Peter Brunstetter is chief legal officer and general counsel for Novant Health. He has been an attorney for nearly 30 years and served in the North Carolina State Senate from 2006 to 2013. Prior to joining Novant Health, Pete served as a member of the Novant Health board of trustees, including three years as chair. He was appointed as an initial board member with Novant Health when the organization formed in 1997.
In addition to being one of the most complex, health care is one of the most heavily regulated industries; how did your time in a large law firm and in the North Carolina State Senate prepare you for your role at Novant Health?
In private legal work, I spent 25 to 30 years in and around the health care space working on business transactions, mergers and acquisitions, bond transactions and a variety of finance projects for a number of health care systems across North Carolina.
Several years before Novant Health was formed, I started in public service as a member of the Forsyth County Board of Commissioners. Because of the county history of Forsyth Memorial Hospital, the county had to consent to the merger of Carolina Medicorp of Winston-Salem, North Carolina, and Presbyterian Health Services in Charlotte, North Carolina, to form Novant Health. As chairman of the board of commissioners, drawing on my health care transactions experience, I was able to work with then CEO Paul Wiles to formulate the structure and approach for the county to consent to the creation of Novant Health. I was also a member of the North Carolina Senate from 2006–2013 where I was close to state and federal health care policy and chaired the appropriations committee.
While I was wearing a regulatory hat during much of this time, my experiences made it pretty clear that systems needed to partner or merge in order to be healthy and viable.
What are some legal and regulatory obstacles to forming partnerships in health care?
There are many obstacles. In fact, what you often find is that many federal regulatory requirements are at odds with putting these partnerships together. For example, changes in reimbursements by the federal government along with new technology requirements create strains on a health system by pushing up costs. One solution would be to form a larger footprint and spread the cost over more facilities, but federal antitrust laws restrict this kind of collaboration in many ways.
Some states have started implementing certificates of public advantage (COPA) and other laws that encourage collaboration and industry consolidation. Unfortunately, the North Carolina Legislature just voted to eliminate its COPA law beginning in 2018.
Do you expect any relief from these obstacles given the rapid acceleration of health care partnerships?
I don’t really expect any significant relief in the near future. We are in a transition period in health care and I think eventually reality is going to sink in for lawmakers and regulators. We’re dealing with aging populations and an unsustainable rise in costs, which will push health care systems to get more efficient. State and federal governments won’t be able to sustain the current pace of costs increases.
The industry is in enormous transformation and I don’t think you can look and say we’ll be done in five years. In the 30 years I’ve been working in and around health care, it has been constantly spinning. It’s just getting more and more complicated. Health care never stops changing. But there are some fundamental issues we are going to have to grapple with including how best to consolidate and reduce costs while still delivering a remarkable patient experience, together with satisfying careers for our health care professionals at every level.
Eventually, the federal government will realize you can’t have policies encouraging partnerships alongside programs that discourage them.
Are there other challenges that you see to these partnerships?
One of the biggest challenges in partnering relates to cybersecurity. The more you open your IT systems, the more access points there are, and the more vulnerable your systems become. It is a major focus for our organization to maintain security of proprietary and patient information.
Culture fits are also important when partnering. Health care has traditionally consisted of independent-minded, very committed professionals. Business has historically been built on a small business model by very independent, mission-driven people. A critical dynamic in our industry will be how all of those independent thinking professionals will adapt to the reality of partnering. There is a larger culture and a larger mission.
How do we get there?
We all need to remain focused on the mission: to serve the patient. Virtually every discussion at Novant Health starts and ends with the patient.