Written by Peter Lewis, Asheville Watchdog.
This story was originally published by Asheville Watchdog, an independent nonprofit news team serving Asheville and surrounding communities.
The Mission Health system could have been purchased by another nonprofit hospital chain in a deal that would have been at least as good if not better than the $1.5 billion sale that the hospital system’s board ultimately approved to HCA Healthcare in 2018, a former top Mission executive now says.
The sale to HCA was “significantly detrimental” to the community, said Charles F. Ayscue, who was Mission’s top financial executive from 2007 to 2018. Ayscue broke the cone of silence that has surrounded the highly controversial Mission sale by writing a letter in support of Novant Health’s application to be awarded 67 new acute care hospital beds in Buncombe County.
Ayscue is now working for Novant as an independent contractor.
The letter includes stunning new revelations about the HCA deal, including that Novant, the only other bidder for Mission, agreed to financially match any offer by HCA and guarantee employment to the hospital system’s staff for at least three years. Since the 2019 sale to HCA, the nation’s largest for-profit hospital chain, more than 3,500 Mission employees have left, Ayscue wrote.
He also wrote that for the six months before his retirement in January 2018 — a period when Mission administrators and a few board members were actively, and apparently without the knowledge of the full board, working to broker a sale to HCA — Ayscue was excluded from any discussions about a possible sale to HCA.
As Asheville Watchdog reported earlier, Mission’s then-chief executive, Ronald A. Paulus, and his longtime adviser, Philip Green, solicited offers from HCA months before the Mission board of directors authorized them to seek potential partners for the nonprofit healthcare system, including Asheville’s flagship Mission Hospital.
“A Mistake”
In 2015, under Paulus’s direction, Mission Health successfully lobbied the state assembly to repeal North Carolina’s Certificate of Public Advantage (COPA) statute, which since 1993 had held that it was to the advantage of the people of western North Carolina to allow Mission to operate as a state-regulated monopoly. State oversight ended Sept. 30, 2016, freeing Paulus to run Mission as, in effect, an unregulated monopoly.
“Sunsetting the COPA was a mistake when the result was selling to HCA, a for-profit institution,” Ayscue wrote.
Less than a year later, in July 2017, according to documents obtained by Asheville Watchdog, Paulus and Green solicited offers from HCA. With offers for both a 50-50 partnership and a complete sale in hand, a small group of Mission administrators and board members secretly met with HCA executives at its Nashville, Tenn., headquarters in September 2017.
Paulus later told The Asheville Citizen Times that the Mission Board first authorized him to identify and gauge the interest of potential partners in January 2018.
The Mission board did not ask its investment bankers to issue a broad request for proposals, as is common in sales of such magnitude, and did not pursue an auction to get the maximum value for the 133-year-old institution. Internal memos examined by Asheville Watchdog reveal that the Attorney General’s office described Mission’s sale agreement with HCA as unusually favorable to HCA, and pressed for changes.
Only Novant was invited to make a formal offer to the Mission board to counter HCA’s offer, and the board rejected Novant’s offer within minutes, on a unanimous vote, according to documents obtained by The Watchdog.
“In the end,” according to a confidential internal memo prepared by investigators from the North Carolina Attorney General’s office, “an outside observer could conclude that HCA rose to the top among a limited number of bidders because the deck had been stacked in [HCA’s] favor from the beginning by Dr. Paulus and Mr. Green.”
“Significantly Detrimental”
Paulus, Green, and members of the Mission Board have refused to talk to Asheville Watchdog about the sale, other than to insist that HCA made by far the best offer among what Paulus described as “a handful” of suitors.
Ayscue, Mission’s longtime chief financial officer, now working for Novant, disputes this.
“After signing on with Novant Health as an independent contractor,” Ayscue wrote, “I was provided access to review Novant Health’s proposals from 2017 and 2018 to acquire Mission Health. These presentations clearly state that Novant Health would match any financial offer proposed by HCA, but equally significant was the documented fact that Novant Health guaranteed employment for all employees, including employed physicians, for a minimum period of three years.”
