A movement to rein in the dominance of Mission Hospital in Western North Carolina’s healthcare landscape has hit a critical juncture.

A legislative committee studying whether smaller hospitals are suffering from aggressive, monopoly-like tactics by Mission will unveil its recommendations this week. Based on a preliminary report, the committee will recommend new restrictions to help level the playing field for Mission’s competitors.

But, there is early indication the recommendations won’t garner the necessary support in the General Assembly.

To pass, it would need the support of heavy-hitter Sen. Tom Apodaca, R-Hendersonville, who chairs the Senate rules committee. Apodaca has told fellow legislators he won’t support it.

“The senator assured me it would be dead on arrival in the Senate,” said Rep. Ray Rapp, D-Mars Hill.

Without Apodaca’s backing, new restrictions on Mission have “zero” chance of passing, according to Sen. Jim Davis, R-Franklin, even though Davis himself personally supports them.

Another nail in the coffin: Sen. Martin Nesbitt, D-Asheville, doesn’t support new restrictions either. Between Apodaca and Nesbitt — the two senators who represent territory at the heart of the Mission Hospital debate — it’s unlikely senators from other parts of the state would feel strongly enough to go over their heads and push it through anyway.

Smaller hospitals and doctors in the region are fearful that Mission is exploiting monopoly-like power to gobble up market share, causing the slow-but-steady decline of smaller community hospitals by eroding their patient base.

But while Mission’s competitors lobbied for more restrictions, Mission was lobbying for fewer restrictions. It currently is subject to anti-trust oversight dating back to the merger of Asheville’s only two hospitals in the 1990s.

Mission claims those existing regulations handcuff its ability to navigate the rapidly changing dynamics of healthcare and should be lifted.

“It has been 16 years. There has to be a way of gracefully ending this,” said Ron Paulus, CEO of Mission.

The upshot, however: neither may get what they want. If lawmakers buck committee recommendations and decide to leave well enough alone, the status quo will stay in place.

“If it ain’t broke, don’t fix it,” Rapp said.

Rapp said the state shouldn’t do something that could hurt Mission’s role as a life-saving hospital in the region.

“The health and well-being of our citizens should be first and foremost,” Rapp said. “ We can’t put our premier health care institution in jeopardy.”

But, Davis said Mission’s unfair advantage is jeopardizing smaller hospitals.

“I just don’t want any hospital to be preyed upon by a large hospital,” Davis said.

Davis said the anti-trust oversight Mission is subject to was put in place for a reason.

“Whenever you endorse a monopoly, whatever government body blesses that, has an obligation to keep an eye on them,” Davis said.

Paulus said Mission has a critical responsibility in the region as the largest and only tertiary care institution. “I hope you don’t need us but I want to be here if you do,” Paulus said.

It’s doubly hard given the demographics: poorer, sicker, older and less insured.

“The issue is how do we care for the patients in our region when the demographics are so much worse,” Paulus said.

Mission wants to work collaboratively with all the hospitals and doctors in the region toward that goal rather than get bogged down in turf battles no one can afford to wage, Paulus said.

The state committee considering whether to strengthen or weakened the anti-trust regulations governing Mission released preliminary recommendations last month.

Among them: a buffer zone that would stop Mission from setting up certain types of clinics within 10 miles of an existing hospital and a cap on the percentage of doctors Mission can employ in a community.

In Haywood County, MedWest-Haywood hospital has been in a race with Mission to buyout private doctors’ practices and put physicians on the hospital’s payroll as in-house employees.

The trend of doctors working directly under a hospital instead of private practice is a national one, driven largely by economics. Doctors have been getting squeezed by declining insurance and Medicare reimbursements and see employment under a hospital as an easier route.

The fear, however, is that whichever hospital employs doctors can control where they send their patients.

“If Mission buys a practice, the default for that practice would be to send those patients to Mission Hospital, and I am concerned about how all these little hospitals in the western part of the state will survive if that happens,” Davis said. “I don’t think anyone wants our community hospitals to become emergency clinics that feed to Mission Hospital.”

Paulus countered that Mission would not dictate which hospital a doctor should admit and refer patients to.

Nonetheless, Mission’s competitors would like to see limits on how many doctors it can employ in surrounding counties. Currently, Mission’s anti-trust regulations cap the number of doctors it can directly employ in Buncombe County to 30 percent, but there are no caps for other counties.

Fishing for physicians

Mission has come under fire for courting physicians in Haywood County. Mission has also set up a competing medical office complex in Haywood.

But, Paulus said Mission’s motives in extending employment offers to Haywood doctors are not sinister.

“The goal is not to have a single monolithic hospital in the middle of Asheville,” Paulus said, adding “it would never work, parking is terrible.”

Paulus said WNC has historically not been able to recruit enough doctors to serve the population.

“The ratio of doctors to population is well below the state and national average,” Paulus said.

Their salaries here are lower because of the higher number of  poor, uninsured patients. By employing doctors, hospitals essentially subsidize their practices to get them to stay here.

Mission simply wants to ensure a stable of doctors for the region, he said.

“Our core concern is the ablity to attract and retain quality physicians in the community,” Paulus said.

Haywood doctors who are critical of Mission for its forrays in their home territory questioned why, if Mission’s goal was building the physician base, did it try to buy exisiting practices that are already here.

Paulus said the existing practices are the best route for recruiting more doctors.

“It is much easier to recruit into an existing group than create a new group,” Paulus said.

MedWest-Haywood got particularly irked, however, when Mission tried to court Mountain Medical Associates, a key practice in Haywood County with eight doctors across four critical specialties.

Realizing it had stepped on an ant hill, Mission actually withdrew its offer to Mountain Medical Associates, Paulus said. Before doing so, it extended an olive branch inviting MedWest-Haywood to form a three-way partnership with the practice and the two hospitals working together. That way MedWest-Haywood wouldn’t have to shoulder the entire financial burden of adding all the doctors to its payroll, Paulus said.

Paulus said the offer attempted to “reset the playing field and get past old emotions” between Haywood and Mission, but the opportunity was squandered.

