WARREN MCROY
Past Chief Financial Officer
Pitt County Memorial Hospital

April 20, 2000

Interviewer: Marion Blackburn

Marion Blackburn: Please talk a little about your background.

Warren McRoy: I was born in Washington, North Carolina. I am a CPA. I graduated from Chocowinity High School in 1954 and I graduated from Emmanuel College in Franklin Springs, Georgia, a junior college, in 1956.

Marion Blackburn: How did you get to Georgia?

Warren McRoy: That is a church school and that was the church I grew up in. Through study and correspondence work I obtained my CPA certificate in 1967. In 1970 I was working for a CPA firm in Atlanta, Georgia and I was contacted by North Carolina Blue Cross/Blue Shield that they were hiring auditors to do Medicare/Medicaid audits in North Carolina and I was one of the original groups of auditors that North Carolina Blue Cross hired to do Medicare audits in North Carolina. I started with them in 1970 and I was stationed in Greenville, headed up the area for the hospitals, nursing homes and home health agencies and did the Medicare/Medicaid audits and through this connection Jack Richardson, who was Administrator at Pitt County Memorial Hospital, talked me into going to work for him in 1975.

Marion Blackburn: That was just before the new hospital opened.

Warren McRoy: That was in 1975 and my office was located adjacent to Jack Richardson's office, which was in the building behind the old hospital. At that time we called it the nursing quarters. I believe it was April 30, 1977 was when we moved into the new hospital.

Marion Blackburn: What attracted you to this new life or really a whole new role?

Warren McRoy: Well, it was mainly salary at the time because every time Jack Richardson talked to me about leaving Blue Cross and coming to work for Pitt Memorial, I told him if he got the money right that I would make the change. In 1975 he had me come before the Hospital Board and we discussed the situation and we got together on salary and that's when I came to work for the hospital. I left Blue Cross and came to work for the hospital. At that time it was still salary.

Marion Blackburn: I have to ask this just sort of as an aside. You had I guess a two-year college degree and then you got your CPA. A lot of people get their CPA certificates and they never do much more than, and I don't mean to say that as a judgment, but they have managed an office or maybe a business, but you were pretty right out of the gate doing some major financial work. Do you think you had a knack for it?

Warren McRoy: Yes, but I believe I am the only CPA that I have ever talked to that has a CPA certificate with actually only two years of college. At that time the requirements for taking the CPA exam, the minimum requirements, were two years of college, two years experience with a CPA firm and a number of quarters of accounting, I don't recall the number. When I applied to the North Carolina CPA Board to take the exam they said that I had the two year's experience. I had the quarters of accounting because I had taken a correspondence course through the International Accounting Society out of Chicago. But they would not recognize the two-years of college at Emmanuel College but East Carolina University would recognize those two years and so I transferred my two years of college to East Carolina and took a summer course at East Carolina to get my credits transferred and then the CPA Association would accept them from East Carolina so I got in under the minimum requirements to take the exam. As far as I know, I am the only CPA I have ever talked to that only had two years of college.

Marion Blackburn: In high school were you a whiz in math?

Warren McRoy: No. Well, I was always one that took business courses. In fact, in high school the business teacher told me that I was the only male that she had ever had that stayed in the shorthand course for a whole year.

Marion Blackburn: So you can do shorthand?

Warren McRoy: No, I just took the course and I think mainly it was because I could make marks that I could remember what they were and so I could take dictation. I did take bookkeeping and typing. I was pretty good in typing. Then when I went to college I was able to do pretty well in accounting courses.

Marion Blackburn: So you went from Emmanuel College to working in Atlanta in a CPA firm?

Warren McRoy: Well, no, between that time I worked. When I got out of school I did bookkeeping for a few years and then I went to work for a CPA firm and later wound up in North Carolina.

Marion Blackburn: And it was with a CPA firm in Atlanta and from there you went back to North Carolina.

Warren McRoy: That's right. When they contacted me from Blue Cross they did not even know I was from eastern North Carolina. All they knew was that I worked for a CPA firm in Atlanta.

Marion Blackburn: So you were an auditor for about five years with Blue Shield and I guess at that time you pretty much knew the ins and outs of hospital finance and Jack Richardson recognized that.

Warren McRoy: More the Medicare/Medicaid reimbursements and that's what Jack Richardson was concerned about because he had enough foresight to know that Medicare and Medicaid the future of what was going to be a large part of reimbursement for hospitals and it was important that he get somebody that knew that side of the fence. It would be like a large taxpayer hired somebody from the Internal Revenue Service to come to work for him.

Marion Blackburn: Absolutely and that has proven true that Medicare and Medicaid continue to be an enormous source of revenue. Now, when you first came to the hospital was it the system then or was it just expenses? I know at one point there was a major shift where instead of being just a bill to Medicare/Medicaid, Medicare/Medicaid came up with their acceptable expenses. Was this about that time?

