November 19, 2018; Carolina Public Press
The North Carolina attorney general’s upcoming decision on whether to approve the proposed $1.5 billion sale of nonprofit Mission Health Systems to the for-profit behemoth HCA will have ramifications far beyond an 18-county, mostly rural mountainous region—certainly on the parameters of future hospital conversions, and possibly on the practice of rural philanthropy itself. As the largest per-capita infusion of philanthropic capital from a healthcare conversion in the nation, will the new Dogwood Health Trust be transformative, promoting real structural change in this piece of Appalachia, or will it perpetuate existing disparities and institutional practices?
Health conversion foundations are created when a nonprofit hospital converts into a for-profit entity; they’re required by federal law. A recent Bridgespan study estimates that there are 228 such foundations in the US, representing $27.5 billion in assets and awarding about $1.5 billion in grants annually. For many parts of the South, healthcare conversion foundations are the dominant philanthropic player, with an estimated $8 billion in assets and a commitment to entirely invest in a proscribed geography (the service area of the original hospital).
Some of these foundations solely focus on ensuring healthcare services for the community’s poor; others are using the social determinants of health frame to direct investments to the causes of poor health outcomes—poverty, education, nutrition, and housing. Indeed, Mission officials announced that the new Dogwood Health Trust will focus on the social determinants of health.
Little if any significant opposition to the actual sale of Mission to HCA has surfaced in the eight months since the proposed deal was announced. But local officials and citizen coalitions have passed resolutions, circulated position statements, filed comments, and filled meeting halls to voice their concerns, which fall under three key headings: the sale’s likely impact on rural hospitals, the composition of the new foundation’s board, and the absence of any independent oversight of how the agreement will be actualized.
Threat to rural hospitals
Mission’s footprint encompasses the 18 westernmost counties of North Carolina. The region is defined both by the thriving retirement/tourism destination of Asheville, where 36 percent of the population has bachelor’s degrees and the area’s median household income is $46,902, and by remote Graham County, with 9,000 people, a median household income of $34,778, and only 14 percent of residents who can claim a college degree. The Mission health system itself is comprised of its flagship hospitals in Asheville and five smaller hospitals in surrounding rural communities.
Rural hospitals across the country are struggling to stay alive, but this acquisition, according to Mission’s leaders, will enable its health system to save money by tapping HCA’s “vast economies of scale.”
“The only way that we can get further efficiency is by becoming larger, and the only way to become larger is through something like this deal,” Dr. John R. Ball, chairman of the Mission board, told an Asheville community forum in August.
Local officials in Mission’s rural footprint disagree, fearing that the proposed sales contract offers ample scenarios where HCA, the new owner, could justify ending services in a rural community or closing/selling an entire rural hospital with local residents legally having little or no say. The proposed agreement protects a lengthy list of services for the Asheville facilities for ten years, but only provides five years of such protection for a much shorter list of services currently provided by the five rural hospitals. Rural advocates want the list of protected services for their communities to be as detailed as the one for Asheville, and several local governments are calling for a buyback provision of their local hospital if HCA attempts to close it.
Since the sale’s announcement, nine members of the new board of Dogwood Health Trust have been named (without public notice or input). Six of the nine live in Buncombe County (Asheville), though this county only has 28.6 percent of Mission’s market population. Seven are male, and only one is a person of color (from the Cherokee Nation). Eight are either current or former members of Mission hospital boards. Mission’s leaders have said they will add three more to the current board, targeting non-Buncombe County residents, women, and people of color. Community advocates, however, argue that the expanded board will still be primarily composed of Buncombe residents with Mission’s institutional interests and history and they call for the AG to create a new governance plan that fully represents the diverse interests of the region’s population.
“It pretty much is Mission people in Buncombe County,” says small-town Franklin mayor Bob Scott. “I really don’t think that as the Dogwood Health Trust is constituted right now, it is representative of Western North Carolina, of the people that work and live and raise families here.”
The proposed sales agreement calls for the new Dogwood board to enforce its terms. Distrusting the institutional interests and history of these board members, critics call for a commission or special master appointed by the AG that will be independent of both Mission and HCA. And they say that the new foundation should be subject to disclosure requirements that mirror North Carolina’s open records and meetings laws.
As Allen Smart notes in a July 2018 blog about philanthropy in the South, for philanthropy to be transformative, it must invest deeply in grassroots system-led change and local advocacy, focusing directly on the causes—rather than the effects—of the social determinants of health. Given the proposed board composition, the continuing institutional dominance of big hospital interests, and the lack of external oversight, it is unlikely, however, that this large new philanthropic vehicle in Appalachia will result in a new paradigm for philanthropy and rural investment. That is unless the state’s democratically elected attorney general, takes a courageous stand and begins to articulate a new paradigm for healthcare foundations and how they change a region’s trajectory.—Debby Warren