Whether perception or reality, MedWest-Haywood had to counter Mission’s offers to buy local physician practices, despite not really having the money to do so.

“They in a sense have been forced into a bidding war with Mission for their own doctors and have had to pay more for those physicians as a result,” Fields said.

That was partly to blame for landing the MedWest-Haywood in a financial quagmire. It barely had enough cash on hand to make payroll and had to get an emergency line of credit to bail it out of a cash flow crunch.

But, those who defend the move say it was critical.

“If you don’t have physicians in your community pushing people toward your hospital, you aren’t going to have a hospital in your community,” said Kirk Kirkpatrick, a Waynesville attorney and Haywood County commissioner who has been active in hospital affairs.

Kirkpatrick said billboards for Mission in Haywood County are a testament that Mission is actively going after patients in Haywood County and trying to pull them away from MedWest-Haywood hospital.

“It is an extremely competitive business, extremely competitive,” Kirkpatrick said. “If you want a hospital in your community that can provide the kind of care you expect then you need to utilize your hospital. If you go over to Mission and you vacate your hospital and don’t utilize it, it won’t be here anymore.”

For more information on both sides of the issue, go to www.wncchoice.com and www.missionfactchecker.com.

Haywood County commissioners this week gave their blessing to a $10 million line of credit for the MedWest-Haywood hospital, ending a delicate dance in the finer points of contract law that has spanned the past three months.

The loan was needed to solve a serious but short-term cash flow crunch brought on by a concatenation of unexpected costs. MedWest-Haywood had turned to the powerhouse of Carolinas HealthCare System, a network of 34 hospitals that Haywood is part of, to help bridge the gap.

The status of the loan has been in limbo, however, as county commissioners wrestled with whether to allow MedWest-Haywood to put up the hospital building as collateral. While highly unlikely, if the hospital failed to pay back the loan it could be foreclosed on. The worst-case scenario concerned county commissioners, preventing them from initially signing off on the loan.

Without commissioners’ blessing, the loan was in limbo. The county’s measure of control over the hospital building dates back to its original status as a public hospital — a status county commissioners felt compelled to protect.

Commissioners finally arrived at a series of caveats that would allow the loan to go forward.

“It protects the county’s interest but allows for a way forward for the hospital,” County Commission Chairman Mark Swanger said.

Commissioner Mike Sorrells agreed.

“We wanted to provide the hospital with the means to get over get over this bump in the road, as it is being called, but continue to maintain a viable county hospital,” Sorrells said.

MedWest-Haywood CEO Mike Poore said the hospital is not in dire financial straits, but it is operating under austerity measures and has been forced to lay off some employees as it regains its footing from a series of set-backs.

Poore pointed out that the $10 million loan is the only debt the hospital has — compared to its annual operating revenue of $110 million and a building worth $70 million.

“To have an organization with that little debt ratio in today’s world is really amazing,” Poore said.

Collateral with caveats

Swanger stressed that the process has in no way been adversarial between the county and the hospital.

“I think I can speak for everyone up here when I say we want the hospital to succeed and thrive,” Swanger said at a county meeting this week. “We have an obligation to protect the county’s interest and taxpayers’ interests, but the process of doing that has not been adversarial.”

Poore said he would “echo that.”

“The commissioners have been asking the right questions and doing their fiduciary responsibility, but the whole time the interest is how can we help our hospital along,” Poore said.

Specifically, the county agreed to let the hospital put its building up as collateral if the county is given the first right of refusal, so to speak. Should the hospital default on its loan, Carolinas HealthCare System could not foreclose without coming to the county first.

The county would be given the option of paying off the loan itself. The hospital would then be on the hook with the county to pay back the loan rather than to Carolinas.

“Should there be a default rather than just a normal foreclosure, they first have to give the county notice,” explained Haywood County Attorney Chip Killian. “The county has six months after that notice to kind of figure out what they are going to do — to decide whether they want to purchase the note and in fact be the lender instead of Carolinas.”

If the county indeed decides to bail the hospital out, it would have another 12-month window to put together a financing deal to “satisfy and cure the default.”

The caveats written into the loan drew on the best contract-writing skills Haywood County Attorney Chip Killian could muster.

“There is a lot of legalese in this document, but I had to craft this out of whole cloth because I had never seen anything like this before,” Killian said.

A ‘perfect storm’

Poore said that the need for a loan isn’t a sign of financial insecurity.

“We had several events that were what I would describe as a perfect storm of cash issues,” Poore said. “The clock ran out on us. There were too many things that hit us at the same time.”

MedWest-Haywood had to spend $1 million to replace a broken generator, $1.6 million on a wrongful firing lawsuit by group of emergency doctors and $8 million on a new computer system to handle electronic medical records.

The hospital also spent an undisclosed sum in the past year buying up private doctors’ practices that were being courted by Mission Hospital in Asheville. MedWest-Haywood feared long-term repercussions of a patient drain if it didn’t make a competing offer.

“It is a lot more complicated than ‘the hospital is in some economic trouble,’” said County Commissioner Kirk Kirkpatrick said. “There have been a lot of hurdles we have had to get over. I hope we are at the point we are making that turn.”

Meanwhile, however, the hospital has already spent $7 million of the $10 million loan. Carolinas Health System had already extended the loan to MedWest-Haywood — and Med-West Haywood had begun spending it — before they realized the county’s blessing was needed for the collateral.

Carolinas could have retrenched and frozen the line of credit when the county didn’t promptly sign off. Instead, Carolinas allowed MedWest-Haywood to keep spending against the line of credit, allowing the balance to grow to its $7 million mark.

Margaret Wakefield is not a college student nor does she sport dreadlocks and Birkenstocks while chatting about how the world should focus more on peace and love.

Wakefield has short dark hair, pink fingernails and silver heart-shaped earrings. Wearing a printed shirt and sweater, the Cherokee resident is dressed as if she was going to a nice restaurant with a friend or just coming from church.