“From my recent assessment, over 3,500 employees are no longer on the workforce at Mission Health due to HCA’s focus on their profit margin,” Ayscue wrote, “and the resulting adverse economic impact on the community is significantly detrimental.”
“Because of the quality of healthcare and affordability, Mission Health was once a desirable place for retirees to seek healthcare services,” Ayscue wrote. But, he said, that’s no longer the case.
After being rebuffed by Mission, Novant soon after paid $2 billion cash and another $3 billion in commitments to buy the smaller, less profitable New Hanover Regional Health Center in Wilmington.
Novant Health’s manager of public relations declined to comment about Novant’s bid for Mission.
The sale became official on Feb. 1, 2019, giving HCA control over the six-hospital Mission Health system. Paulus joined HCA as a strategic adviser just days after the sale.
Green had business dealings with HCA that were not disclosed to the Mission board prior to its initial vote to approve the sale to HCA, according to documents obtained from the North Carolina Department of Justice under public records requests.
“Completely Inaccurate”
Asked to respond to Ayscue’s assertions, Nancy Lindell, director of public and media relations for HCA Healthcare’s North Carolina division, wrote, “Mr. Ayscue’s letter focuses on internal communications and operations at Mission Health prior to the sale to HCA Healthcare. Current Leadership at HCA Healthcare North Carolina Division and Mission Health would not have been privy to any communications or operations prior to the sale, and we therefore do not have the knowledge to comment on the accuracy; those would be questions for the Mission Health leadership prior to February 2019.”
Mission Health leaders prior to February 2019 told Asheville Watchdog they are unable to answer any questions because of nondisclosure agreements that Mission required all parties to the sale to sign. A spokeswoman for Dogwood Health Trust, which received the money from the sale of Mission’s assets, and where several former Mission board members went after the sale, said the Mission NDAs are in effect “in perpetuity.”
“Regarding Mr. Ayscue’s assessment of staffing changes at Mission post-sale, it is completely inaccurate,” Lindell continued. “As Mr. Ayscue has not worked at Mission Health in many years, it is unclear how he could make an assessment of that nature. Mr. Ayscue’s comments in his letter regarding staffing and patient care are not factually supported, as demonstrated by the multiple patient care and quality accolades that Mission Hospital has received since 2019, including our recent Leapfrog Grade A for quality and safety and successful completion of our Joint Commission Survey.”
Mission has repeatedly refused to say how many healthcare providers have left the system, but insists that overall staffing levels are “about the same” as before the sale.
“With respect to Mission Health’s financial impact in Western North Carolina, we have invested more than $270 Million in charity care and financial assistance and paid more than $53 Million in taxes just in 2021,” Lindell wrote.
Multiple Lawsuits
HCA and Mission Health are now defendants in three lawsuits — one by the governments of Asheville and Buncombe County, one by the City of Brevard, and a class action lawsuit by six private citizens of western North Carolina — all alleging price-gouging and anti-competitive behavior.
In comments announcing the lawsuit against the new owners of the formerly beloved community hospital system, Mayor Esther Manheimer said, “The Asheville City Council and the Buncombe County Board of Commissioners felt it was necessary to take this step to bring an end to predatory practices that limit HCA Healthcare’s competition and clearly result in overpriced and limited choices in people’s healthcare.”
Lindell said HCA would “vigorously defend against this meritless litigation.”
Ayscue, now retired, could not be reached for comment. He wrote the letter in support of Novant Health’s application to be awarded 67 new acute care hospital beds in Buncombe County, where HCA-Mission currently has no competition. He identified himself in the letter as an independent contractor for Novant.
Novant, a nonprofit healthcare system based in Winston-Salem, and AdventHealth, a nonprofit based in Altamonte Springs, Florida, have also applied to the North Carolina Division of Health Service Regulation to be awarded the new beds.
Under North Carolina law, health providers must obtain the permission of a state board before opening, expanding, or offering a new type of service.
A public hearing to discuss the three Certificate of Need applications is scheduled for Aug. 12.
Asheville Watchdog is a nonprofit news team producing stories that matter to Asheville and Buncombe County. Peter H. Lewis is a former senior writer and editor at The New York Times. He can be reached at [email protected].