HCA, Mission and the "Tragedy" of Transylvania Regional Hospital

Once the source of community pride and even "love," the hospital has suffered declining service and skyrocketing prices blamed on the "obscene" influence of profit-seeking.

Jun 09, 2022

The entrance of Transylvania Regional Hospital, east of downtown Brevard

Strawberry Shortcake Festivals and “Wealth Pockets”

Newspaper announcement of the 1942 opening of a new hospital building on North Country Club Road

There’s a reason “Community” was part of the hospital’s name from its founding in 1933 until its 75th anniversary in 2008, said recently retired pediatrician Ora Wells.

“It was by God built by this community.”

Transylvania residents and companies — notably cigarette-paper manufacturer Ecusta Mill — contributed two-thirds of the $110,000 cost of building a new brick hospital on North County Club Road in 1942, according to newspaper archives at the Transylvania Public Library.

More than $1 million of the $3 million needed to construct the hospital at its current site in 1973 came from local sources, which contributed not only larger sums but larger percentages of the costs of upgrades in 1989, 2003, 2008 and 2017.

The last of these, the construction of a new emergency room, “was an $8 million project, which was totally donor funded,” said Lex Green, former executive director of the Transylvania Regional Hospital Foundation and current president of the organization that grew out of it, the Pisgah Health Foundation.

“There were a lot of other projects like that if you go back in history,” Green said. “These were funded with major contributions. They were funded with events like carnivals. They were funded with golf tournaments and they were funded with strawberry shortcake festivals. It was just amazing, the cornucopia of funding mechanisms.”

But those big donors were, unsurprisingly, especially crucial. Ecusta gave so much for so long before its closing in 2002, Wells said, that “for years we had a cigarette machine in the emergency room lobby. That was very hard to get rid of because of Ecusta.”

Well-heeled homeowners — many of them part-time residents — donated most of the $14 million the Foundation raised for an $18-million inpatient wing completed in 2008, said Peter Elder, a retired marketing executive who led the fundraising effort.

He targeted “wealth pockets” such as Lake Toxaway and Connestee Falls, he said, appealing both to donors’ sense of responsibility — “I made it understood; they are not guests of the community, they are residents” — and their self interest.

They needed to pay, he told them, if they wanted to secure Transylvania’s future as a desirable retirement destination and a level of health care they had come to expect in their big-city homes.

Because he once thought he had played a key role in doing just that, the current state of the hospital has left him “heartbroken, absolutely heartbroken,” he said.

“I spent three or four years of my life, eight hours a day, every day, rebuilding this hospital so we could compete face to face with Duke University (Hospital).”

“Awards and Awards”

Recently retired pediatrician Ora Wells, a longtime member of the local hospital board

At least it came remarkably close for a 92-bed hospital in a rural county, said people who used to work there.

Responsive leadership, regularly upgraded facilities, and adequate compensation and staffing, they said, combined to create a committed team that delivered excellent care.

“It won awards and awards and awards,” Wells said of the hospital, which as recently as 2010 was ranked fourth of 102 hospitals in the state for patient satisfaction, according to a Consumer Reports website

“We loved our hospital and we worked for it and we promoted it,” said Wells, who served several stints on the hospital’s board and is a member of the new Community Committee.

Transylvania’s natural beauty helped attract highly qualified doctors, said Ray Dunkelberg, a retired internist and longtime board member. The hospital’s salaries — adjusted to partly compensate doctors for lower potential earnings in Transylvania compared to in bigger cities — helped retain them, said Bob Bednarek, the hospital’s president and chief executive officer from 1997 to 2014.

And, he said, both Transylvania Community and doctors’ practices received reliable payment from thousands of patients covered by the insurance plans of big employers such as Ecusta and Dupont.

Doctors willingly served on the board, Wells said, because Bednarek as well as other board members — some of them retired executives of Fortune 500 companies — listened to their concerns about patient care.

“It was a three-legged stool,” Wells said. “The board, the CEO and the staff all worked together.”

