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Bed Count: Do private companies have to keep hospitals open?

Bed Count: Do private companies have to keep hospitals open?

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When Pungo District Hospital shut down this summer in Belhaven, North Carolina, it prompted protests by the NAACP, marches to Washington, D.C., by town leaders, and a community movement called Save Our Hospital.

The hospital had been a community hospital for more than 60 years when it was bought from a community group in 2011 by a private company, Vidant Health, which owns multiple hospitals and clinics in the area, including one in the city of Washington, North Carolina, about 26 miles away from Pungo District Hospital. Initially the company talked about expanding Pungo, but instead, it closed it in July and announced plans to build a clinic instead. Eric Byler and Annabel Park produced a compelling video documenting the struggle to keep the hospital open.

The closure – like so many hospital closures in rural areas – prompts a series of questions. The first, perhaps, is in a system where health care is a mix of private and public funding – and in a state that has declined to participate in Obamacare’s Medicaid expansion – what obligation does a private company have to keep a hospital open? Especially when a hospital is losing money at a rate of $1 million a year.

The short answer? No obligation.

In the video by Byler and Park, the mayor of Belhaven, Adam O’Neal, draws the comparison between a hospital company and a grocery store chain.

It would be like if you had a grocery store in Washington and one in Belhaven, and you knew that if there was no grocery store in Belhaven, they would have to go to Washington. Well, if you could get rid of the expense of having a grocery store in Belhaven, and send all the customers to Washington, you’d make more money.

And that appears to be the choice that Vidant has made. It issued a statement about the closure, saying:

Vidant Health reviewed a variety of models of care considering historical service activity, future population and volume projections, financial viability, and other factors. The Vidant Pungo Hospital Board made the decision to move forward with the closing of the current facility and to build a new 12,000 square‐foot, $4.2 million multispecialty clinic in Belhaven. The 24/7 clinic is not the least expensive model of care Vidant could provide, but is a model that provides sustainable, high‐quality health care options for the people in Belhaven and the surrounding community.

In many ways, the location seems perfect for an ambitious health care company. It’s right on the waterfront by the Pungo River, east of the business and research hub of Raleigh-Durham, and not far from the Atlantic Ocean. But Belhaven is a town of fewer than 2,000 people. The surrounding county of Beaufort has fewer than 50,000 people, and one in five are living below the poverty line, a rate that exceeds state and national averages.

The community board that ran the hospital before selling to Vidant got into a legal dispute with the company. But when the community group met to discuss the dispute, it kept members of the public out. Did it have an obligation to have an open meeting?

Again, the answer is no.

The truth is that when private companies – for-profit or not-for-profit – run hospitals and clinics, they only have to answer to their boards and their investors. Now, the next question is whether closing Pungo District Hospital or any other hospital will actually harm residents of the area. This is a tougher question, and I will examine it in a future post.

Send me your thoughts via Twitter @wheisel or to askantidote [at]

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