Boyle column: Former Mission CEO Bob Burgin offers views on proposed sale to HCA

With the recent mega-news about a potential sale of Mission Health to a for-profit company, we heard a lot of analysis, explanation and spin from some of the main players involved, not to mention pretty much everyone else in the mountains.

But one voice I wanted to hear from was former Mission CEO Bob Burgin, who ran the hospital system from 1981-2005. Burgin reached out recently, and we had a good, long conversation about the deal.

Like just about everyone else, initially he was fairly stunned by the announcement.

"I learned of this on that Thursday about three in afternoon and said, ‘No way,'" Burgin said, referring to the day after the announcement was made public, March 20.

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That was not a "no way," as in, "Boy, that's great!" Burgin quickly got on the horn and talked to a couple of board members about the decision.

"I know this was not the choice they thought they were going to make, but they...spent several months going through (the details)," Burgin said, stressing that he was in no way involved in the process. "The easier alternative for the board members would be to just stay the course."

But Burgin said that also would likely have meant failure for the system, which operates seven hospitals in the mountains. Burgin also closely followed Mission's highly publicized feud with Blue Cross/Blue Shield of North Carolina, which had refused to increase rates paid to Mission.

"I think in the end, Blue Cross/Blue Shield basically saying, 'We won’t increase your reimbursement in the future, and you’ve got to sign a contract that's five years out — as soon as I realized that’s what it was, I said to many people, that's the death knell of Mission functioning the way it is," Burgin said.

Mission's board has signed a letter of intent to be acquired by HCA Healthcare Inc., the Nashville-based for-profit health care company that operates 177 hospitals and 119 surgery centers in the United States and the United Kingdom. A deal will likely take months to hammer out.

Mission is a 135-year-old community institution, a not-for-profit entity and the region's largest employer.

RELATED: Mission Health may be acquired by Hospital Corporation of America

The North Carolina General Assembly's refusal a few years ago to expand Medicaid under Obamacare also played a role in the hospital's financial struggles, Burgin maintains.

Current Mission CEO Ron Paulus told us recently that the health system was coming up about $70 million short every year, necessitating an endless cycle of cuts. Mission makes a profit, generally 2-4 percent annually, but only because of that perennial cutting.

Mission also has a tough payer-mix, with nearly three-quarters of its patients either being on Medicare or Medicaid, which have notoriously low reimbursements, or not having health insurance at all.

"The joke when I was there was you’ve got Medicare that pays just under cost, Medicaid that pays 15-20 percent below cost and then you’ve got slow pay and no pay," said Burgin, 77. "Then you’ve got a small percentage of people — I think it’s like 24 percent of (patients) who have commercial insurance."

With Blue Cross making up the vast majority of coverage for those patients, if Blue Cross refuses to increase reimbursements, "in the end it’s going to be deadly," Burgin said.

RELATED: Potential Mission buyer HCA has made money, endured scandals and grown

So, he understands why Mission's board voted unanimously to pursue the deal with HCA. But Burgin has no blinders on about the for-profit company that had a significant fraud scandal in its past. HCA has addressed that issue head-on, Burgin said, and he believes the company has changed its culture.

But he still harbors concerns about Mission, a not-for-profit operation, becoming part of a huge for-profit company that must answer to the stock market.

"You betcha," Burgin said, when I asked if that worried him. "I mean, that’s the reality."

Public entities such as police and fire departments don't have to bow to the whims of Wall Street, but publicly traded companies certainly do, Burgin said. But, HCA will have to provide competitive wages to employees, and it's going to have to continue to provide excellent, high-level care, or employees and patients will opt for other local hospitals such as Park Ridge and Pardee in Henderson County or Haywood Regional Hospital in Waynesville, part of the Duke Lifepoint system.

Park Ridge is part of the Adventist Health System, and Pardee is managed by UNC Healthcare.

Burgin sounded to me like he has fully come around to understand why Mission is going the for-profit route, although he's still pushing for vigilance.

"The reality is that generally Mission is in a strong position compared to other not-for-profits, and they have a fair amount of money in the bank and a low interest rate on their debt," Burgin said. "So, even in your own experience, don’t you normally wish to be negotiating from strength rather than a weakness?"

Personally, I do most of my negotiating with my wife, and that usually involves plain old begging for $20 in coffee money every two weeks.

Overall, Burgin sounded cautiously optimistic about the sale, particularly the creation of a new foundation that would likely be seeded with $1.5-$2 billion of sale proceeds and could have a major impact on the community. With investment returns of 6-8 percent, the foundation could become a major player in local health ventures and in funding various projects, he said.

But he also has concerns about HCA's at times checkered history, as well as the loss of control over a community institution. Burgin wants to see that new foundation set up with real power to act as a check on HCA.

"Let’s use the power of the foundation to make certain that certain programs are continued and there is a way to have input," he said, citing programs such as pediatrics, maternity and psychiatry that are typically not money makers for hospitals. When he ran Mission, Burgin sometimes would get criticism from the money managers about funding such programs.

“I remember telling people, they would say, ‘Why do you put all your money into this? It’s a loser.’" Burgin recalled. "I said, ‘Because the community needs it. They need maternity, and they need pediatrics and they need psychiatry. They don’t pay for themselves.’ The reality is you're answerable to the community, and the community expects you to do things that are in the best interest of all the citizens.”

He's convinced the board will remember that as negotiations proceed.

The former CEO also had another piece of advice that was music to my ears.

"I think personally that there needs to be, as this (foundation) is formed, I think there need to be some community meetings, some discussion of what the process would be, because it’s going to be different," Burgin said. "I think the community needs to know and understand what the new world order is going to be with Mission."

This is the opinion of John Boyle. Contact him at 828-232-5847 or jboyle@citizentimes.com