Despite her clean-cut appearance, Wakefield is a vocal leader for, what some may find, a surprising cause — medical marijuana.

Wakefield’s mother died from cancer a year ago, and the life-changing event has made her very open and passionate about allowing people suffering from chronic illnesses to use cannabis as a form of treatment.

“If I had known then what I know now … (my mother) would have had some to smoke everyday,” said Wakefield, a member of the North Carolina Cannabis Patients Network, a nonprofit with the end goal of passing a medical marijuana bill. Medical cannabis is legal in 16 states and in Washington, D.C. Another 17 states have seen bills introduced.

The N.C. Cannabis Patients Network has about 700 members, most of whom range from age 30 to 60 and beyond, Wakefield said. Members are also allowed to remain anonymous.

“We are just wanting to be able to grow our own medicine,” she said. “We are trying to get our rights back.”

There is currently a bill in a N.C. House of Representatives committee, which NCCPN hopes will be voted on either during the upcoming short legislative session in April or when the newly elected General Assembly leaders meet next year.

House Bill 577, a.k.a. the Medical Cannabis Act, would allow people with debilitating medical conditions, including cancer, glaucoma, AIDS, Alzheimer’s disease, multiple sclerosis and osteoporosis (to name a few), to receive prescriptions for medical marijuana from their doctors. Studies have shown that cannabis can increase one’s appetite and offer pain relief.

The state would also profit from the legalization of medical marijuana. Within four years, the state would realize about $250 million in revenue from the production and sale of cannabis each year, according to the bill.

However, Wakefield understands that the organization is in for a tough fight in this Bible Belt state, especially since some are hesitant to sign their name in support of such a controversial bill. When asked what the biggest obstacle to the bill’s passage was, Wakefield immediately spouted the Republicans.

“They tend to be a lot more conservative than Democrats,” she said.

But even when the General Assembly was under a Democratic majority in previous years, similar efforts went nowhere.

While marijuana carries a stigma for its use as a recreational drug, allowing medical marijuana is not tantamount to opening the floodgates of illegal use, supporters claim. Many synthetic pharmaceutical drugs are abused in street settings but are still legal for their perceived medical benefits.

One Democratic state representative from Buncombe County has already put her support behind the Medical Cannabis Act.

Patsy Keever, who is serving her second term of office in the N.C. House of Representatives, said her husband suffered for three years before he died of cancer, and his pain medication was in pill form.

“He couldn’t swallow,” she said.

If medical marijuana was available, her husband could have inhaled it in a vapor form, Keever said.

“Medical marijuana has been proven to treat the pain,” Keever said. “Anything that will just help somebody in pain and not harm them or anybody else seems like a no brainer to me.”

The bill being considered in North Carolina is much stricter than the one in California, Wakefield said.

In California, it is widely claimed that anyone can get a medical marijuana prescription by simply walking into a doctor’s office and saying you have a problem. In North Carolina, patients looking for a prescription would have to have a relationship with their physician, which includes a full medical assessment and the doctor’s willingness to provide follow-up care to determine the efficacy of the drug.

People who wish to grow or sell marijuana or marijuana-infused products, such as cookies or butter, will be required to pay a $5,000 licensing fee each year. That amount could increase to $10,000, pending possible amendments to the bill, Wakefield said.

Get involved

The North Carolina Cannabis Patients Network will hold a meeting at 2 p.m. on March 10 at Tribal Grounds Coffee Shop in Cherokee. Discussions will revolve around allowing the use of medical marijuana in North Carolina and educating people about the benefits of prescription cannabis. The meeting is open to the public.

828.497.9045.

Government at all levels needs to spend money judiciously. It is, after all, our money. I’m not convinced either major political party is doing that very well right now. What we get is competing priorities, which is why voters need to make choices. That’s where things sometimes get complicated.

North Carolina House Speaker Pro Tem Dale Folwell, a Winston-Salem Republican, makes a strong case for taking relatively drastic and perhaps painful steps to get the state’s fiscal house in order. In a talk he gave last week at a meeting of the North Carolina Press Association in Chapel Hill, the candidate for lieutenant governor revealed a policy wonk mentality and knowledge of issues that left me impressed.

Folwell is part of the new General Assembly leadership that took over in the last session and went right to work to make changes. I’ve criticized some of those moves, as have many other newspaper editors, and continue to disagree with many of them.

Folwell and Senate President Pro Tem Phil Berger, however, both made the case that the moves taken by the new Republican leadership will help North Carolina. Whatever one’s political stripes, what happens in Raleigh is important, and Folwell did a good job of using statistical data to shed light on a few important issues that are flying under the radar of most voters.

Folwell was blunt and matter of fact. He proclaimed that there are “four ‘invisible costs’ that will drive all the legislative issues North Carolina faces through the next generation. Those invisible costs are state debt, public retiree health care costs, state employee pensions and unemployment.”

Without getting into all the numbers, Folwell’s presentation shows that North Carolina’s pension system has not met its investment goals. That means the system will not pay for itself and will need tax dollars to keep it solvent unless things improve dramatically. The state also has obligations toward the cost of retiree health benefits and a huge debt to the federal government for unemployment benefits sent our way during this recession.

Right now the state keeps 4.75 cents of the sales tax on every dollar. To meet the obligations outlined above, Folwell says the state would need to more than double the sales tax to 10 cents. Ouch.

These are obligations to teachers and other state employees that we have to keep. Neither party has yet laid out a plan to solve this problem. As we struggle during this recession to adequately fund current public services — education, health care for the poor and elderly, roads, public safety, economic development, etc. — there is a bit of a monkey on our backs. Better yet, a gorilla.

Elections are coming up. We voters better pay attention, or they’ll be hell to pay a few years down the road.

(Scott McLeod can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..)

A $10 million line of County credit intended to bridge short-term cash flow problems at MedWest-Haywood hospital has hit a snag.

A loan taken out by the hospital offers up the hospital building as collateral but legally it needs approval from county commissioners to do so.

