ape Fear Memorial Hospital (Wilmington, NC) is a 141-bed acute care hospital sold in May 1996 to Columbia/HCA. The total gross sale price was $55 million for all assets, excluding $6 million in cash on hand at the time of the sale and the hospital's $13 million long term debt, which was retired using the purchase price. A new foundation, whose aim is to address health needs in the community, has been created with the sale proceeds and began funding community projects in 1997. In May 1998, Columbia/HCA sold Cape Fear Memorial Hospital to New Hanover Regional Medical Center (NHRMC), a hospital across town.

Conversion Process

Motivation. The old hospital board believed a change was necessary because of increasing managed care penetration and loss of market share. The hospital was financially sound throughout most of its 40-year life. The board decided to sell after concluding that a stand-alone not-for-profit hospital was no longer viable in this market. The loss of several large managed care contracts to rival Wilmington hospital NHRMC severely hurt Cape Fear Memorial's ability to survive. Over a period of several years Cape Fear and NHRMC held discussions about a possible affiliation between the hospitals, but no satisfactory arrangement was reached. Public Oversight. This conversion was a high profile event, widely covered in newspapers across the state and attracting the attention of the State Attorney General. This sale arrangement received a great deal of scrutiny in the media, by the Attorney General, and from the medical community. There was disagreement among the medical community concerning the sale, leading a group of physicians to attempt to purchase the facility. Fair Value. Assets appear to have been sold at a fair price. Columbia/HCA purchased the hospital for $55 million. There was tremendous variation in the dollar value of the bids received for the hospital. The board did not accept the offer with the highest dollar value, but selected the bid they believed would provide the greatest long term stability for the hospital (in terms of decreasing the chance that the hospital would be re-sold). The belief that selling the hospital to Columbia/HCA would preclude resale was in error, as evidenced by the hospital's sale in May of 1998.

Community Control

The community has permanently lost control of the hospital after the sale, but retains some advisory control through community representation on a local board. There has not appeared to be any community concerns regarding this loss of control. However, since the 1996 sale to Columbia/HCA, the facility has been re-sold to NHRMC, a competing public (county-owned) hospital in Wilmington. This again places control of Cape Fear Memorial hospital at the local level. It is not clear what plans, if any, NHRMC has to change the mission or scope of services offered at Cape Fear Memorial.

Community Health Impact

Hospital Survival. The sale of the hospital to Columbia/HCA may increase the chances the hospital is owned for the long term by one entity. Stability seems to have been an important consideration of the board in choosing to sell the hospital to a large corporation (Columbia/HCA), in terms of avoiding rapid re-sale. At this point it is unclear what effect the 1998 sale of the hospital to NHRMC will have upon the continued operation of the facility. Access. There is no evidence that the sale of the hospital has lead to access barriers for the uninsured or Medicaid patients. The sale agreement stipulates the hospital will provide indigent care services in line with "similar" hospitals, but no other standards were set. Cost. The sale ensures that the Wilmington, NC community retains a choice of hospital. One reason the old board did not choose to merge or otherwise align with NHRMC was their belief that the existence of another hospital entity in Wilmington would encourage competition and restrain cost increases. Again, however, Cape Fear Memorial