North Carolina’s big hospital systems reaped billions in profits during the pandemic while patients and rural hospitals suffered, according to a new report from the State Health Plan.
The report found that the growth in charity care did not keep up with hospital profits and some hospital systems actually spent less on caring for the poor in 2020 than they did the year before.
“North Carolina’s seven largest hospital systems recorded $7.1 billion growth in cash and financial investments from 2019 to 2021. These seven systems reaped $5.2 billion in net profits in 2021, and all but one even enjoyed higher net profits than before the pandemic,” the report states.
At the same time, the federal government sent $1.5 billion to big hospital systems in North Carolina during the COVID pandemic and even more in accelerated and advanced Medicare payments, according to the report.
The North Carolina Healthcare Association, which represents hospitals, disputed the report.
“Cherry-picking financial data, and then spinning it, is not reflective of the many immense struggles and challenges facing the hospital field, including a workforce shortage crisis, along with skyrocketing costs for supplies, equipment, drugs and labor, and near-historic levels of inflation,” the association said.
“The report released today falsely demonizes health systems for applying for and using Provider Relief Funds (PRF) to respond to the COVID-19 crisis,” the association said in a statement.
“The truth is that NC hospitals drastically changed their operations and way of doing business based on the request of the Governor and other State officials. Although these changes allowed the state to avert a pandemic disaster, they were taxing on all hospitals,” the association said.
State Treasurer Dale Folwell said the state’s big hospital systems operate like a “cartel” and called on the General Assembly to help rein in health care costs.
“Cartels control the quantity of a product, they control the quality of a product, they control your access to a product, they control the price of your product,” he said. “If you don’t pay for this product you didn’t want to consume, then you’re punished and your credit score is weaponized.”
The report found some big hospitals charged patients that should have received free care and continued to sue people who could not pay their bills.
The state’s big hospital systems said they had spent hundreds of millions of dollars in financial assistance for patients.
“In 2020, only a sliver of their $3.1 billion growth in cash and investments was devoted to increasing charity care spending despite record unemployment rates and economic pain from the pandemic and the lockdowns,” the report states.
The report also notes that the state’s big hospital systems took in much of the COVID relief money as “rural and disadvantaged hospitals starved.”
The report focuses on North Carolina’s seven largest hospital systems: Duke Hospitals, UNC Health, Atrium, Cone, Novant, Vidant and WakeMed. Spectrum News 1 reached out to each of the hospital systems listed in the report.
“It's troubling that health systems like Atrium Health are being attacked while we are still caring for communities that are recovering from the pandemic,” Atrium Health said in a statement.
“The reality is the $719 million in provider relief funds we have received covers less than half of the adverse $1.55 billion financial impact we have incurred as a result of the pandemic,” Atrium said.
Duke Hospitals said it had a “a total community investment of $823 million, including $141 million in financial assistance to nearly 270,000 patients.”
Duke also noted that federal funds helped the hospital keep its staff of 25,000 employed during the pandemic without any layoffs or furloughs.
UNC Health called the report “charged and misleading.”
The report, UNC said in a statement, ”paints a baseless picture of excess relief funds as ‘profit’ and seems to intentionally obscure the fact that advanced Medicare payments were not gifts – UNC Health has already paid the federal government back almost all of the $305 million it received from advance Medicare payments.”
The state treasurer called on North Carolina lawmakers to act to rein in health care costs during a news conference Wednesday when he released the report.
“Atrium has nearly $12 billion in the bank this morning. That is nearly half of the state budget for one year,” Folwell said.
“You should care about the fact, very simply, that they didn’t get $12 billion by selling groceries or making widgets or developing software, they made $12 billion on the backs of taxpayers,” he said.
“This is not a Democrat and Republican issue. This is a moral issue,” said Folwell, a Republican. “You should care about the massive transfer of wealth in this state from the citizens to these multibillion-dollar nonprofits.”
“This isn’t about the people who actually do the work of health care in this state, this is about the multimillion-dollar lobbyists, the multimillion-dollar executives who run these multibillion-dollar corporations who don’t pay sales, real estate and property taxes, who disguise themselves as nonprofits,” he said.