Warren McRoy: No, from the beginning Medicare was a cost reimbursement program and so it was very important that the cost reports maximized reimbursement from the hospital's standpoint because they were paying hospitals their definition of cost for providing services to the patients. It was a step down cost finding report and Medicare started, I believe, in 1966 and this was 1970. Up until that time any audits that had been done were done by Blue Cross by a CPA firm in Raleigh. In 1970 Blue Cross decided to hire their own auditors to do these audits and so that's what I was doing. I was going to the hospitals and to the CPA firms that were preparing the cost reports for the hospitals to check the accuracy of those reports that they were filing.

Marion Blackburn: When you came to the hospital it became important to as you say, do a step down cost finding. Explain a little bit about what your main role was.

Warren McRoy: When I was hired at the hospital, I was hired as a Reimbursement Officer, not as a Chief Financial Officer. The people that were in charge of the Business Office and in finance continued to do that. My job was to handle the reimbursements and to make sure that the hospital maintained records and so forth that we could get the maximum Medicare reimbursement for Pitt Memorial Hospital. I can't recall exactly the timing, but approximately at the time we moved into the new hospital was when I was made Chief Financial Officer and all of the finance was made my responsibility.

Marion Blackburn: I have heard and I don't know the dates and times they took place but it seems like one of the things that you guided the hospital through was the period when there was a change in the way Medicare/Medicaid expenses were calculated. Does that sound like something you remember?

Warren McRoy: Yes, it went from a strictly cost reimbursement to a DRG system in which they established set amounts for each diagnosis.

Marion Blackburn: That must have been a major change.

Warren McRoy: You still had cost reimbursement and you had DRGs for certain diagnosis but you had outpatient services and some ancillary services that were still paid on a cost basis.

Marion Blackburn: What was your biggest challenge during that time after moving into the new hospital?

Warren McRoy: My philosophy was always to hire the very best people I could hire. I had a graduate of Duke, Julia Day; I had a graduate of Georgia Tech, Steve Aslinger; and I had an ECU graduate, Keith Askew. I had a comptroller, Gary Kester, that had a great deal of experience. I always prided myself on having very good people to work for me.

Marion Blackburn: What were the things that you tried to inspire in them? In other words, how did you inspire them to continue to be good once they came to the hospital?

Warren McRoy: That they always understood their objectives, what they were doing and how it fitted in to the system, and that they were never uncomfortable with what they were trying to accomplish.

Marion Blackburn: You mentioned and I want to go back to the DRG transferral, but before then I want to talk a little bit about Jack Richardson and his foresight. So many times in my interviews and in work I have done with the hospital I hear the words vision, foresight. Would you like to talk a little bit about those concepts and how they were put into place when you were at the hospital, looking into the future and trying to plan?

Warren McRoy: Jack Richardson had a lot of foresight, I am not sure about this but I believe in his background he worked in a hardware store and he went to Medical College of Virginia. His wife, Lily, she worked as a nurse in the operating room and I think she worked to help send him to college and he got his degree and then got the job at Pitt County Memorial Hospital as Assistant Administrator under C. D. Ward. Jack was Assistant Administrator under him and then he moved up to Administrator Jack had a lot of common sense, which is what I liked to call it. He knew how to manage. He never reacted. It was always amazing how he under reacted to situations but he was always very calm and he was able to put a good team together and run a good ship.

Marion Blackburn: If administrators had been content simply with the status quo could the hospital be as strong as it is now in your opinion?

Warren McRoy: No, but there was just a lot of pent up pressure all the time for the hospital. In the old hospital there were not enough beds. We had beds in the halls continuously because there was not room enough for the patients. When the new hospital was built it was pretty much finished and ready to move in and the affiliation with North Carolina and East Carolina to be the teaching hospital for the med school came about, so the hospital was actually under renovation, the new hospital was under renovation when we moved into it. If you walk into now what is the lobby of the hospital and you see the atrium up above three floors high, that atrium was actually down on the first floor, a single story atrium there and it had already been completed. That was all being torn out and everything when we moved into the new hospital.

Marion Blackburn: Because of the Affiliation Agreement?

Warren McRoy: Yes, because of the Affiliation Agreement and the addition that was going to be put on the front for the med school affiliation. The hospital was designed with most of all the ancillary areas having outside walls so they could be extended out and a lot of those walls were being moved when we moved into the hospital. The new hospital was being renovated as we moved into it. There was always pressure to move the hospital forward and enlarge it. That has gone on since then.

Marion Blackburn: You were with the hospital roughly two years before the Affiliation Agreement was signed?

Warren McRoy: I went in May of 1975 and we moved in April of 1977. I was there about ten years.

Marion Blackburn: Were you CFO most of that time?

Warren McRoy: From the time we moved into the new hospital until some time in 1984.

Marion Blackburn: Was that to retire?

Warren McRoy: Well, at the time I left I went with a home health agency and I was with them for a period of time.

Marion Blackburn: That's about the time I spoke with Harry Leslie yesterday and that's about the time he left the Board.

Warren McRoy: I am not sure who was the Board Chairman the day I was hired but Wilton Duke was the first Board Chairman that I remember and he served as Board Chairman for a good time after I began at the hospital. Wilton Duke was a very excellent Board Chairman.

