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Stakeholders agree: Hospital consolidation costs NC

North Carolina's healthcare system is more consolidated than almost any other state in the country. Republicans, Democrats, providers and insurance providers agree that's driving down competition and driving up costs.

Posted Updated

By
Laura Leslie
, WRAL Capitol bureau chief
SANFORD, N.C. — Political and healthcare officials came together in Sanford Thursday to talk about healthcare consolidation. According to state Attorney General Josh Stein, who helped organize the event, it's the first in a planned series of listening sessions around the state.

North Carolina's seen several hospitals merge or be sold to larger healthcare systems in the 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 closures of rural hospitals since 2005. And many independent provider practices have also been consolidated into larger systems.

Duke Law professor Barak Richman, an expert on the healthcare sector, said that's not always—or even often—in the public's best interest.

"What’s been happening in this nation is nothing short of an anti-trust policy failure," he told the panel.

For 25 years, hospitals have been buying other hospitals and practices, claiming economies of scale will help control costs and improve patient outcomes. But Richman says academic studies prove that’s not usually the case.

"The evidence really is overwhelming, especially on the providers' side, hospitals and physicians," Richman told WRAL News. 'When there’s consolidation, for the large part, there’s a significant increase in prices, and often a reduction in quality. It's indisputable."

Richman was joined on the panel by Stein, D-NC, and state Sen. Jim Burgin, R-Harnett, along with an independent provider, the CEO of an independent hospital, and a spokeswoman for Blue Cross Blue Shield North Carolina, or BCBSNC. Notably, no large healthcare systems were represented at the roundtable.

According to Stein, North Carolina has one of the most heavily consolidated healthcare systems in the country. 74 percent of hospitals are owned by a larger system. And according to Chris Evans with BCBSNC, we also have the Southeast's second-highest average monthly health insurance premium at $634. For comparison's sake, Georgia's average premium is $309. Only Louisiana's is higher.

"We’re among the most concentrated, and we have some of the highest prices," Stein said. "They’re not unrelated."

Evans, with BCBSNC, agreed. "We’re not seeing savings. We’re seeing an increase in cost, short-term and over the long term," she told the panel, "and we’re not seeing an increase in access to rural care, and we’re not seeing improvements in outcomes."

Stein says his authority to oversee hospital sales and mergers is limited by statute 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, no matter what kind of transaction it is, where we put the interest of the patient at the very top. Because right now, that's not the fundamental question that's asked when these transactions go forward," Stein told WRAL News.

Several others on the panel joined Stein in urging the state to expand Medicaid, saying it would help many independent hospitals in financial distress, 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 for traveling nurses to fill needed positions. "Who’s paying for that? The hospital has to pass that cost somewhere," he said.

Burgin said some local hospitals get 80 percent of their revenue from Medicare and Medicaid, while people with richer private insurance often travel farther to larger facilities like UNC or WakeMed. He says expanding Medicaid would help community hospitals keep their doors open.

"It’ll do away with a lot of the charity care and bad debt, because right now, those folks that are coming in and then leaving and not paying that bill and it has to written off? It’ll be covered," Burgin told WRAL News.

Burgin says House and Senate Republican lawmakers are planning to discuss Medicaid expansion next week.

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