Including the nurses, said Karen Sanders, who as director of acute care nursing from 2008 to 2014, oversaw a staff of 92 employees, many of whom contributed belongings and off-duty hours to an annual “giant yard sale” that raised money for the hospital.

“It was fun,” she said of her first years at the hospital. “It was exhilarating. It was professional. It was teamwork, teamwork, teamwork.”

Not all memories are quite so fond. Nash criticized not only the influence on financial considerations on the board, but its lack of racial and economic diversity.

And Jim Hoffmeister, a general surgeon at the hospital for three-and-a-half years before it was sold to Mission in 2012, has no recollection of enhanced compensation.

Still, the hospital boasted of a skilled and dedicated staff, a thriving birthing center, a fully equipped postoperative transitional care unit and an adult day-care center offering games, crafts and other engaging activities, Sanders said.

Its doctors performed “bread-and-butter surgeries,” such as appendectomies and gall bladder removals, Hoffmeister said, as well as a full range of orthopedic procedures and common cancer operations such as mastectomies.

“The vast majority of internal medicine patients — we took care of them here,” Nash said.

When Hoffmeister, who had previously worked at a rural hospital in Washington state, first arrived at Transylvania Regional, he said, “I thought we were incredibly fortunate for a town this size to have such a nice hospital with such a broad range of specialties available.”

“Mayo Light”

But it couldn’t last, Bednarek said.

Even the generous support from the Foundation wasn’t enough to overcome the “macro issues” that buffeted Transylvania Regional’s finances and forced the closure of 130 rural hospitals across the country between 2010 and 2020.

These include the increasing specialization and expense of treatment, small hospitals’ limited power to either purchase supplies or negotiate favorable payments from insurers, and, in Transylvania, greatly reduced enrollment in these plans after the closures of Ecusta, DuPont and other factories in the early 2000s.

By the time of the sale to HCA, 75 percent of Mission Health’s patients in Western North Carolina were either uninsured or covered by Medicaid or Medicare, both of which pay far less for most treatments than private insurance companies, according to a 2019 study of the deal by Georgetown University’s Center on Health Insurance Reform.

“It became apparent that we were falling behind,” Dunkelberg said. “I remember a board meeting when Bob Bednarek presented the cost of all the things we would need over the next four or five years and it was millions and millions of dollars.”

After considering several options, Dunkelberg said, the board decided to join the Mission system. That is how a 2012 press release framed the deal — as a merger — but “in hard business terms, it was a sale,” Bednarek said.

Dunkelberg said the price was $18.9 million. As a point of comparison, that amount is roughly half the nearly $40 million the Foundation raised from its founding in 1988 to the time of the Mission sale to HCA, Green said.

But besides easing an economic crunch, said Dunkelberg and Wells, the deal promised — and, for a while, delivered — big benefits, allowing local doctors seamless access to the system’s resources and expertise, especially at its acclaimed flagship, Mission Hospital, in Asheville.

Former Mission President and Chief Executive Officer Ron Paulus “was building a beautiful system with Mission,'' Wells said, comparing it to the famed Mayo Clinic in Minnesota.

“I used to call it Mayo light,” he said. “I thought Mission was getting a gem in us, but as I became involved with the quality people at Mission, I realized that they do an excellent job.”

A Culture of Cost Cutting

But how did Mission bring financial stability to a small hospital serving low-income and aging patients? And, later, how did such a hospital fit into HCA’s drive for profits, including $1.3 billion in the first quarter of this year.

Both before and after the sale, according to a range of sources, Mission employed three primary strategies: gaining the market dominance that has prompted the two antitrust suits; streamlining care by funneling more patients to its hospital in Asheville; and, finally, dramatically cutting services and workers.

In 2012, Mission representatives told the Brevard City Council that its 620 workers made it the “largest employer in Transylvania County.”

By August of 2021, Michele Pilon, the hospital’s chief executive officer and chief nursing officer, boasted of its “more than 250” workers and its status as the county’s “third-largest employer,” in a guest column in the Transylvania Times.