Marion Blackburn: We're talking about people with vision and we're talking about changes and we're talking about the constant pressure to grow and to evolve. I should have asked this question before-I would like to ask it again and say with all these pressures and with all these changes, what was your biggest challenge or what was your biggest aim or ambition? When you went to work in the morning you said that today you had to make sure I - what was that?

Warren McRoy: I'll have to come back to that.

Marion Blackburn: You probably have so many, it's probably very hard to keep it to one single thing. How about this, when the medical school got rolling, tell me a little bit about what the atmosphere was like from 1977? Did it change?

Warren McRoy: No, because I think it all went very smoothly because Dr. Laupus was easy to work with and we had a good relationship between the hospital administration and the medical school administration. The Board was made up of and still is of members who are all appointed by the county commissioners but about one-third of them were nominated by the UNC Board of Governors and there was never any friction there between Board members from Pitt County and Board members from outside the county. Everybody had a very good relationship there on the Board and the tasks were accomplished and that's what we worked on doing.

Marion Blackburn: Once again in keeping with the same concept of vision and foresight, what kind of an impact do you think the hospital and all its practice locations and affiliated hospitals and then the medical school with all of its practice locations, what kind of impact do you think these organizations have had on eastern North Carolina?

Warren McRoy: I guess it is immeasurable. Jack Richardson used to say that when they talked about building the new hospital there were a lot of people who were upset that we were going to take this much farmland out of cultivation. They felt it needed to remain as farmland and now those acres of farmland probably impacted millions of dollars on the economy in eastern North Carolina.

Marion Blackburn: That is a wonderful image for what Pitt County used to be and what it has become. You didn't want to take the land out of cultivation because the area was so dependent on I guess tobacco farming and all the other kinds of farming that went on here and now there is still farming but there is also just a different level of services all around and I think a lot of those have come from the medical community.

We have talked about the impact that the hospital has and of course we have talked about Medicare and Medicaid, the change with the DRG system, and the medical school; of course you left the hospital in 1984 but do you have any thoughts on the future of the hospital, future challenges or if you went back to the hospital today, something that you might have in mind that would be a challenge today?

Warren McRoy: Well, I think my background financially was conservative and I was always interested in keeping costs down and I can't say that others that feel like we should provide every service and every imagined procedure regardless of what the cost is. I can't say they are not right either but I feel like that there should be some medium there that maintains cost at a level that society will be able to support. I am not sure that it's not out of hand and now there is such an outcry for every imaginable procedure to be done no matter what the cost is. I have often wondered if there are going to be enough dollars out there to pay the tab at some point in time. Maybe it should be somewhere between where I am at and where they are.

Marion Blackburn: I have always looked at it this way. If my life is in jeopardy there is no limit. There is no limit on what I will pay to keep my life. I think that kind of thought out there that if we have the technology we don't want to put a ceiling on cost because we want to live. Do you feel that is part of what is going on here?

Warren McRoy: Oh yes.

Marion Blackburn: I think I have asked you all the questions that I am supposed to, now I would like to ask you some things that are kind of interesting to me. Is there anything during your ten years at the hospital that happened that you weren't expecting, any surprises you got - one day you came in and somebody turned your office upside down to surprise you?

Warren McRoy: I don't recall any right off the top of my head, anything that unusual. I'm sure there were times. Another thought about Jack Richardson and his foresight was before one of the bed towers was built we had run out of patient rooms and so he decided that we would rent some rooms at the Holiday Inn and put patients over at the Holiday Inn. Myself and a couple of more of us went up to Durham because Duke was doing that exact thing. They had rented some rooms at a local hotel and we came back and everyone sat down and figured out how to do it and he rented a section of what was the Holiday Inn, it isn't now, but it was at that time and he had actually put in a nursing station and patient rooms and we had an annex over there where we kept patients for awhile.

Marion Blackburn: Do you remember about when this was?

Warren McRoy: I would say about 1980 or 1981.

Marion Blackburn: What did people say when you said we rented the Holiday Inn?

Warren McRoy: You always had the naysayers who said that it couldn't be done and that there was no way we could do that. Jack Richardson had people that were doers and he had people who were talkers and this was the time he called on his doers to get it done and we did it.

Marion Blackburn: What about him, and I know he is a friend of yours, how was it that he created such willingness that when he said to do you all wanted to do?

Warren McRoy: He had the foresight to see what needed to be done and know how to do it. He was not saying to do something that was impossible, he was just saying to do things that need to be done and can be attained.

Marion Blackburn: Is there anything I haven't asked about that you would like to add?

Warren McRoy: I failed to mention during this time my counterpart at the Med School was Ben Weaver. He was the financial officer for the med school and he and I had a very good relationship and worked to everyone's advantage through the med school and the hospital because Ben Weaver was a very good financial officer. He had a lot of personality. We had a good relationship there too. I don't want to be remiss and not mention Ben because he was an excellent person.