Planned NC children’s hospital would get major funding boost under Senate’s budget proposal

A plan to build North Carolina’s first standalone children’s hospital — an enterprise that stands to create thousands of jobs in the Triangle and improve pediatric health statewide — would get a massive funding boost under a new state budget proposal.

Republican Senate leaders, who released a spending plan late Monday, proposed investing another $535.5 million in the planned 500-bed pediatric hospital, a partnership between UNC Health and Duke Health. If approved, the appropriation would bring total state funding to about $855.2 million — nearly 43% of the lowest projected cost estimate.

The additional funding was one of the biggest earmarks in the Senate’s $32.6 billion spending proposal.

Such a large chunk of money is rarely set aside for a single project in any state budget, let alone one in which Republican leaders are recommending cuts to many agencies as they seek to also cut tax rates. The hospital was one of the main projects Senate leader Phil Berger highlighted in a news conference Monday night for the budget announcement.

“We also look ahead to initiatives that will build on North Carolina’s already stellar reputation among the states,” said Berger, R-Rockingham. “That includes supporting the North Carolina Children’s Hospital.”

The hospital, expected to be complete in the early 2030s, is projected to cost at least $2 billion — a figure that could grow as the hospital is built. The additional funding enables the health systems to continue planning out the hospital, which aims to treat complex pediatric health issues.

The funding can only happen if the House agrees to let it in the final budget. The Senate plans to debate its spending plan in committees this week. The House is expected to eventually release its own budget proposal. The two chambers would then negotiate a final budget. The new fiscal year starts July 1.

Berger has been a major proponent of the project. State leaders have credited him with pushing through the initial state pledge of $319.7 million, which was approved as part of the 2023 state budget.

“We look forward to working with Speaker Destin Hall and the N.C. House of Representatives as they advance their budget proposal,” Dr. Thomas A. Owens, Duke University Health System’s chief operating officer, said in a statement Monday.

Dr. Wesley Burks, chief executive of UNC Health, said in a statement that the investment would save lives.

The university partners have said the fast-growing region is running out of pediatric hospital beds and doesn’t have enough specialty services to keep up with demand. Organizers expect the new hospital to bring more — and more advanced — medical care to more children.

As part of the budget proposal, the Senate seeks to remove certificate-of-need requirements for the hospital. Such rules typically require health care providers to seek approval to add services — a regulatory measure that proponents say helps control medical costs. Removing those requirements could help the project be built sooner. But the attempt could also bog down the spending proposal in political fights. The certificate-of-need system is heavily backed by the state’s hospital industry, and previous attempts to repeal it have failed.

The state portion of the hospital’s funding has largely come from a signing bonus paid by the former administration of Democratic President Joe Biden when North Carolina expanded Medicaid. Some state officials have expressed concern about whether Republican President Donald Trump, who has been canceling many programs authorized before he came into office, could also target that money.

The new Senate budget plan would find some of the $683 million in that signing bonus fund. But most of the funding would be paid for by $400 million the Senate wants to take back from NCInnovation, a public-private group that has been tasked with funding grants for commercially viable university research. The Senate budget proposes overhauling that group’s funding, in order to pay for the extra hospital money.

To fund the balance of the construction costs, beyond the state funds, UNC and Duke would likely have to invest some of their own money while also relying on donations from individuals or philanthropic groups.

“This project is going to be life-changing for children and families across the state and really outside of the state of North Carolina,” Berger said at a January news conference announcing the hospital. “… This is a win for the economy and for our children’s health and for our state’s infrastructure.”

The partners haven’t finalized a site for the new hospital, which would likely be built on a site that is central to the region with access to a robust road network. The universities aim to break ground on the new campus by 2027, with construction of the campus expected to take about six years.

WRAL State Government Reporter Will Doran contributed to this report.