Those numbers need additional context, Bednarek said, because they include workers providing services such as hospice and home health care — once classified as hospital functions but later moved to other Mission-supported organizations.

But the cuts included the squeezing of doctors out of Mission-owned practices, reported both across the system and in Transylvania.

“At one point last year, I put the number at 15,” said Copelof, the city’s designated liaison to HCA, who added that in a subsequent meeting with Greg Lowe, president of HCA’s North Carolina operations, “he spent a lot of time saying I was off by one.”

The culling of workers began soon after Mission’s acquisition of the hospital, Karen Sanders said, with one of the first casualties being the quality of service at the formerly thriving adult day-care center, which finally closed this year.

The pressure to save money “just got worse and worse and worse” after Mission took over, said Sanders, who left her job a few months after being called to a 2014 meeting in which Mission’s Chief Operating Officer Jill Hoggard Green announced the reassignment of Bednarek and another key hospital administrator.

“It was very personal to hear,” Sanders said. “I’ve been here seven years and this is a community hospital and both these people have done extraordinary work and you’re doing this to them, right now, in front of all of us?”

Neither Paulus nor Hoggard Green, now president and CEO of The Queen’s Health System in Hawai’i, responded to requests for comment. Bednarek said he viewed the move, to a position overseeing rural healthcare throughout the Mission system, as a promotion he was happy to accept.

“But I can understand Karen’s feelings because there was a very special environment that may have begun to change because of some of the macro issues I talked about,” he said.

The formerly bustling transitional care unit was all but shut down under Mission, said Sandy Westney, a licensed practical nurse who worked in a Mission-owned practice across the street from the hospital and tracked patients it admitted.

“They have said that the unit was still there,” said Westney, who lost her job when Mission cut a doctor and her position from the practice in 2017.

But “there were no employees in that unit and there were no patients being admitted to that unit, so that’s about as close to being closed as you can get,” she said. (The reduced activity, Wells said, was partly due to insurers’ reluctance to pay for extended hospital stays.)

As staff was slashed, said Lynn Tyler, a registered nurse who worked at the hospital for 33 years, more positions were filled by traveling nurses and more work was piled on the remaining permanent employees.

“It got to the point where you just could not do your job,” she said.

She resigned shortly before the sale to HCA and after the firing of “two other nurses who had been in the emergency department longer than I had,” she said. “I knew I was going to be next on the list.”

“When Paulus and Jill Hoggard Green first came in, they cut a lot of technologists,” said Helen Sandven, a radiologist who retired in 2020 and whose practice, Asheville Radiology Associates, has long had a contract to provide imaging services to Transylvania Regional.

Among those removed, Sandven said, was the hospital’s exemplary chief technologist Gloria Adams, who was escorted from the building during a Christmas party (and who did not respond to a request for an interview).

“That was how they managed people,” Sandven said. “They wanted to get rid of (Adams) because she had too close of a relationship with the doctors . . . I think they were looking for stuff to fire her for.”

Nash, who worked monthly shifts as a hospitalist at Transylvania Regional until about the time of HCA’s purchase, has a more nuanced view of Mission’s management, both before and after the sale.

He praised the skills of current hospitalist Randall Cope and thinks most patients at Transylvania Regional “are still receiving what I would call adequate care.”

But during the last few years as a hospitalist, he noticed “lots of travel nurses, and that was pre-pandemic, and lots of staff changes,” he said.

“I think what bothered me the most, it became nearly impossible for staff to know who their support was, who their leadership was. Not only did they feel somewhat isolated, they didn’t know who to go to for guidance or help or respite.”

Dominating Markets, Raising Prices

The one strategy most costly to consumers is the drive to dominate local markets, said Barak Richman, a Duke University professor of law and business administration.

“Frankly, both for-profits and nonprofits have been pursuing monopoly power,” he said. “This is leverage that hospitals have acquired and that’s why hospital prices are going up so much.”

It’s a power that was unleashed by the state’s 2016 rescinding of Mission’s Certificate of Public Advantage (COPA), which since 1995 had limited its profits in exchange for protection from antitrust suits such as the ones filed last week by the city of Brevard in Asheville’s US District Court and last year on behalf of six local residents in Buncombe County Superior Court.

