Wake hospitals appeal Novant's Holly Springs project

The Triangle's three largest health systems have appealed a decision by state regulators that would allow a Winston-Salem chain to establish a foothold in Wake County's fast-growing medical market.

In July, regulators approved a plan by Novant Health to build a surgery center in Holly Springs with three operating rooms. Regulators also rejected applications by WakeMed, Rex Healthcare and Duke Raleigh Hospital to add the ORs at their facilities.

By appealing the ruling, the Raleigh hospitals are setting up a long legal fight that will postpone a final decision until at least next year.

The county's established health providers don't want to face a powerful new competitor on their home turf. Novant owns hospitals in the Triad and Charlotte markets, and has made it clear it wants to expand into this region.

"We're really lucky to have three strong players providing such quality health care in Wake County," said Lisa Schiller, Rex's vice president of marketing. "Having a fourth doesn't really make sense."

The appeals contend that Novant's application was riddled with errors and was missing information. For example, Rex wrote that Novant used inaccurate population and revenue projections to support the facility's proposed $8.2 million cost.

"It was a poor application," said William Pittman, Rex's director of strategic planning and business development. "We think we have a good opportunity to change the outcome, based on the facts."

Novant's proposal would duplicate services already available or planned in Southwestern Wake County, wrote Stan Taylor, WakeMed's vice president of corporate planning. And Novant failed to show that it has lined up adequate support from local physicians, he added.

State regulators review major medical projects through the Certificate of Need process, a system designed to control health-care costs by preventing unnecessary expansion. Providers must prove that new projects are needed and won't drive up costs for consumers.

"We’re not surprised that they appealed, but we are confident ours was the best application for the ORs and in the end we will be granted the certificate of need to build them," Novant spokeswoman Kati Everett wrote in an e-mail this afternoon.

Novant's lawyers haven't reviewed the appeals and can't comment on their rationale, she added.

Novant has been working with Holly Springs officials for several years to generate support for a new hospital in the fast-growing town. State regulators last year rejected Novant's bid to build a $100 million community hospital in Holly Springs.

But Novant returned with the surgery center proposal, with the goal of expanding it into a full hospital in the future.

"Just because the state said we couldn't build a hospital yet, that didn't change our commitment," Everett wrote in an e-mail when the surgery center was approved. "We'll just start with a surgery center and build a stronger presence over time."

Novant owns 12 hospitals in the Carolinas and Virginia, including Forsyth Medical Center in Winston-Salem and Presbyterian Hospital in Charlotte. Last fall, it took over management of the 70-bed Franklin Regional Medical Center in Louisburg, north of Raleigh.