The proposed acquisition of Asheville-based nonprofit Mission Health by forprofit HCA Healthcare of Nashville would be beneficial to ensuring high-quality health care to the local community, now and in the future, Mission Health President and CEO Ron Paulus said during a presentation to the Council of Independent Business Owners on May 4.

About 50 people attended CIBO’s early-morning breakfast meeting in UNC Asheville’s Sherrill Center. 

In a 30-minute presentation and question-and-answer session, Paulus began by saying, “Thanks for the opportunity to share what I consider overwhelmingly good news for the community.” Paulus added that he would “leave plenty of time for questions” after his presentation.

“Each year, the (Mission) board and I consider the question: ‘Are we better off doing our work alone, or should we consider a partner?’

“We’ve reduced hospital mortality by about half... We’ve been named one of the top health care systems in six of the last seven years.”

Further, Paulus said Mission Health, has “doubled in size” in recent years.

“As we all know as nonprofit leaders, my job is not to keep my job. We are here solely for the community. The question is what helps us achieve those goals....

“All of that was framed in the context of the mission of Mission Hospital.”

To that end, Paulus said the hospital’s board “has an extraordinary ability” to look at local health care service “versus (being) ego-driven.”

He added, “We were doing an excellent job in healing sick people... That’s different from improving the health of the people of the region.”

Speaking generally, Paulus pointed out that “30 percent of health is determined by the DNA when you’re born. Number one, is behavioral and lifestyle choices….”

Paulus added, “The other big chunk (of an individual’s health) is around social determinants… the factors in an individual’s life that impact whether they’re likely to develop a health” issue. “We now know living under an extraordinarily stressful environment” is damaging — and “that stress actually changes your DNA.

“So when the board takes a step back” each year to consider whether to remain independent or be acquired by a larger entity, “I had the rather challenging task of every single year having my revenue flattened down” by the health care system. “So I’ve got drugs going up double-digits, labor going up 4 to 5 percent....

“The question is: What do you do with that problem?

“The board decided,” as a goal, that “we want to explore a relationship with another entity, if , and only if, that relationship can help us achieve our mission, which is to help improve the health status of people of Western North Carolina....

“When do you want to sell an entity?” Paulus asked, rhetorically. “When you don’t have to. When you can walk away. That’s critical.

“When we looked out into the future — the federal government, the state government and Blue Cross… Every one of them was terrible,” insofar as how their policies would impact Mission Health. “So what does one do?

“So we put together a process… and heard from many, many heath systems, and HCA was the only for-profit. And we considered them only because they were” top-caliber companies.

Regarding HCA, Paulus said, “No. 1, they’re the lowest-cost, for-profit hospital in the United States.

Speaking of the United States in general, he added, “Eventually we’re going to have a (health care) system where everybody is paying Medicare rates.

“As a nation, we need a lower-cost cost structure.

“Why is HCA’s cost structure the lowest? Because everything they buy is at the lowest cost.

“They have the ability to leverage their costs,” which “we can’t get” as a smaller health care provider. “In particular, in the back-office side — non-evaluative stuff that you have to do... we’re dramatically less efficient. But we can’t get there” with the realtively small size of Mission Health.

“They (HCA) also have oncology and cancer” departments, he said.

If Mission is acquired by HCA, “The most immediate change that people will see is access to clinical testing that is second to none.

“The future of medicine is about artificial intelligence… They (HCA) have all that.

“On the Mission side, if social determinants and lifestyle choices” determine good health, “where’s that money going to come from?

“In this example (Mission merging into HCA), we’ll have not only a better health system than we have today, but also an extraordinary foundation ... We will be the largest foundation per capita, we believe, on the face of planet Earth — spinning off somewhere between $50 million and $100 million per year — $75 million yearly is probably a good guess.

In contrast, he said of Mission’s foundation, “Right now, we struggle to give away $1 million or $2 million a year to deal with social determinants.

“Our regional members have agreed not to change our service for at least five years.

“For context, nobody has any protections right now as far as closing facilities. But in the future, HCA has agreed that it will not close any facility without putting it up for sale — and nobody will pay even $1 for it. After that, they have to offer it to the successor foundation.

“We’ve been offered a lot of money for some hospitals we own by adjoining groups,” Paulus said in concluding his address.

During a question-and-answer session that followed, CIBO member Mac Swicegood asked, “As the largest employer and probably the largest landowners in Buncombe County, “You’re looked at as fresh bait” by corporate conglomerates.

“Can you shed some light on going from a nonprofit to a for-profit? Where does that break out?” Swicegood asked.

“If the transaction closes... and we’re doing due diligence ...  but if it closes, Mission Health will cease to be a nonprofit,” Paulus replied. “So I can’t tell you when that will occur. It’s unlikely to occur before early November. It’s more likely to occur by February. Somewhere in that zone.

“The taxes will likely amount to $20 million a year,” Paulus added. As a nonprofit, Mission Health currently is tax-exempt.

An unidentified man noted to Paulus, “The Roman empire grew and grew and grew until it began to run into trouble. There were limits to growth. I wonder if there are any limits in growth that pertain to the growth of hospital systems.”

Paulus replied, “What I’m hearing is: ‘Health systems are big and tending to get bigger.’ The first thing you need to understand is that that’s not true. The health care system (in the U.S.) is mainly ‘mom and pop.’ In many other industries,” that is not the case.

“People here locally perceive Mission as a huge health care system. It’s tiny. People in the industry said it can’t survive in the long run.

“To survive, you need to be above $10 billion a year. We’re not above $2 billion.

“Most people don’t even believe consolidation in the health care industry has even started,” Paulus said.

Another man asked Paulus to address the idea of using wellness as an incentive.

“What’s amazing is, is we’ve done an extraordinary job on those parameters,” Paulus answered. “They (the insurance industry) reward you for cutting your cost, but punish you” if you fail.

“What insurance companies do — I won’t name names, they just punish you outright.” (Paulus’ reference was an obvious one to the contentious relationship that Mission Health has had with Blue Cross Blue Shield North Carolina in recent years.)

On a separate note, Paulus said, “Up to 10 percent of our babies (in Mission Health’s service area) are opioid babies.

“We’ve gone from getting millions for detoxing the babies in the hospital to getting nothing for detoxing them at home,” he said, calling the system “perverse.”

Concluding, Paulus said, “HCA views that kind of work as a portfolio. They’re not going to go all in on something that has no business model.”