The MedWest board failed to seek necessary approval from the county before taking out the loan, however. The hospital had already signed on the dotted line and promptly begun spending some of the loan money before the oversight was realized, prompting the hospital to seek the county’s retroactive blessing.

But, county commissioners apparently have not been willing to rubber stamp the loan. The hospital came to the commissioners six weeks ago for their approval on using the hospital building as collateral.

Since then, county commissioners have held three private meetings, which were closed to the public, citing attorney-client privilege, to discuss the loan conundrum.

Formerly known as Haywood Regional Medical Center, the hospital has a clause in its deed that prevents any transfer of the property without county approval. In the unlikely case the hospital defaults on the loan, the lender could not in fact take the building, making the current loan documents partially invalid unless the commissioners give their blessing.

Commissioner Chairman Mark Swanger said commissioners are working with the hospital to come to a suitable arrangement that helps the hospital move forward but still safeguards the building in the event of a default.

“We generally have two goals,” Swanger said. “One is that there be a viable thriving hospital in Haywood County and the second is to protect the county’s interest in the property.”

Meanwhile, the Jackson County medical community has expressed dissatisfaction that their hospital in Sylva, which is part of the MedWest system, ended up on the list of collateral for the loan.

A shorter list, in fact, might be what didn’t get listed as collateral. In all, the loan documents list enough collateral to pay the $10 million many times over. Accounts receivables are at the top of the collateral list — essentially every payment coming into the hospital could be garnished to cover the loan, which in itself would be more than enough to cover the debt. Collateral also includes all the medical equipment in the hospital, as well as the MedWest Health and Fitness Center.

The actual hospital itself, along with the MedWest-Harris and MedWest-Swain hospitals, are far down the list.

So why even list them as collateral? It’s the nature of financing these days, with skittish lenders requiring everything but the kitchen sink, and in some cases even that, to secure a loan, according to Mike Poore, CEO of MedWest-Haywood.

MedWest-Haywood has spent $4 million of its $10 million loan so far. The hospital has no other debt. And that’s why Poore is confident the debate over whether the building is included as collateral is a largely a moot point.

“There are several dominoes,” Poore said, listing all the collateral that would be tapped first in the event of a default before the hospital itself would ever become an issue.

Even then, the loan would merely take the form of a lien against the hospital, as the hospital is worth far more than the $10 million loan.

Indeed, the debate over whether the hospital should have been used as collateral on the loan seems to be playing out more on a matter of principle.

“If we thought there was much chance of default we wouldn’t be doing this. We felt we would be in and out of this moment,” said John Young, vice president for Carolinas HealthCare’s western region.

In an unusual financing arrangement, Carolinas HealthCare System has agreed to act as a bank and put up the money from its own reserves for the loan to MedWest-Haywood. MedWest-Haywood is under a 15-year management contract with Carolinas HealthCare, a network of 32 hospitals under the flagship hospital of Carolinas Medical in Charlotte.

Despite the large number of hospitals under the wing of Carolina’s management, it has never stepped in to provide financial help for an affiliate hospital.

“It has never been done before,” said Young. “I don’t know we will ever do it again, but at the time, it was the right thing to do.”

Young said Carolinas made an exception given the circumstances. For starters, the Haywood hospital desperately needed the money to bridge a short-term cash flow crisis brought on by a perfect storm of financial hits.

MedWest-Haywood had to spend $1 million to replace a broken generator, $1.6 million on a wrongful firing lawsuit by group of emergency doctors and $8 million on a new computer system to handle electronic medical records.

The hospital will actually be paid back for part of the cost of electronic medical records system by the federal government in coming years, Poore said.

“These are what you would consider one-time expenses. We knew we would have to get some kind of financing to help us through,” Poore said.

The hospital also spent an undisclosed sum buying up private doctors’ practices during the past year. It didn’t have the budget to do so, but the practices were being courted by Mission Hospital in Asheville. MedWest-Haywood feared long-term repercussions of a patient drain if it didn’t make a competing offer.

While the hospital was in the black last year, its margin was so slim — around 1 percent — it didn’t have the cash flow to cover the unexpected one-time costs.

“It is not a symptom of the engine being dysfunctional in any way,” Young said. “We realized this liquidity issue would go away, so we decided to lend them the money to get through this moment.”

Smoothing out the wrinkles

Meanwhile, the newly formed MedWest allegiance — a merger of sorts of the hospitals in Haywood, Jackson and Swain under an umbrella organization — need help finding its footing.

“Coming together under MedWest was trying to happen in a very difficult time under a very difficult set of circumstances,” Young said, offering further explanation of why Carolinas stepped up to the plate financially.

The recession was taking its toll on hospitals everywhere, particularly smaller, rural hospitals. And here, the hospitals in Haywood and Jackson were facing tougher competition than ever from Mission Hospital in Asheville.

Meanwhile, the relationship with the Jackson County medical community toward MedWest was strained. A large number of doctors in Jackson County had come forward to express concerns about how their hospital was faring under the new MedWest entity.

Carolinas has been asked for help many times by cash-strapped hospitals operating on razor-thin margins. It’s a frequently asked question by smaller hospitals when weighing whether to join Carolinas’ umbrella.

“One of the things that usually comes up is would you be willing to put capital in. Our answer is always ‘no,’” Young said. “That is not our model. Our business model is to help local hospitals find economies of scale and have the expertise to be successful in a very difficult marketplace. It is hard to do it alone.”

Poore said the financial problem faced by MedWest-Haywood is partly inherited. The hospital couldn’t get a traditional loan from a lender.

The once deep-reserves of MedWest-Haywood were spent up during a faltering time four years ago when the hospital failed federal inspection, largely on technicalities, but the resulting decertification by Medicare, Medicaid and several major insurance carriers forced the hospital to essentially shut its doors for five months. Its reserves were depleted as a result.

“I wish it could have happened a different way,” Poore said of the need for the loan from Carolinas. “I wish we had all the credit in the world and everyone was knocking down our doors to give us credit.”

Poore sees the loan more like a line of credit, a very common financial tool used by corporations both large and small.

