15 pediatricians practicing in the clinic, five from ECU and 10 from private practice. Medical students and residents were also taught in the clinic.

Additionally, an after-hours clinic was opened for gynecology and obstetric patients requiring urgent care. That clinic, located in two examining rooms next to the PCMH Birthing Center lobby, would also enable private and ECU physicians to treat patients. PCMH would provide nursing staff.

ECU’s departments of medicine and family medicine had been offering extended patient-care hours for several years in the Family Practice Center, and the Firetower Medical Office had provided extended hours from its opening in September 1997. As Dr. Richard Reinhart, interim associate dean for clinical affairs and medical director for ECU Physicians said, “Access to medical care is difficult during normal working hours for some patients. Providing outpatient clinics with extended hours gives patients the option for convenient, less costly care than the emergency department.”

HealthDirect, a telephone service staffed by registered nurses around the clock, had been since February detouring patients away from the emergency departments. HealthDirect answered an average of 2,612 calls a month. In July, of the callers who said they originally intended to go to the emergency department, 47 percent were advised to see their physician in one day or more and 18 percent of that number were given home-care advice.
After hours, the nurses took calls forwarded by Greenville pediatricians both in private practice and at the school of medicine, and provided health care advice and information for the Medicaid population of Pitt County. The nurse coordinator of HealthDirect, Becky Ross, said “The overall objective is to increase a patient’s access to health-care information and direct them to the appropriate level of health-care at the appropriate time.”

                                                                  The Halifax Connection

Halifax Regional Medical Center and PCMH signed an affiliation agreement that would enable them to work more closely together to provide improved healthcare to their shared regions of eastern North Carolina. The two institutions had worked together for some time, and the agreement made no changes in their independent administrations or ownership. PCMH had stationed an EastCare critical care transport at the Halifax hospital, which had 206 beds and a medical staff of 61 physicians. The two hospitals were contemplating the establishment of a wellness center at the hospital that would be jointly owned by HRMC and PCMH. ECU School of Medicine health sciences students had for some time rotated through Halifax, and that would continue. ECU students and faculty staffed a clinic in Tillery that provided care to Halifax County residents.

Halifax President Rick Gilstrap maintained close ties at PCMH, where he had been a well-respected executive until 1982. “The formal relationship,” he said, “was not a great leap from what we had been doing, but it made both parties more comfortable to have something on paper.” The link made Halifax part of University Health Systems of Eastern Carolina.