On April 3, 2014, Vidant Health CEO David Herman, MD spoke at the signing ceremony for the historic mediated settlement that resulted from the North Carolina NAACP's filing of a Title 6 complaint with the U.S. Department of Justice. The complaint had pointed to the disproportionate impact Vidant's takeover and closing of the Pungo District Hospital in Belhaven, NC would have on poor and minority communities, prompting the DoJ to step in.
Vidant Health, Inc. has an operating margin (profit margin for non-profits) of over $100 million per year, and is seeking increase that number to build upon its sprawling medical center in Greenville, North Carolina, about an hour west of Belhaven. In the fall of 2011, Vidant Health (then known as University Health) took control of Belhaven's Pungo District Hospital — as well as Beaufort County Hospital which is half way between Greenville and Belhaven. Both of these newly acquired hospitals have seen increased losses since their acquisition by Vidant. In the fall of 2013, Vidant announced it would close Belhaven's hospital, which was smaller and further out into the country, providing emergency services to approximately 20K people.
The NAACP argued that Vidant's rural business practice of extracting well-insured patients from wide geographic regions, while limiting emergency services to those regions, would disproportionately impact African Americans, poor, rural Americans, and other minorities. From a business perspective, it is understandable that Vidant would prefer to service customers with insurance — each year, Medicare pays out an average of $10,000 per patient and there are 13,000 Medicare recipients in the region worth $130 million dollars per year. But a preference for well-insured patients, while using vast geographic distances as barriers for uninsured patients, disproportionately impacts poor people and people of color. This much is indisputable. Vidant Health receives 70% of its funds from government programs such as Medicaid, and, under Title 6 of the 1964 Civil Rights Act, it is against the law to accept federal funds and then use them in ways that are discriminatory. (And, as Washington Post columnist Dana Milbank would point out later, even patients who DO have insurance may not be able to use it in time, to tragic results, if the closest emergency room is 75 miles away.)
The U.S. Department of Justice has an agency called the Community Relations Service (CRS) designed to help address and prevent conflict based on religion, race, color, national origin, gender, gender identity, sexual orientation, and disability. In March of 2014, CRS offered to provide mediation to settle the NAACP's Title 6 complaint against Vidant Health, Inc. and both parties accepted. The Department of Justice then sent Suzanne V. Buchanan, a Conciliation Specialist with CRS to facilitate the mediation sessions. Vidant Health sent CEO, Dr. David Herman, attorney Mary Beth Johnston, and other executives and attorneys with the corporation. The North Carolina NAACP sent its president, Rev. Dr. William Barber, its lead attorney Alan McSurely, and regional NAACP leaders such as Mike Adams, president of the Hyde County NAACP and Bill Boothe, president of the Beaufort County NAACP. Belhaven's Mayor Adam O'Neal represented the Belhaven town and region.
Story of America was among the television and print journalists who waited outside of mediation sessions for news. Often, the statements were brief, leaving to interpretation how things were progressing. After the second day of mediation, the body language was gloomy, and we soon learned that Vidant Health had drawn up a contract to pass the hospital over to its partner company Pantego Creek, LLC. We took this as a sign that Vidant didn't like the way that mediation was progressing, and would rather have the hospital, and thus, potential Civil Rights Act violations, become the responsibility of Pantego Creek LLC (which is not dependent on federal funds to stay in operation).
But on March 26 during the 4th day of mediation, things seemed to take a turn for the better. The two sides came out and announced that a settlement had been reached that would avert the planned closure of the hospital on April 1, and transfer the hospital back to the community by July 1. When asked about the paperwork hastily drawn up to pass the hospital over to Pantego Creek, LLC, Dr. Herman said that this contract had not been executed.
However, the contract was executed in June when Pantego Creek, LLC announced that it would not allow the hospital transfer to go through, thus breaking the DoJ-mediated settlement.