(Raleigh, N.C.) – North Carolina’s Local Government Commission (LGC) has approved a survival plan for the struggling Randolph Hospital that includes a potential $12 million loan for a startup company to buy the Asheboro-based health system.
The 145-bed community hospital, which has more than tripled in size since it was created in 1928, entered Chapter 11 bankruptcy. Randolph County Commissioners Chairman Darrell Frye told the LGC on Tuesday, May 4, that community health care is in crisis mode.
State Treasurer Dale R. Folwell, CPA, chairman of the LGC, is an opponent of health care consolidation and hospital monopolies that drive up costs and reduce quality. He said Randolph Hospital “is a gem” that provides independent, affordable and accessible health care. He has toured the hospital on many occasions, and successfully advanced Tuesday’s motion intended to secure the hospital’s future.
The motion, passed unanimously, approved VMG Holdings LLC, doing business as VMG Health, as a disinterested and qualified third party to evaluate Randolph County’s plan to sell the hospital to American Healthcare Systems, LLC pursuant to NCGS 131A-33. The motion included approval of a loan of up to $12 million subject to four conditions:
- The North Carolina Attorney General approves the sale of Randolph Health to American Healthcare Systems.
- Randolph County receives an opinion from VMG Holdings that the hospital stabilization plan presented by the proposed buyer demonstrates a financially sustainable health care service model for the community.
- Randolph County receives two seats with full voting powers on the governing board of the proposed buyer or the entity which becomes the owner of Randolph Health for at least as long as the Rural Health Care Stabilization Program (RHCSP) loan is outstanding.
- Randolph County shall disburse RHCSP loan funds to the proposed buyer by no fewer than three draws and, for each draw down, shall receive adequate security interests in amounts and form satisfactory to the county to secure the proposed buyer’s repayment of the loan.
The Randolph Hospital matter has been contentious. UNC Health said it could not recommend the loan approval because the plan does not represent “a realistic and feasible path forward for Randolph Health.” UNC Health had a lead role with the RHCSP committee that evaluated the purchase proposal.
In other action, the LGC approved two requests from Charlotte-Mecklenburg Hospital Authority, doing business as Atrium Health, totaling $726 million. Atrium Health expects to generate $35.8 million in savings through lower interest rates. The financing also will fund an acute/emergency tower replacement at Atrium’s Carolinas Medical Center in Charlotte; a bed tower renovation at its Pineville hospital; and renovations, medical equipment and infrastructure purchases at its North Carolina campuses.
Treasurer Folwell cautioned against the types of financing Atrium Health was pursuing because they are incredibly complex and LGC staff has neither the resources, time nor expertise to properly vet them.
“I just feel like we’ve got to have restraint when someone comes in to borrow $600 million when it has $7 billion sitting in the bank,” Treasurer Folwell said. “A nonprofit that has over $7 billion in the bank that was derived on the backs of sick people is absurd. Their hundreds of millions of dollars of profit come from the money management business.”
LGC members tabled until the June meeting a request by the Bald Head Island Transportation Authority to approve up to $59 million in Transportation System Revenue Bonds to buy the privately owned ferry, tram, barge and parking assets that provide access to Bald Head Island. The proposal has created friction between the Village of Bald Head Island’s leaders and the legislatively created authority. LGC members raised concerns that an evaluation paid for by the authority was about 2.5 times higher than Brunswick County’s assessed tax value.
The agenda included a host of financing requests that were approved:
Lutheran Services for the Aging (Rowan County), $206 million to build and equip the Trinity Landing Project independent living retirement community comprising 184 residences, renovate the existing Trinity Oaks Project assisted living and skilled nursing facility, and refinance bonds at a lower interest rate; Johnston County, $79 million to build a new wastewater treatment facility; INLIVIAN (City of Charlotte Housing Authority, Mecklenburg County), $58.3 million to provide a loan to a private facility to build and equip 216 apartment units for low-income family tenants; The Forest at Duke (Durham County), $51.2 million to add 90 resident rooms at its skilled nursing and assisted living facility; Holly Springs (Wake County), $21.7 million to buy 150 acres of land as part of a large biopharmaceutical manufacturing facility and make improvements to Town Hall; Oak Island (Brunswick County), $8 million to renourish and maintain the town shoreline with beach quality sand; Lincoln County, $7.5 million to install water lines and a booster pump station to link Lincolnton service to county customers; Statesville (Iredell County), $5 million to extend water lines into a commercial park and upgrade sewer lines in two areas; Wake Forest (Wake and Franklin counties), $1.29 million for street and sidewalk improvements; Oxford (Granville County), $1.25 million for street resurfacing; Marvin (Union County), $1.18 million to build a 6,000-square-foot Village Hall; Troutman (Iredell County), $810,000 to buy land for a future Town Hall or police station; Benson (Johnston County), $288,736 to remodel an existing building to house government offices; and Stem (Granville County), $275,000 to buy property and remove dilapidated buildings, and to refinance an existing loan.
Two towns were approved for debt-funded projects — even though they are on the Unit Assistance List that flags struggling local governments — because they have demonstrated improvements in their condition. Maysville (Jones County) received approval for $500,000 in financing to loan to a local business to expand its recycling facility and demolition landfill. Belhaven (Beaufort County) was approved for $69,380 to replace 80-year-old water lines.
Approvals were granted to allow other units to save money by refinancing existing debt at lower interest rates. They are:
Johnston County, $15 million; Central Nash Water and Sewer District (Nash County), $11.6 million; Beaufort County, $9.8 million; Waxhaw (Union County), $3.7 million; and Cramerton (Gaston County), $2.4 million.
The Local Government Commission monitors more than 1,300 units of local government, and must approve most borrowing by those entities. It oversees independent audits, and provides resources, guidance and oversight on topics ranging from annual budgets, internal controls and debt management to financial guidance related to pension and other post-employment benefits funds. For more information click here.