NC Hospital Consolidation Costs :: WRAL.com
Sanford, North Carolina – Politicians and health care leaders gathered in Sanford on Thursday to talk about consolidating health care. According to state Attorney General Josh Stein, who helped organize the event, this is the first in a planned series of listening sessions across the state.
North Carolina has seen several hospitals merge or be sold to larger health systems in recent years, including Mission Hospital in Asheville, sold to HCA in 2019, and New Hanover Regional Hospital, sold to Novant. in 2021. It’s also one of the worst states for rural hospital closures since 2005. And many independent provider practices have also been consolidated into larger systems.
Barak Richman, a Duke Law professor and healthcare industry expert, said it’s not always, or even often, in the public interest.
“What is happening in this country is nothing less than a failure of anti-trust policy,” he told the panel.
For 25 years, hospitals have been buying other hospitals and practices, saying the economies of scale will help control costs and improve patient outcomes. But Richman says academic studies prove that’s generally not the case.
“The evidence is really overwhelming, especially from the side of providers, hospitals and physicians,” Richman told WRAL News. “When there is consolidation, most of the time there is a significant increase in price, and often a reduction in quality. It is indisputable.”
Richman was joined on the panel by Stein, D-NC, and State Sen. Jim Burgin, R-Harnett, as well as an independent provider, the CEO of an independent hospital and a spokeswoman for Blue Cross Blue Shield North Carolina, or BCBSNC. Notably, no major health system was represented at the roundtable.
According to Stein, North Carolina has one of the most consolidated healthcare systems in the country. 74% of hospitals belong to a larger system. And according to BCBSNC’s Chris Evans, we also have the second highest average monthly health insurance premium in the Southeast at $634. For comparison, Georgia’s average premium is $309. Only Louisiana’s is higher.
“We are among the most concentrated and our prices are among the highest,” Stein said. “They are not unrelated.”
Evans, with BCBSNC, agreed. “We’re not seeing cost savings. We’re seeing increased costs, short-term and long-term,” she told the panel, “and we’re not seeing increased access to care in rural setting, and we’re not seeing any improvements in the results.”
Stein says his authority to oversee hospital sales and mergers is limited by law and depends on the structure of the proposed combined entity. He’s asking state lawmakers to change that.
“What we need to do is have a very clear standard of review that my office can engage in, regardless of the type of transaction, where we put the best interests of the patient first. Because for at the moment is not the fundamental question when these transactions continue,” Stein told WRAL News.
Several other panel members joined Stein in urging the state to expand Medicaid, saying it would help many financially struggling independent hospitals, especially in rural areas.
COVID has only made the problem worse. Burgin said his local hospital had to spend an unbudgeted $3.2 million last year on traveling nurses to fill needed positions. “Who pays for it? The hospital has to pass that cost on somewhere,” he said.
Burgin said some local hospitals get 80% of their revenue from Medicare and Medicaid, while people with wealthier private insurance often travel farther afield to larger facilities like UNC or WakeMed. He says expanding Medicaid would help community hospitals keep their doors open.
“That will eliminate a lot of the charity care and bad debts, because right now these people coming in and going out and not paying that bill and it has to be cancelled? That will be covered,” Burgin told WRAL News.
Burgin says Republican lawmakers in the House and Senate plan to discuss Medicaid expansion next week.