Since the termination of the COPA, prices for a range of inpatient and outpatient procedures have risen gradually in most of the rest of the state while skyrocketing in Mission’s regional market, where “HCA’s prices . . . are by far the highest in North Carolina,” Brevard’s complaint said.

The hospital charges more than twice as much as the state average for “a C-Section without complications,” last year’s suit says, while Brevard’s claim states “The Mission-Asheville price for (a shoulder arthroscopy) was $2,419 — nearly three times the statewide average of $897.”

Overall, Brevard’s suit says, private insurers pay about twice as much as Medicare for inpatient care at hospitals across the state and more than three times as much at Mission.

When hospitals charge insurers more for treatment, the 2021 suit says, these companies naturally pass those expenses on to residents and employers in the form of higher premiums.

Those rates throughout Mission’s Western North Carolina service area, the complaint says, are “approximately 50% higher . . . than in Winston-Salem; about 55% higher . . . than in Durham, Raleigh, or Charlotte; and about 60% higher than in Greensboro.”

After the Brevard suit was filed, Mission Health’s Director of Media Relations Nancy Lindell said the company had not been served with the suit and couldn’t yet comment on its details.

HCA’s lawyers’ most complete rebuttal to last year’s lawsuit, a brief in support of its motion to dismiss, says high prices alone are not proof of illegal activity.

“The complaints . . . about the prices paid by commercial insurers to Mission Health likewise do not support an antitrust claim,” the brief said, “because charging ‘high’ or even ‘monopoly’ prices is not unlawful.”

The Asheville Migration

The third strategy, streamlining care, is central to the concerns of Copelof and other county healthcare advocates: that Transylvania Regional will ultimately serve as little more than an emergency-care way station for patients who are either discharged or transported for expensive treatment at Mission Hospital, which can charge a premium for the most severely injured patients as the region’s only certified Level II Trauma Center.

“I don’t want my hospital to be an emergency room with a helipad,” Wells said.

The state-approved asset purchase agreement (APA) that governs the terms of the sale to HCA is meant to prevent this, requiring the company to provide emergency, acute, transitional and surgical care at Transylvania and Mission’s other hospitals until 2029.

The agreement, however, doesn’t require HCA to produce real evidence that these services remain available, Copelof said, and its most recent annual report addressing compliance with the agreement dispensed with the matter in one sentence:

“Buyer did not discontinue the provision of the services set forth on Schedule 7.13(b) of the Purchase Agreement at any Member Hospital Facility.”

The company hasn’t provided much more proof to Copelof, she said, though “I’ve been asking for detailed metrics for two-and-a-half years now.”

She did receive some partial figures last month, which have been shared with other members of the Community Committee, she said. But HCA, besides declining to provide the same information to NewsBeat, blocked its release by Copelof, citing an exemption for proprietary information in the state public records law, City Attorney Mack McKeller wrote in response to a records request.

Centers for Medicare and Medicaid Services, however, does show a long-term trend of care migrating from Brevard to Asheville, at least for the Medicare patients that make up a large percentage of HCA’s customer base.

The prime example is patients from Brevard’s 28712 zip code, where according to the city’s suit, Mission Health holds an 85 percent market share for hospital patients.

In 2015, according to the Centers’ database, 559 Medicare patients from the zip code were treated at Transylvania Regional, which collected $7.5 million in fees from the program; Mission Hospital admitted fewer of these patients from Brevard that year, 375, but took in more than twice as much of their payments — $17 million.

By 2020, Mission had surpassed Transylvania in the number of Brevard patients it admitted, 437 to 333, and by then its collections from Medicaid, $30.7 million, dwarfed the $5.1 million paid to Transylvania Regional.

The last year those numbers were available, 2020, was also a year of severe Covid-19-related disruptions, Pilon said in a presentation at a January 2021 meeting of the Transylvania County Commission.

