An unsolicited bid last year for an affiliate of UNC Hospitals — Rex Healthcare — brought increased public attention to Roper, leading some legislators to shift their attention from the bid itself to larger questions about the relationship between the state and UNC Health Care.
Despite recent state budget cuts to both the system and the medical school, U.S. News and World Report has consistently ranked the school among the top in the country, and UNC Health Care has expanded to become a $2 billion operation.
Roper continues to argue that UNC Health Care is best left alone.
“My appeal to the legislature, which I’m regularly making these days, is please help us keep this going forward. Please don’t do anything to impede our progress,” Roper said.
An expanding system
In 1998, the N.C. General Assembly passed legislation that gave the health care system flexibility and independence from the state. The system has used that freedom to expand rapidly.
In 2000, the system acquired Raleigh-based Rex Healthcare. Rex’s 665 beds have increased the capacity of the system by more than 60 percent.
Roper has continued this expansion. After a year of Roper’s rule, the system’s net operating revenues totaled $1.2 billion.
The system now operates on revenues of more than $2 billion and has added 5,000 employees since Roper took control.
Roper attributes the expansion to strong management and changes in health care markets.
“Many forces are causing doctors and hospitals in America to look to partner with each other, to consolidate, to choose sides,” he said.
The success has positive side effects — not just for the system itself, but for the state, he said.
“We can use financial success to expand for the future for the growing and aging population,” he said. “Finally, it will allow us to financially subsidize the medical school.”
Audits of the system’s enterprise fund — used to transfer funds between its various entities — show Roper transferred more than $30 million from hospital accounts to the medical school in fiscal year 2011.
But some observers have criticized the system’s expansion.
“UNC Health Care has been growing by leaps and bounds since (Roper) took the reins. I do wish though that there were limits on its expansion,” said Duke Cheston, a writer for the Pope Center for Higher Education Policy, a conservative think tank.
The battle with WakeMed
Last year, Raleigh-based WakeMed Health and Hospitals offered to purchase Rex Healthcare.
WakeMed, a private nonprofit, claims that UNC’s state appropriation of $18 million dollars and preferential Medicaid reimbursement treatment has put WakeMed at a disadvantage.
But Roper said the system’s returns to the state far exceed its public funding.
“We get 1 percent of our funding from the state. It’s a vanishingly small amount,” he said.
WakeMed’s bid was quickly rejected by UNC Health Care’s Board of Directors in August, but the committee that reviews state-owned assets later revived the question of selling Rex and could force the system to do so.
But after testifying multiple times in front of the committee, Roper said he believes more legislators are understanding.
“We’re not trying to be the biggest health care system in the state; we’re not trying to buy up every doctor practice in the state; we’re not trying to merge with every hospital,” he said. “But we are trying to be a successful, integrated health care system.”
Despite the continuing year-long row, Roper hopes to strengthen UNC Health Care’s relationship with WakeMed.
“They’re a great hospital that does a lot of good things,” he said.
‘Playing the game’
WakeMed’s bid has opened up a larger debate in the legislature about the state’s role in the health care market and the regulations that govern UNC Health Care.
“We’re in tough budget times,” said Rep. Michael Wray, D-Northampton, in an email. “State-owned institutions need to be more accountable and transparent than ever.”
Wray said he supports leveling the playing field between WakeMed and UNC and is worried about Roper’s ability to transfer funds between the hospitals and the medical school.
“It would be good — for him, for UNC and for the taxpayers — for somebody with the University or the legislature to exercise more oversight over how he spends state dollars,” he said.
But Rep. Bill Owens, D-Camden, said state budget cuts forced Roper to make these decisions.
And Roper said he has helped defray unprecedented cuts to the teaching side of his operation.
“The reality is the state is reducing, and has reduced for several years now its funding for the University,” he said. “We have been able and quite willing to step in and provide this money.”
But funding cuts have still led to tuition increases and decreased faculty retention, Roper said.
Continued cuts, in combination with potential increased regulation of the system, will damage the system’s strength and competitiveness, Roper said.
But he said he is confident that the legislature will retain the rules that protect UNC Health Care’s independence, and the system will continue to grow.
“We’re not asking for people to declare us the winner, but we do want to be able to play the game, and I think we’re playing it quite well, frankly.”
Contact the State & National Desk at email@example.com.