Folwell calls on AG to investigate antitrust as hospitals consolidate

N.C. State Treasurer Dale Folwell discussed hospital acquisitions, Medicaid expansion, Certificate of Need, and a new Senate bill focusing on bond referendum transparency Tuesday at his monthly “Ask Me Anything” conference call with reporters. 

Novant Health, a nonprofit system headquartered in Winston-Salem, recently completed a deal to purchase Lake Norman Regional Medical Center, Mooresville, and Davis Regional Medical Center, Statesville, from Community Health Systems, Franklin, TN, for $320 million. Novant currently has 15 hospitals and 800 provider locations. Regulators still have to approve the deal. 

Folwell said the consolidation of healthcare has resulted in lower quality, lower access, and higher cost.

“We all know the stories about what’s happening west of Hickory with the HCH takeover of Mission Health,” he said. “We’re seeing story after story about sellers’ remorse in Wilmington and Brunswick, Pender, and surrounding counties with Novant taking over New Hanover Regional.”

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Folwell said the Novant purchases might be linked to antitrust violations and that although Democrat Attorney General Josh Stein should pursue some sort of action, he hasn’t been supportive of Folwell’s actions as treasurer.

“I don’t see any evidence of where we are actually going back and looking at previous transactions that were approved,” he said. “I have filed an amicus brief on the HCA Mission Health transaction, and I had to file that as an individual citizen, so that should tell you something about the attorney general’s office’s willingness to advocate. They would not represent me as the state treasurer of North Carolina, they would not represent me as the chair of the state health plan, which is the largest purchaser of healthcare in North Carolina, and they refuse to give us permission to get outside counsel for me to be a co-filer with the mayor of Brevard which happens to be a Democrat on that transaction.”

Mission Health, acquired by HCA in 2019, has 18 facilities across western N.C. controlling approximately 75% to 90% of the healthcare market there. Photo from www.missionhealth.org

A reporter asked why the Novant purchase wouldn’t be considered as just competition rather than consolidation, as Atrium Health and Iredell Health System have a presence in the area.

“Novant has been hit in just last year with a 95-page federal report on problems that they have found in other places that they’ve taken over, and they nearly lost their Medicare contract over significant deficiencies found after the healthcare giant purchased New Hanover Regional in 2021,” Folwell replied. “There are federal reports that are already in the queue and evidence of how Novant operates. Everything has gotten not mathematically worse, not geometrically worse, but exponentially worse in the terms of how much healthcare costs in this state.”

On the topic of Medicaid expansion, Folwell said with the federal money coming from the Biden Administration, the General Assembly has taken a second look after being adamantly against it for ten years.

“What I know is we don’t have a revenue problem with healthcare in North Carolina, we have a cost problem and that’s not just me saying it.,” he said. There are very reputable think tanks from across this country and across the world saying this, like the Institute of Medicine, so I don’t know how you actually try to fix an issue with a revenue solution when the problem is actually the cost of healthcare and secondly, we have not seen the bill. I’m very concerned that this will be another unfunded mandate on the state employees of North Carolina.”

Folwell said with the State Health Plan, they have been able to freeze family premiums for five years, cut over $100 million of administrative expenses, and renegotiated their Medicare Advantage contract to save $1 billion with no cost to members and no cost to the taxpayers, and saved over $800 million with our pharmacy benefit management contract. 

“We’ve done everything that we possibly can, but until we get reference-based pricing in the State Health Plan, nothing’s going to change in terms of the cost,” he said. “So I hope that before it reaches its final destination that the General Assembly will put reference-based pricing in the state health plan starting at 100% profit for these nonprofits off of Medicare reimbursement rates.”

Folwell said he doesn’t think that there will be an unfunded healthcare liability on the SHP if Medicaid expansion passes, but after sending the GA a letter asking for $4 billion more dollars over the next several years just to keep the SHP solvent, he said they don’t need anything in Medicaid expansion that will exacerbate that.

He said some legislators may be looking at cost controls, but bigger issues are at stake.

“You know, when 500,000 people don’t have something, that means they can’t afford it, right?” Folwell responded. “That’s a cost problem when you can’t afford something and I think that my belief is that we’re spending enough, billions of dollars on healthcare in North Carolina. We have become one of the most expensive healthcare states in the United States.”

Folwell said his concern is for those who are eligible for the SHP but can’t afford the premiums.

Looking at Certificate of Need reform, Folwell said the letters CON are just that, a con on the people of North Carolina. He said all of it should be repealed, and the sooner, the better.

“We’re only one of 13 states that has a AAA bond rating and I believe we’re only one of 13 states that has a CON, so any adjustment of Certificate of Need in this Medicaid expansion needs to involve a full repeal of it, and it doesn’t need to have an effective date four years from now,” he said. “I also want to remind people when we talk about the solvency of the State Health Plan and lowering family premiums, our own Julie Havlak and other reporters from Carolina Journal reported several years ago that Certificate of Need laws are costing our State Health plan $250 million a year. Do you know what we could do with family premiums for $250 million a year, even if a portion of that savings from completely repealing the certificate of needs law go toward that? 

Folwell also said that he is in favor of S.B. 99, Bond Referendum Transparency, and has been since he was in the General Assembly. He likened it to someone filling out a credit application with pages of disclosures. 

“All we really do when we ask the voters is put about 25 words on the ballot,” he said. “I’ve long been in favor of full disclosure of telling people who are going to be paying these increased property taxes based on this issuance of these bonds that they know what the estimated interest cost and the present value of all that is so just to be as transparent about the disclosure as we are on everything else that we deal with in terms of a credit card or buying a house.”

Follwell ended the conference call by saying they also need to ensure, especially in rural North Carolina, that 40% of lottery proceeds are going to public school construction. The proceeds can go towards rehabilitating a building rather than tearing it down and building a new one, eliminating the need for many school bonds. 

The post Folwell calls on AG to investigate antitrust as hospitals consolidate first appeared on Carolina Journal.

 

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