Fears of catching the virus had limited emergency visits to only the sickest patients and likely caused residents to delay elective procedures, she said, but “we’ve really had a nice recovery” in the numbers of surgeries and admissions.

She also pointed to capital expenditures that counter the impression that HCA plans to diminish care at the hospital. The total investment, including in new imaging equipment and a new helipad, now stands at more than $14 million, according to Lindell.

But not all the improvements are meant to enhance local care, Copelof said.

“I’ll tell you, that new helipad makes it much easier to transport patients from the community.”

Hub-and-Spoke

“The hub-and-spoke” model of care at systems such as Mission makes sense for complex procedures requiring major resources, said Richman, the Duke professor, and the 2015 closing of the birthing center shows that even common treatment can migrate to larger hospitals for legitimate reasons, Wells said.

The hospital didn’t have the up-to-date delivery rooms or expanded neonatal services that expectant mothers could find at Mission or AdventHealth Hendersonville, he said. It didn’t have the patient volume to justify spending millions of dollars on a new delivery wing or for pediatric practices to hire more doctors to provide newborn care.

“I was on call 24/7 for the last three years it was open,” he said.

But hospital systems have a motive to funnel work to, if not a particular hospital, hospitals in general because they charge more for treatments that could be provided in clinics and doctors’ offices, Richman said.

“When you have a hospital running a local healthcare system, you will have a premium on hospital services and not a lot of dedication or attention to non-hospital services.”

And Brevard’s suit emphasizes the standing of Mission’s Asheville hospital as a major generator of profit.

Thanks partly to its power over insurers to limit coverage of patients seeking care at competing hospitals, the legal complaint says, “revenues from Mission Hospital-Asheville were recently reported to be over $1.2 billion, ahead of all but one of the other 100-plus hospitals in the HCA chain.”

Teeing It up?

That Mission employed these strategies before the sale to HCA makes Sandven suspect the nonprofit wasn’t just trying to stave off bankruptcy, as Paulus repeatedly told Transylvania Regional’s board members. Maybe, she said, it was more about setting up a sale that rewarded Paulus financially.

“In my opinion, it’s not just HCA that’s bad news. Paulus and Jill Hoggard Green were also bad news,” she said.

“It appeared they teed it up so HCA could come in.”

Asheville Watchdog, an investigative reporting website that consulted with NewsBeat on this story, has raised this possibility in several articles, citing a 2018 internal memo from state Attorney General Josh Stein’s office stating that “the deck had been stacked in (HCA’s) favor from the beginning,” that Paulus reviewed an offer from the company before the board authorized him to begin negotiations and that, two weeks after the sale, Paulus accepted a job as an HCA strategic advisor.

The site has also reported that Mission had enough money to pay Paulus $4 million in compensation in the months before the sale, while publicly available tax documents also undermine the message of Mission’s financial hardship.

Mission collected robust “revenues after expenses” in the two years before the sale, tax records show, and in the final fiscal year Paulus received $2.46 million in total compensation while 14 Mission executives earned more than $500,000 each.

Mission was also able to present the company with a 12-story, surgical tower that opened just months after the sale. An architect’s website calls it “the largest construction project” in Asheville history and a Mission blog post says it cost a total of $404 million.

Its declining value can also be a source of accelerated depreciation against the company’s taxes, according to federal law, thanks in large part to a 1997 ruling in a case brought by HCA.

When Mission first announced its decision to build the tower, said Green, whose position at the Foundation was fully funded by Mission, “everybody rallied around it,” but it was also a source of puzzlement.

“In the face of all the cost mitigation,” he said, “many employees of Mission Health were scratching their heads when they discovered we were going to build a (multi-million-dollar) tower.”

The “Company”

What is left of Mission’s operations in Transylvania? Without detailed information from HCA or people affiliated with the hospital, it’s hard to know.

Both lawsuits accuse the company of violating a 2021 federal rule requiring healthcare pricing transparency. Visitors to a common hospital-rating site, Leapfrog.com, are greeted with a red banner saying “Transylvania Regional Hospital has DECLINED TO RESPOND.” And more than a dozen of the hospital’s non-union nurses and doctors with admitting rights did not respond to requests for interviews.

