“Cartel” Might Not Be Strong Enough to Describe the Hospital Systems

June 24, 2022

Hospitals have been claiming poverty to kill bills that would lower patient costs

But Treasurer’s report shows NC hospital systems raked in record profits during the pandemic

Treasurer Dale Folwell calls North Carolina’s major hospital systems a “cartel,” but that may not be strong enough. At least the South American cartels don’t claim they’re performing community service while pilfering the countryside.

Here’s what’s happening. North Carolina law limits competition for hospitals through what’s called “certificate of need.” If a radiology clinic thinks they can perform better service for a lower price than the hospital down the street – too bad. They can’t open unless they get a literal certificate from the state saying there’s enough demand in the marketplace to warrant the clinic. And the hospital down the street? They can take action to block the clinic from obtaining the certificate required to open. North Carolina’s certificate of need laws are the second-most restrictive in the country. Because the laws keep supply and competition down, they increase costs.

So the state’s major hospital systems – Duke Health, UNC Health, Atrium Health, Novant, Vidant Health, Cone Health, and WakeMed – have a huge incentive to protect the existing certificate of need laws. It helps the hospitals kill their competition, which means they can keep prices higher.

The state senate this year paired certificate of need reforms with a bill to expand Medicaid. The deal is hospitals would benefit from Medicaid expansion even though they don’t like the certificate of need reforms. Seems fair, right?

Well, most of the hospital systems don’t care about fair. UNC Health and Vidant have shown a willingness to negotiate, but the rest of them have been telling legislators they’re barely scraping by, doing all they can to save lives in the community regardless of profit, and that certificate of need reforms might send them over the cliff.

We now know that’s garbage. Not only are the major hospital systems tremendously wealthy – they earned record profits over the past two years…and accepted taxpayer “assistance” to boot!

They’re are going around pretending to be community-minded “nonprofits” that just care about saving lives, when in reality they’re raking in more money than ever because of protectionist laws that keep away competitors.

The major hospitals have pulled off a rare feat in politics: earning a permanent enemy. They’ve been fighting Treasurer Folwell with everything they have for three years now. And by continuing with their duplicitous charade, they’re sending more recruits into Folwell’s camp.