The Daily Tar Heel

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Friday May 20th

UNC Health Care asks for audit of Enterprise Fund

RALEIGH — At the request of legislators, the UNC Health Care system is shedding more light on its relationship with Raleigh-based Rex Healthcare, which it has owned since 2000.

Pressured by a legislative committee to be fully transparent with the system’s finances, Bill Roper, UNC Health Care CEO and dean of the UNC School of Medicine, has requested an audit of its Enterprise Fund.

Story so far

WakeMed Health and Hospitals submitted a $750 million bid to buy Rex Healthcare from UNC Health Care in May. Rex, a Raleigh-based hospital, has been owned by UNC Health Care since 2000. The bid was rejected in August by UNC Health Care’s board of directors. Since then, the House Select Committee on State-Owned Assets has began to look at the possibility of selling Rex without UNC Health Care’s consent.

The system uses the Enterprise Fund to transfer money between its various entities, including Rex. Contributions to and expenditures from the Enterprise Fund have been audited, but the state auditor has never undertaken a full examination of the fund.

“They continue to have questions, and we’ve given them all sorts of information about the Enterprise Fund,” said Karen McCall, spokeswoman for UNC Health Care. “It would help everybody to say that the Enterprise Fund itself has been audited.”

The system’s financial interactions with Rex have been under scrutiny since Raleigh-based WakeMed Health & Hospitals submitted a $750 million bid to buy Rex from UNC Health Care in May. The system’s board of directors rejected the bid in August.

The General Assembly has held hearings since then to consider selling Rex without the system’s consent due to the potential financial benefits of such a large sale.

UNC Health Care released Tuesday six pages of answers to questions posed by the N.C. House of Representatives’ Select Committee on State-Owned Assets.

The papers showed that Rex had a net operating margin of $34.6 million for fiscal year 2010, most of which was reinvested in the hospital. During the last 10 years, Rex has transferred $20 million to UNC Health Care.


Members of the committee were undecided on the issue, and some questioned whether the state needs to own hospitals in order to fulfill its teaching mission.

“What I’m trying to get my arms around is the idea of whether or not UNC should own hospitals,” said Rep. Bill Brawley, R-Mecklenburg. “Is that what they need to do to train doctors?”

Hospitals based in Chapel Hill are not large enough to accommodate all of their medical students and residents, so some teaching is done at Rex, according to the document the system produced.

McCall said the system is committed to its teaching mission.

“If you want to have a teaching hospital, it’s really important to have a teaching facility very closely connected to the school of medicine,” she said.

But Avila questioned whether teaching remains the system’s primary focus.

“We need to look at where the hospital has been, what its mission is supposed to be and if, for some reason or influence, it may be losing sight of that particular mission.”

Staff writer Madeline Will contributed reporting.

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