North Carolina health system plans to buy vulnerable hospital

A vulnerable North Carolina hospital is on the cusp of getting new ownership.

Iredell Health System says it has reached a deal to acquire Davis Regional Medical Center from Community Health Systems. Iredell hopes to complete the deal this fall, but regulators must sign off on the transaction.

For a while, it appeared that Davis Regional was going to be a part of Novant Health. Novant had reached an agreement with CHS to purchase Davis Regional and Lake Norman Regional Medical Center in a $320 million deal.

However, Novant dropped its plans to acquire the hospitals when the Federal Trade Commissions secured an injunction that would have significantly delayed the deal. The FTC argued that Novant’s acquisition of the hospitals would lead to higher prices for consumers and reduced services and competition.

Of the two facilities, Davis Regional seemingly faced a more precarious future, with some worrying that the hospital would close if the Novant deal didn’t materialize. Davis had formerly been an acute care hospital, but CHS converted it into a psychiatric facility.

Iredell says it is still evaluating its plans for Davis Regional, but the system said it would keep the psychiatric facility open.

Iredell is based in Statesville, N.C., which is also home to Davis Regional. The medical center, now known as Davis Regional Psychiatric Hospital, has roots in the small city dating back more than a century, while Iredell has operated for more than 70 years.

John Green, president & CEO of Iredell Health System, said the acquisition of Davis Regional will preserve important services for the community.

“We recognize the critical need for behavioral health services in our area — and throughout all of North Carolina — and will strive to be a part of the solution for this crisis on a local level with Davis,” Green said in a statement.

Iredell, a non-profit provider, operates a 247-bed hospital and a host of clinics and outpatient facilities.

Green also said Iredell plans to retain all the employees of Davis Regional.

“These are good healthcare workers, and we want them to remain in our community to take care of their friends, family and neighbors,” Green said in a statement. “We plan to extensively evaluate our community’s healthcare needs as we consider what the best course of action will be for the Davis facility, but our first priority is to keep it open and sustainable.”

Davis Regional had seemingly faced a precarious future. U.S. District Judge Kenneth Bell initially blocked the FTC’s bid to prevent the sale, and he cited the fear of the possible closure of Davis Regional as a factor in his decision. CHS closed the hospital in 2022 for financial reasons and converted it into a behavioral health facility.

“Keeping Davis open is clearly in the public interest because its closure would eliminate critically needed inpatient psychiatric services,” Bell wrote in the opinion.

Shortly after Bell’s decision, the U.S. Court of Appeals for the Fourth District narrowly granted the FTC’s petition for an injunction in a 2-1 ruling, delaying the deal and ultimately resulting in Novant abandoning its plans. Even in that ruling, Judge J. Harvie Wilkinson III, the dissenting judge, feared the possibility of Davis shutting its doors.

“The Davis hospital seems on its last legs, and I worry that, as the district court found, its closure may be imminent,” Wilkinson wrote.

Now, Davis Regional appears to have a future with the pending acquisition by Iredell.

“This is an important investment in our community and allows us to continue to expand with those needs,” Geen said in a statement. “We look forward to continuing to care for our community for many years to come while giving our citizens the opportunity to remain local to get the healthcare they need and deserve.”

CHS recently reached a deal to sell three hospitals in northeastern Pennsylvania to WoodBridge Healthcare, Inc. in a $120 million transaction.