At the same time Durham Regional Hospital appears to be sailing out of rough financial waters, Duke officials are hoping to reevaluate their lease with the county and may be looking to renegotiate its terms.
Early last week, officials from the Duke University Health System initiated a "meet and confer" request-a provision of the contract that allows Durham County Hospital Corporation, DUHS or Durham County to call a meeting between the lease's three parties to resolve an alleged breach of contract.
DUHS currently leases the hospital at an annual price of $3.5 million but also helps support the county's EMS and Lincoln Community Health Center, putting the total price at $7.1 million.
Observers have speculated that DUHS could ask the county to assume some of the financial burdens of the EMS or the health center.
Health System Executive Vice President William Donelan would not comment on the matter this week, but told The News and Observer of Raleigh last week, "The lease price is too high because the financial picture of the hospital was misstated in the audited financial statements. We want to go back into discussions with the county to talk about a remedy."
The hospital will suffer a $15 million loss for the fiscal year that ends June 30, as a result of an accounting glitch last year that caused hospital officials to overestimate the amount of money Durham Regional would receive from managed-care health insurers. Durham Regional is expected to be back in the black in the upcoming fiscal year with a 1 percent operating margin-roughly $1.5 million.
Health System officials achieved this $16 million swing by reducing expenses in acquiring supplies as well as enhancing the system of revenue collection, said hospital CEO Richard Myers. This improvement, however, is still short of the 3.5 percent operating margin specified in the lease agreement.
County commissioner Ellen Reckhow said she shares the opinion of several other board members that DUHS was responsible for checking the financial condition of the hospital prior to leasing it and that the county should not be held responsible. "They had a lot, if not complete, financial information," said Reckhow.
In a news release issued Monday, the county commissioners expressed their belief that the lease of Durham Regional "was premised on the numerous assurances by Duke that Duke would be taking the entire financial risk regarding Durham Regional Hospital's operations."
Donelan issued a statement of his own early this week. "Our purpose in calling for this meeting, is to discuss Durham Regional hospital's ability to sustain its current programs and invest in future services," he said. "We believe these are common concerns for all the parties in this discussion."
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