Provider Relief Funds (PRF) have allowed many of North Carolina’s hospitals to continue operating when they otherwise would have buckled under the burden of COVID-19. Unfortunately, North Carolina Treasurer Dale Folwell doesn’t understand that health systems are not yet out of the woods: in 2022, more than 60% of hospitals in his state have a negative operating income.
Two weeks ago, Un-covered issued a rebuttal to Mr. Folwell’s report against his state’s very own health systems. There were so many baseless claims in this report that we couldn’t even get to all of them. So, here’s a continuation of Folwell’s misinformed points, and the important context he conveniently leaves out.
Point #4: Seven large North Carolina health systems took all the relief money and left nothing for small rural hospitals.
While Folwell’s report does cover seven systems in particular, these seven health systems span half the counties in the state — including rural counties. Centralized administration was responsible for collecting the money, disseminating it appropriately, and ensuring that the facilities within their network received the funds in an equitable way. In other words, funds went directly into communities with small rural independent hospitals and physicians.
And while Blue Cross Blue Shield of North Carolina (BCBSNC) continues to grow its already dominant market share, it’s also gaining leverage in rates negotiations. As a result, hospitals cannot afford to be out of network and are forced to accept unfairly low rates. Many operate on razor-thin margins — if they’re profitable at all. Those that aren’t are forced to find a larger partner or close their doors, leaving their local community without access to care.
Point #5: Despite profits, large North Carolina health systems provided less charity care than in years past.
It’s worth noting that all North Carolina health systems are audited and must report on charity and community benefit expenses to the Internal Revenue Service (IRS). Additionally, health systems frequently lose money as they utilize hundreds of millions of dollars to provide care for uninsured and under-insured patients that isn’t reimbursed by Medicare and Medicaid. The following indicates the amount of combined uncompensated and unreimbursed care provided by health systems in 2020 (AKA money that the hospital lost providing care):
- Atrium Health: $608+ million
- UNC Health: $277+ million
- Novant Health: $271+ million
- Duke Health: $236+ million
Point #6: North Carolina health systems should commit to lowering costs and being more transparent about pricing.
. . . But they are. As of January 2022, 122 North Carolina hospitals complied with federal price transparency laws. According to the Bureau of Labor Statistics Consumer Price Index May Report, in the last year, other industries have seen a more dramatic increase in costs, including a 35% hike in energy and 10% increase in food. Comparatively, inpatient and outpatient hospital services have increased a modest 3.9% and 3.5% respectively, while insurance premiums outpaced providers with an increase of nearly 14%.
Point #7: North Carolinians provided tax breaks to these large non-profit health systems.
Non-profit health systems reinvest all excess funds into technology, research, and infrastructure to ensure the highest quality of care for North Carolinians. There also regulations set by state and federal bodies that govern the margins, profits, and reserves of non-profit hospitals and health systems to ensure profits are commensurate with costs of care.
Further, in 2021, the state imposed a new $200 million tax on hospitals, which was burdensome during the onset of new COVID-19 variants and evolving treatments.
Just some food for thought, for Folwell and his constituents to consider.