In a response to detailed questions, including ones about the treatment of individual patients, Lindell sent an email repeating information HCA had provided after Brevard filed its suit:

The company has recently hired five new primary care doctors in the county and renovated their practices. Since the sale, it has more than doubled its annual contributions to charity care, Lindell wrote, and the hospital has “recently been recognized by Healthgrades for Pulmonary Care Excellence.”

In her earlier comments responding to the lawsuit, Lindell also touted the company’s efforts to engage with Copelof and other committee members, while suggesting this work had been jeopardized by the city’s legal complaint.

“We will now turn our attention to vigorously defending the lawsuit,” she wrote, “while continuing to provide excellent health care to the citizens of Western North Carolina.”

Or not so excellent.

Ramsey said the hospital’s treatment of her parents — James and Gloria Sanders — was marred by both neglect and medical errors, which she attributed more to a shortage of staff than their lack of ability.

“They have let so many people go because (HCA’s) real interest is the bottom line, not patient care,” she said.

During a February stay, her 94-year-old father, who is blind, mostly deaf and suffering from dementia, was admitted by way of a video consultation with a doctor in Charlotte. Though the most probable cause of his illness was a systemic infection, Ramsey said, he was also treated for a heart attack without sufficient evidence he had suffered one.

“He was put on two medications that he absolutely did not need,” she said.

The only time Gloria Sanders saw a doctor, he scolded her for insisting on a visit when he was a “very busy man,” Ramsey said, and before Ramsey intervened, the hospital planned to release her mother two days into a prescribed five-day treatment of remdesivir antiviral infusions that could not be administered at home.

When Gloria Sanders was released, she suffered from an undiagnosed urinary tract infection that Ramsey attributes to repeated delays in using the restroom — and from still-raging symptoms of her virus.

“I came out just the way I went in,” Gloria Sanders said, coughing “from my toenails up.”

Robin Pickel, of Lake Toxaway, said she was shocked to see discharge papers from the hospital implicating her in the Christmas-day death of her mother, 81-year-old Covid-19 patient Carolyn Hogue.

Noting that Hogue was unvaccinated and had declined to be treated with remdesivir or connected to a respirator, the document said, "the patient seemed to take the daughter’s advice, which was ill-advised if not lethal."

But Pickel said that she was merely carrying out her mother’s wishes and that during Hogue’s 11-day stay she witnessed several serious lapses in care.

These included administering a potentially dangerous medication Hogue had refused and a nurse’s attempt to fit her with a “do not resuscitate” wristband that neither Hogue nor any other family member had authorized.

And after her mother’s death, Pickel said she found documentation showing that her mother had tested positive for a MRSA infection that had never been treated.

“MRSA . . . is awful and deadly if untreated!!” she wrote in an email to NewsBeat.

Dunkelberg called the hospital’s decline “a tragedy,” and Wells, like two board members who resigned in protest last year, now regrets his support of the sale to HCA.

“I drank the Kool-Aid,” he said.

He was never a Mission employee, he said, and hasn’t regularly worked in the hospital for about five years. But as a board member until his retirement in March, he did get a close-up view of HCA’s priorities. Throughout Mission’s days as a nonprofit, he said, doctors on the board retained a strong voice in decisions such as the closing of the birthing center.

Immediately after the sale, however, he realized all this power had shifted to “Asheville and Nashville,” the home of HCA headquarters, and that it would be applied not to benefit patients but to bolster what Mission leadership called the “company.”

“When people complain to me about HCA, I say ‘Stop! Say it out loud! Hospital Corporation of America,’ ” he said, referring to the company’s original name. “That’s what they are.’ They are not a system builder. They are not invested in primary care.”

“It’s been painful for me,” he said. “You have no idea how much I loved my hospital. But what I tell people now is, it’s no longer my hospital.”

Email: brevardnewsbeat@gmail.com

Brevard NewsBeat

Discussion about this post