By Julia Merchant • Staff Writer
The Smoky Mountain News caught up with Carolinas Healthcare System Chief Operating Officer and President Joe Piemont this week. The hospital system — the largest in the Carolinas and the third largest public non-profit system in the country — recently entered into a joint management contract with Haywood Regional Medical Center and WestCare Health System.
Here’s some of what Piemont had to say.
Smoky Mountain News: Will Carolinas Healthcare receive a cut of the profits under the management contract?
Joe Piemont: No. Management contracts generally consist of a base management fee and some opportunities to earn incentives, provided Carolinas Healthcare hits benchmarks detailed by the local board. These benchmarks are set each year and can be related to financial or clinical performance or strategic mission, among other things.
SMN: Did Carolinas Healthcare want HRMC and WestCare to join forces before entering into a management contract?
JP: We strongly encouraged them to talk to one another because we thought for the long-term it would be in their best interest to explore some permanent form of combination. The relationship needed to start between HRMC and WestCare. I think that those two communities share a lot of similarities. They are separated by the mountain to be sure, but if you look at the challenges they’re going to face, they’re simply going to be better off doing it together.
SMN: How will the hospitals benefit from being part of the Carolinas Healthcare System?
JP: We bring various economies of scale and economies of skill to our colleagues and teammates in our system. Scale economies are things such as purchasing — we’re able to get everyone in the system a better price on supplies. Economies of skill mean that rather than having to study things on their own or rely on a myriad of consultants and experts, we provide the hospitals with assistance. We have a full array of subject matter experts.
SMN: Can you estimate a timeline for the management contract process?
JP: I think a short timeline is probably six months. I think you’ll see more concerted and combined activities before the end of 2009.
SMN: Has Carolinas Healthcare ever entered into a management contract with a hospital that has lost its federal healthcare funding status, like Haywood Regional Medical Center did?
JP: We have not. We’ve never seen that before. I think Haywood acted very quickly to get on a path to recertification. They were all over it, and that was very clear to us. I think they’ve done a remarkable job of getting back on their feet.
SMN: Who will the CEO report to, and how will this impact local control?
JP: The CEO will not only be accountable to the board of the combined enterprise, but will also have administrative contact inside Carolinas Healthcare. It shouldn’t impact local control at all. We as management make recommendations for certain actions, but the board makes the decisions. Our authority is no greater than the CEO’s authority has been traditionally.