“The line of credit is helping us pay for a lot of one time expenditures we’ve incurred this year,” Poore said.

Poore said it wasn’t altogether clear initially whether they actually needed county commissioners to sign on the dotted line.

“At one point, we had 11 attorneys on the phone trying to put this deal together,” Young said. “It is unusual for one hospital to loan another hospital money.”

Poore pointed to the proactive steps MedWest-Haywood has taken during the past two years that will start paying off. It has employed doctors practices, has an outpatient surgery center under construction on its campus, has a new urgent care slated to open in Canton in the spring, and has recruited several new doctors, including a new urologist, cardiologist and neurologist just recently.

These days, it is all about fighting for market share against Mission, and that’s what Poore has been positioning Haywood to do.

“There is a demand, and if we can meet that demand, we can keep those patients here,” Poore said.

Steve Heatherly made sure there were plenty of Diet Cokes queued up in the office mini-fridge before work Monday morning — he would need at least a dozen, probably more, to get through the next 24 hours.

Heatherly faced hundreds of nurses, doctors, lab techs, billing clerks, cafeteria workers  — anyone and everyone who works at MedWest-Harris hospital in Sylva — for a full day and night this week. Every hour on the hour, he repeated a short spiel laying bare the challenges and issues facing the hospital before turning the floor over to questions from a steady stream of hospital workers rotating through for the interactive marathon.

“In our current environment we felt like as quickly as possible I have the opportunity to interact with as many of our employees as possible in a very rapid succession,” said Heatherly, the newly promoted CEO of the two WestCare hospitals, MedWest-Harris and MedWest-Swain.

Heatherly likely touched on the challenge of competing for market share against Mission Hospital in Asheville. He allayed concerns that the hospital was struggling financially — at least not hopelessly so — but also charted a course for a better bottom-line.

Billed as a “frank and open dialogue,” Heatherly was bound to get questions about why he was suddenly put at the helm two weeks ago — giving Harris its own leader rather than sharing a single CEO with MedWest-Haywood as it has for the past two years.

The move signaled a retrenching of sorts following a pseudo-merger of the neighboring hospitals two years ago after they both signed a management agreement with Carolinas HealthCare System out of Charlotte. It is also a reflection of discomfort among some in the Jackson medical community about whether their hospital was getting the attention it deserved from a CEO based in neighboring Haywood County.

“Any time those type of administration changes come about, obviously people have lots of questions,” Heatherly said. “They are interested not only in the present but also the future.”

The epic, uber-long format was an effort to hit all hospital employees on every shift, bringing the whole staff up to speed at once but in the comfort of small group sessions — all the while keeping the round-the-clock operations of the hospital humming.

“He is a straight shooter,” Bunny Johns, the chair of the WestCare board, said of Heatherly. “What you see is what you get, and he will lay it on the line for you. I think it is a real talent to do that in a way people can hear it.”

For the record, Heatherly isn’t a big coffee drinker — thus the arsenal of Diet Cokes.

More ‘boots on the ground’

Meanwhile, Mike Poore has returned to being the CEO of MedWest-Haywood only. When the MedWest partnership was formed two years ago, Poore went from being the CEO at Haywood to being CEO of all three hospitals. But, that changed somewhat suddenly two weeks ago.

The stated reason: to give each hospital their own in-house leader that could singularly focus on the issues each location face.

“It makes sense for both of us to put more time into our individual organizations,” Johns said.

Things haven’t exactly been rosy for the Jackson medical community since the affiliation. Patients have been lost to Asheville. Revenues are down. The downward trend was already in play before the merger, an unfortunate combination of a doctor shortage in Jackson and the economy. But some doctors wonder whether the merger with Haywood has helped matters.

“It hasn’t gone down any more, but it hasn’t come back up,” said John Young, vice president for Carolinas HealthCare’s western region.

Several doctors apparently came to the WestCare board of directors with their concerns, thus the CEO shuffle that Young calls “more leadership boots on the ground.”

“I wanted to make sure the folks on the WestCare side of the system knew that Steve (Heatherly) had the authority to work with them to solve issues and win back market share,” Young said.

Working well with doctors

Heatherly isn’t a stranger to the staff at Harris. He has held various top positions at WestCare during the past 15 years. He spent a good part of his childhood in Sylva, went to UNC-Asheville, then got his MBA at Western Carolina University and a second masters in health administration from UNC-Chapel Hill.

He started out at WestCare in 1997 over a subsidiary company that handled physician management and billing and spent nearly a decade on the frontline of doctor-hospital relations.

Heatherly had worked his way up to second in command at Harris, serving as both the chief financial officer and chief operation office, when the merger happened. He was given a new title of chief strategy officer.

Meanwhile, however, the ranks of doctors employed directly by the hospital was swelling. MedWest now has more than 80 doctors on its payroll, a major change from the days not too long ago when doctors all worked in their own private practices.

Heatherly’s skills working with the physician community were tapped for a new position of CEO of MedWest’s physician network. He is continuing to serve in that role as well as his new role of CEO of the MedWest-Harris and Swain.

Heatherly has learned a thing or two about working with doctors over the years, and has occasionally been asked to share his insight.

The relationship between any hospital and its doctors — whether in private practice or employed by the hospital — can take many forms. Some are outright adversarial, and even the rosiest relationships have their share of tension.

“I think the pitfall for a lot of hospitals is if you aren’t fully engaged,” Heatherly said. “You really don’t even have to have active discord, but if a hospital and medical staff aren’t fully engaged then you run the risk of not walking in lockstep. Through no ill will, not being actively engaged can lead to a disconnect. You don’t always have to be in agreement, but the process of going through the dialogue is very, very important.”

That attitude could make Heatherly just the man to iron out concerns of Jackson County’s medical community.

“He is highly motivated. He is highly intelligent. He is well versed in medical systems,” Johns said. “He will bring a level of energy that is impossible to put down on paper.”

Some within the Jackson County medical community are wondering whether their hospital has gotten a fair shake in the partnership forged with neighbor Haywood County under the MedWest umbrella two years ago.

