Dr. Michael Waldrum, CEO of Vidant Health, discusses why state Treasurer Dale Folwell's plan to reform the state health plan would hamper rural hospital's at Tuesday Greenville-Pitt County Chamber of Commerce Power Luncheon.

Vidant Health’s CEO urged Greenville’s business community to support legislative efforts to combat the state treasurer’s effort to rework state health plan payments to providers.

Dr. Michael Waldrum talked about the care Vidant Health provides eastern North Carolina through its eight hospitals at Tuesday’s Greenville-Pitt County Chamber of Commerce luncheon.

“Eastern North Carolina may be the toughest health care market in the country,” he said. “It take a lot of work and dedication, diligence and intent to serve that market.”

Waldrum, who also serves as chairman of the North Carolina Healthcare Association Board of Trustees, is seeking allies in the fight against State Treasurer Dale Folwell’s plan to restructure how the N.C. State Health Plan for teachers and state employees, pays hospitals and providers. Folwell estimates the plan — which pays providers 177 percent of average Medicaid reimbursements — will save the state $300 million and plan members $65 million annually.

Called referenced based pricing, it’s modeled after a process used in Montana. Waldrum said the Montana model won’t work in North Carolina because the Old North State has a larger general population and a larger number of people on the state health plan. Montana has more hospitals classified as critical access facilities, which receive higher federal reimbursements for medical care. Waldrum said that Vidant Health’s hospitals on the Outer Banks and Edenton and Winsor are critical access facilities.

Folwell’s proposal will be felt more severely in rural communities where there are fewer industries providing commercial insurance for their employees, Waldrum said.

If Folwell’s plan is enacted on Jan. 1, Waldrum said North Carolina hospitals will see a $400 million annual reduction in reimbursements. Vidant Health alone would lose $40 million, he said.

Waldrum said the losses will require hospitals to consolidate in some instances and close in others, decreasing access to services. He also said costs would be shifted onto the health plans of businesses.

Folwell’s push also comes the same time the state is revamping the management of the state’s Medicaid, Waldrum said.

“Our largest concern is we think there is a better solution for the liabilities the state has for the state health plan,” Waldrum said. “Cutting fees for service payments as radically as they are proposed to be cut will damage rural North Carolina and rural eastern North Carolina. We think there is a better solution which is value-based payments.” Under value-based care, providers are paid based on outcomes, not the number of patients seen or procedures performed.

Waldrum said Vidant’s financial performance is solid. In the fiscal year ending on Sept. 30, the system provided care to 64,333 inpatients, 613,249 emergency and outpatients, performed nearly 47,000 surgeries and delivered more than 5,600 babies.

Vidant Health wants to acquire Halifax Regional Medical Center, a 100-bed hospital in Roanoke Rapids that services counties in the northwest region of eastern North Carolina. Discussions have been underway for nine months and Vidant has nearly completed the due-diligence process, Waldrum said. A decision should be made this summer. If Vidant acquires the hospital it committed to undertaking $30 million in capital investments and service development in a 10-year period.

“They are approached us and thought it was in their best interest,” Waldrum said. “We looked at our mission, which is to improve the health and well being of eastern North Carolina and we think they are an important part of eastern North Carolina.”

Maintaining obstetrical care in eastern North Carolina is a great concern, Waldrum said. He spoke about receiving a card with a photograph of five ob/gyn nurses who work at Vidant Roanoke Chowan Hospital with their newborn babies dressed in Christmas outfits. Waldrum said that when he met the nurses he thanked them, only to be told it wasn’t a holiday card but a reminder that they have a personal investment in keeping obstetrical services at their hospital, which has an average of one birth per day just like the Outer Banks hospital and facilities in Duplin and Washington. Obstetrical care costs are not covered by one birth a day, Waldrum said.

House Bill 184 would create a joint legislative study committee to review Folwell’s plan, producing a report by April 1, 2020. While the study is underway the existing payment system would remain in place.

The bill is in the House Committee on Health. If it receives a favorable report there it will then move to the insurance committee, according to the bill digest on the General Assembly’s website.

“We are the recognized leader for business success, strategic economic growth and community development,” said Kate Teel, president, Greenville-Pitt County Chamber of Commerce. “The economic prosperity of the community we serve depends on the success of organizations like Vidant, that provide critical services to the people who live here.”

Contact Ginger Livingston at glivingston@reflector.com or 252-329-9570.