When the hospitals in Haywood, Jackson and Swain counties partnered, they were careful to avoid the word “merger.” Technically, it was an affiliation, according to hospital leaders.

But at the end of the day, it looks an awful lot like what most people would call a merger. The hospitals share each others’ financial gain — or pain — as it may be.

“At the end of the year, we take the bottom line and split it 50-50,” said Mike Poore, the CEO of MedWest-Haywood.

The hospitals keep their own books from day to day, but come year’s end, the profits and losses of each are averaged out.

Steve Heatherly, the CEO of MedWest-Harris, calls it “financially integrated.” In slightly more layman’s terms, Bunny Johns, chairman of the WestCare board, likened it to a “financial truing up.”

That’s likely why some in Jackson’s medical community may be resentful of big bucks seeming to fly out the door of MedWest-Haywood during the past year.

MedWest-Haywood has seemingly been on a building and spending spree during the past year — from the very necessary replacement of a broken down generator to the very optional construction of a new surgery center. Meanwhile, however, the medical community in Jackson has watched as its plans for a new emergency room and major hospital renovation has been sidelined.

“Any individual who is prone to analyze that very critically, sure someone could be upset by that,” Heatherly said of the spending disparities between Haywood and Harris.

But a partnership like this one can’t be sized up from a one-year snapshot, he said.

“When you put together in essence a capital plan with multiple facilities, in any one year it might be perceived that one of those facilities benefits more,” Heatherly said. “But over the long haul, the goal is to make sure the needs of all facilities are met.”

One day, the tables may be turned and likely will. Harris has jumpstarted plans once more for a new emergency room, which will likely carry a $7 million price tag.

Poore said the spending in Haywood has been necessary. In many cases, the hospital’s hand was forced. A generator broke down. A lawsuit was settled. Computer systems needed updating.

But, what about the surgery center, new hospice center or urgent care in Canton?

Johns said the picture isn’t as skewed as it may seem on the surface.

“Most of those were in place and moving before the merger,” Johns said.

But more so, what appears to be spending by the hospital was in fact paid for by outside sources. Doctors put up most of the money to build a new surgery center in Haywood, while the nonprofit MedWest-Haywood Foundation raised money for the hospice center. The hospital, for its part, contributed $2 million combined to those projects.

A new urgent care center coming on line in Canton is costing $150,000. But one was built in Sylva as well, evening the scales on that particular expense. Besides, an urgent care center is a case of spending money to make money. It helps capture patients.

Here’s the spending at Haywood in a nutshell:

• A hospice center, a new surgery center and a new urgent care are in various stages of construction, a total of $2.35 million.

• The back-up generator broke and a new one cost $1.3 million.

• Money has been put on the table to buy physician practices, bringing more than two dozen doctors on the hospital’s payroll in Haywood County.

• The biggest ticket item is an $8 million medical records system. While the biggest need for the new system stemmed from Haywood, the cost also includes upgrades for the hospitals in Jackson and Swain, as well as computer systems to tie in to the burgeoning number of in-house doctors practices across all three counties with the hospital system.

• Hardly the stuff of bragging rights — but expenses nonetheless — are payouts in two old lawsuits, roughly $1.75 million in all.

Bringing docs on the payroll

One expense weighted toward Haywood since the merger is the buyout of doctor practices.

Doctors nationally are cashing in the hassles of private practice for the steady paycheck of being a hospital employee. They no longer have the freedom of an entrepreneur, but they are free to simply practice medicine without worrying about the business side.

The transition has proven costly for hospitals, however.

“It is not an inexpensive proposition to employ physician practices,” Johns said.

The hospitals nor doctors will reveal exactly what it cost to buy the practice. But, the expense doesn’t stop there. The hospital has to assume payroll and overhead immediately, but there is a several month lag before billing catches up, putting a dent in the hospital’s cash flow.

Both WestCare and Haywood had fallen behind in the arena of employing doctors compared to the national trend, however. As doctors retired or moved away, the hospitals were struggling to attract new ones without being able to offer in-house employment.

“The traditional model of recruiting physicians into private practices was no longer working,” Heatherly said.

So starting five years ago, Heatherly led a campaign to bring doctor’s practices under employment of Harris.

“The potential loss of additional market share far outweighed the investment we needed to make,” Heatherly said. “The good news is we have been able to stabilize market share and now our focus has been to demonstrate to the community we are here and have an engaged group of physicians and employees who are very interested in meeting the health care needs in our community.”

Haywood, however, didn’t have that luxury.

While WestCare was on its aggressive campaign to employ doctors, Haywood was struggling to rebuild its image after failing federal inspections. The hospital was decertified and essentially closed its doors for five months in 2007.

It wasn’t exactly in a position to bring doctors onto its payroll. And doctors most likely weren’t going to sell their practices and go to work until they were sure the hospital was on solid ground.

And thus, it was catch up time.

“The pace of question activity certainly picked up over there,” Heatherly said of Haywood during the past 18 months.

Despite his WestCare roots, Heatherly is the first to admit it was worth the money to buy the doctors practices in Haywood County. The doctors were being courted by Mission Hospital, who was making forays to buy doctors practices in Haywood as part of a fight for market share. Heatherly said Haywood had to step in to protect its turf.

John Young, vice president for Carolinas HealthCare’s western region, also agrees with the move.

“If they hadn’t done it somebody else would have,” said Young, who works for the Charlotte-based hospital system that has a management contract over MedWest.

Perfect storm

Other things on the expense list simply couldn’t be helped — namely the lawsuits and blown generator.

“You have to have back-up generation for your hospital,” Young said.

The biggest financial hit by far was an $8 million system for electronic medical records. The expense was once again seen as spending on Haywood’s side of the ledger sheet, but it’s more complicated than that, Poore said.

When the hospitals partnered, each had a different computer system for electronic medical records.

WestCare’s was seen as the best system of the two, so Haywood had to ditch its system and start over. The cost includes some upgrades for WestCare’s portion of electronic medical records. The cost also includes bringing all the doctors employed by MedWest onto the system as well.

From Poore’s perspective, the expense was for all three hospitals.

Haywood also took a hit from two old lawsuits. Both date to the former hospital administration. One quite literally: the suit was filed by the former hospital administrator to pay out accrued vacation. The hospital settled for $150,000 in back pay.

The other was a $1.6 million judgment against the hospital in a suit filed by ER doctors wrongfully ousted at the hands of the former administration.

“It was before us, but in the end, you have to pay what you have to pay,” Young said.

But neither lawsuit was factored into the profits or losses split at year’s end. Those were backed out and kept on Haywood’s side, meaning Haywood took the whole hit of those rather than factoring them into the shared profits and losses.

Harris next in line

Harris’ turn is indeed next, hospital leaders promise.

Five years ago, Harris was in the throes of designing an ambitious $18 million expansion and renovation. Plans called for a new emergency room four times bigger than the current one, as well as major renovations and additions to various parts of the hospital.

But, the recession sidelined the plans.

“We found that health care is not recession proof,” Johns said.

Unfortunately, the project at Harris had to wait.

“We have been juggling a lot of priorities,” Johns said.

With those now out of the way, however, a new emergency room for Harris is now back on the table as the “top priority,” Johns said.

“The ED is at the very top of the list,” Heatherly agreed.

It won’t be as big as once hoped for — likely only doubling the size of the emergency room and minus the related hospital renovations, for a much smaller price tag of only $6 to $7 million.

Still, that’s a lot of money. It will take borrowing, and that can’t happen until Harris is able to improve its financial bottom line.

Heatherly said MedWest-Harris needs to show “some good, sustained financial results” before the project gets the final green light, so it is hard to say exactly when it will happen.

WestCare is already carrying $14 million in debt on its books dating to various expansions on both its Sylva and Swain a decade ago.

MedWest-Haywood, on the other hand, has only about $4 million in debt, recently assumed as a line of credit from Carolinas Health Systems, which has a management contract over MedWest.

The MedWest system had a profit margin of 0.8 percent last year. It is aiming for 1.1 percent this year.

While slim, it is only slightly below what most small or mid-sized hospitals are pulling in these days. The margins also include depreciation, which artificially deflate what the hospital actually made in hard cash at the end of the day.

Teeheeheehee, yuk yuk yuk, ho ho ho, BAHAHAHA — no matter how you do it, laughter can boost your mood, lower your blood pressure and help prolong your life.

“It’s spontaneous; it’s contagious; it’s incredibly powerful,” said Cindy Miles, a certified laughter therapist based in Sylva.

These factors are some of the reasons Miles sought out laughter therapy training. Laughter therapy uses the positive benefits of genuine, mirthful chuckling to help alleviate problems such as stress, high blood pressure, lethargy and depression.

“It’s a very simple way to manage stress,” Miles said. “We know that laughter relaxes blood vessels.”

And, it’s cheap. The only cost is Miles’ time and training.

“It’s a way to get a powerful result with very little money,” she said.

Burns calories, increases blood flow to the brain, strengthens the immune system and releases endorphins are among the other listed benefits of laughter therapy.

“100 percent of the people who actively participate feel better,” Miles said.

Miles works for the Southwestern Commission Area Agency on Aging as family caregiver resource coordinator.

In her job, Miles sees strained caregivers ignoring their personal needs in order to support a disabled, terminally ill or elderly family member. As a result, caregivers report a deterioration of their health, higher rates of depression and poor eating habits. And, it is not uncommon for caregivers to die before the person they are assisting.

“One thing I encounter with family caregivers is they are so stressed,” she said.

A tenant of the therapy is that laughter begets laughter. By performing one of more than 100 different activities, laughter therapists’ goal is to trigger fits of guffaws, which lead to various degrees of side splitting, floor rolling and ebullient eye watering.

“They are designed to stimulate laughter (and) it’s better in a group setting,” she said.

Exercises include pretending to be laughter-powered airplanes or simply playing a clip of baby’s cracking up — something that, at the very least, is hard not to snicker at.

“Laughter ends up being the outcome,” she said.

One thing you won’t hear at a therapy session, however, is jokes.

Jokes are typically made at the expense of others, Miles said, adding that poking fun at other people is not condoned.

Laughter therapy has not only benefited the people Miles works with, but it has also improved her already cheery disposition.

“I am more mindful of the need to laugh,” she said.

Children giggle hundreds of times a day, Miles said, but as adults, people forget to chortle on a regular basis.

“If we get 15 laughs a day, we have a good day,” she said.

Miles said she has only encountered one Scrooge during her sessions. A police officer attended one of the events in full uniform and had trouble laughing because he was constrained by a bulletproof vest.

“He just could not bring himself to do it,” she said.

Otherwise, even people who have experienced a recent tragedy have been able to find humor and healing in Mile’s therapy sessions. Miles’ specifically recalled a woman who had lost her father the week prior chortling.

“I was just amazed that she was able to participate,” she said.

Spreading the cheer

Miles was first certified in 2010 and attained advanced certification a year later. She is one of about 6,000 laughter therapists certified by World Laughter Tour Inc., an organization founded by psychologist Steve Wilson. World Laughter Tour trains people and promotes the use of laughter therapy worldwide. Miles is the only laughter therapist in area, according to the organization’s website.

“I am pretty much it in this part of the state,” she said.

However, that could change in the next couple years after Miles completes the final level of training. Once she is named a master trainer, Miles can teach coworkers at the Southwestern Commission and people in similar position around the state how to lead laughter therapy sessions.

“After we saw how well it was received, we sent her for additional training,” said Mary Barker, director of the Southwestern Commission Area Agency on Aging. “I think it’s a great thing to relieve caregivers stress. They get so wound up in taking care they forget to take care of themselves.”

With more certified laughter therapists, the commission will be able to host more sessions and expose more people to its benefits.

“It is so popular that she can’t fill all the requests she is getting,” Barker said.

And at some point in the future the Southwestern Commission hopes to partner with a university to track the psychological and physical effects of laughter therapy.

“We are definitely looking at that, and the state is encouraging us to do that,” Barker said.

Laugh more

To schedule a therapeutic laughter session, contact Cindy Miles at 828.226.5893 or This email address is being protected from spambots. You need JavaScript enabled to view it.. Or, visit her website laughtobewell.com.

The medical community in Western North Carolina is embroiled in a debate over Mission Hospital — should its influence and reach be reined in or given the freedom it needs to serves as the region’s health care leader?

A state committee is examining whether Mission needs more checks on its health care monopoly, and will hold a public hearing on the issue at 6 p.m. Thursday, Oct. 20, at the WNC Agricultural Center in Asheville.

Physicians in surrounding counties fear encroachment by Mission could siphon patients away from their local hospitals to Asheville, despite the same quality of care and caliber of physicians serving in their community closer to home.

“You have to have a certain volume of business to be viable,” said David Markoff, an ophthalmologist in Haywood County. “At some point, you reach this tipping point where you can’t keep quality health care locally because the physicians aren’t busy enough.”

Mission has made overtures to buy physician practices in Haywood County and has set up an outpatient clinic for doctors from Asheville to hold office hours in Haywood on select days. If successful, this could result in patients being sent to Mission for procedures and take business away from MedWest-Haywood.

Janet Moore, vice president of communications for Mission, said Mission is trying to fill in gaps of medical specialties that aren’t accessible now, citing a doctor shortage in America that could grow more acute for the region.

Yet that doesn’t explain why Mission is courting local doctors to join its payroll, nor accounts for all the doctors, including general orthopedists, coming over the county line to set up shop in Haywood.

Graham Fields, a spokesperson for Park Ridge Hospital, said Mission’s maneuvers could ultimately undermine patient choice by squelching the free market.

“Missions’ success is inversely proportional to small hospital’s success. As Haywood gets better at keeping patients at home, Mission loses business and has to get more aggressive,” said Fields.

Mission currently attracts about 32 percent of Haywood County’s impatient market share.

Mission sees itself unfairly placed in the crosshairs, however.

“Rather than stepping back with the patient at the center saying what’s right for the region, we have a lot of politicking, frankly,” Moore said.

Mission, however, isn’t the only one playing offense. Carolina’s HealthCare System has brought four hospitals in the region — including Haywood, Jackson and Swain — under its management umbrella. It is based out of Charlotte and dwarfs Mission.

“Carolinas has a footprint that reaches from Murphy to Manteo,” Moore said.

Mission seems to be concerned that Carolinas could funnel specialty care away from it. It is a troubling prospect as Mission’s thin margins grow even thinner. More patients lack insurance and are being written off as charity cases, while Medicaid and Medicare continue to reduce their level of reimbursements to hospitals.

“What you have is a pie that isn’t getting any bigger,” Moore said. “Nobody can afford to lose market share. Everybody wants to stay where they are or get better.”

Markoff said Asheville has attracted lots of doctors since it is such a desirable place to live.

“Asheville has too many physicians for the patients in Buncombe County. They have to pull patients in from surrounding counties to keep their physicians happy,” Markoff said.

Mission is governed by anti-trust regulations dating back to its merger with St. Joseph’s 15 years ago.

“We are the most regulated hospital in the state of North Carolina and in the United States. We live under a microscope and have for 15 years,” Moore said.

Mission sent out a mass email to employees and community members encouraging them to come out and voice support for Mission.

“If you are an employee who is planning on attending and would like a boxed dinner, please click below,” the email read.

Getting a kidney dialysis center in Franklin grew more likely last week after a state committee agreed Macon County had demonstrated a tangible need for such a facility.

With a county population older than that of many surrounding communities, an increasing number of residents here have been forced to travel over Cowee Mountain to Sylva for treatment.

Driving to Sylva is an inconvenience during the warm-weather months, but during snowfall, it is a true danger for those seeking the lifesaving medical procedure, dialysis family members and patients have said. Last winter’s harsh weather set the stage for Macon County’s dialysis-center push, highlighting the difficulties patients faced making their way to the nearest facility in Sylva.

Macon County has a loose agreement from DaVita, a publicly traded national company that operates the dialysis center in Sylva, to come into Franklin if the state gives the OK. The state limits health care competition to ensure hospitals and medical facilities are financially viable, issuing a “certificate of need” only if patient demand warrants it. In this case, the state said there wasn’t enough demand for a dialysis center in Macon County.

Macon County leaders objected to the state’s assessment, however. DaVita prepared a letter of support for the county to show state officials, signaling its intentions to consider opening a center in Franklin.

The state requires that new dialysis facilities be able to project a need for at least 10 dialysis stations, or 32 patients — at last official count, in the state’s semiannual Dialysis Report, Macon County had just 23 residents receiving dialysis.

But county officials dispute that number, saying that more than 30 dialysis patients currently drive U.S. 441 from Macon County to Sylva for treatment. Additionally, officials suspect there are some dialysis patients in the southern end of the county driving to neighboring Clayton, Ga., who aren’t included in that number. The state’s threshold for justifying a kidney dialysis center also doesn’t take into account the particularly arduous health challenges associated with end-stage renal disease — yet Macon County’s end-stage population is increasing by an average of 10 percent a year, according to county records.

The state uses a 30-mile radius to determine locations of dialysis centers.

Friday, the long-term and behavioral care committee, meeting in Raleigh, agreed unanimously with Macon County’s arguments, according to County Manager Jack Horton. The committee recommended Macon County be allowed to build a five-bed dialysis center; that bed number could change to accommodate increased need.

The proposal now hangs on a State Health Coordinating Council meeting set for Sept. 28, said Macon County Commissioner Ronnie Beale, who has led the dialysis-center push.

Beale was optimistic the 29-member council would approve the proposal. If that happens, in March the county would apply for a certificate of need, which Beale believed would be forthcoming.

“We couldn’t be more pleased,” Beale said.