Hospital monopolies are making us sicker...and poorer

Pre-election polls agree on one point: The number one issue on voter’s minds is the economy. Price increases are an everyday reality. And nowhere are prices increases more visible and worrisome than with our healthcare.

An August 10th article in The Washington Post titled, How Hospital Monopolies are Driving Up the Cost of Your Health Care contains disturbing information from the Kaiser Family Foundation. Zack Cooper, a Yale economist has studied hospital consolidation for over ten years, reporting, “hospital prices have risen faster than those in any other economic sector, and hospital consolidation is one of the primary drivers. “

 This is particularly relevant to North Carolina. We have endured a number of billion-dollar hospital mergers, acquisitions or takeovers since 2016. The Sheps Center at UNC reports that 12% of all rural hospitals have merged since 2005 and 12 have closed or drastically reduced services.

We were told these combinations would bring about greater operating and cost efficiencies, claims that now appear highly questionable.

The Post article states, “At Catawba Valley Medical Center in Hickory, North Carolina…the cost of a knee replacement under a Blue Cross Blue Shield health plan this year was about $16,000…at Mission Hospital in Asheville, the cost of the procedure under the same health plan was around $40,000, or more than double.”

Remember that Mission was purchased by for-profit HCA (Hospital Corporation for America) in 2019 for $1.5 billion in cash. Hospital competition in the Asheville region has been significantly reduced, but costs obviously haven’t.

Here’s another example: The $5.3 billion Novant Health buyout of New Hanover Regional Health in Wilmington by Winston-Salem based Novant Health in 2021 is still raising a sore point with residents in Southeastern Carolina. They will tell you that costs have escalated greatly, service has deteriorated significantly and the region has suffered economically. It’s a common complaint.

The big get bigger. The small get swallowed up. The big players in North Carolina currently are Atrium Health, the largest in the state, with more than 50 affiliated hospitals in several states; Novant, based out of Winston-Salem, operates 24 hospitals; UNC Health System, operates 26 hospitals from their Chapel Hill base; Duke Health Systems in Durham has the highest revenue generation of any hospital in the state; and ECU Health, formerly Vidant Health in Greenville, serves 29 counties in the eastern part of the state.

Now Atrium Health wants gobble up WakeMed in Raleigh, in what they are calling a “strategic combination.” The WakeMed CEO has swallowed the bait, as has the WakeMed board. Atrium promises to make a $2 billion investment in upgrading the main WakeMed hospital and other improvements, hire some 3,000 new employees and expand services to be more competitive with UNC and Duke, the other two major players in the market.

But the County needs to approve the “combination” and there exists loud and strong opposition to the proposal. Critics say that historically such transactions result in price increases of 6% or more in the market. They report that when Atrium took over Baptist Hospital in Winston-Salem costs shot up 28% over four years.

State Employees vehemently oppose the transaction, reporting that Atrium already charges between 15 and 40% more than WakeMed in other markets for the same services, and that Atrium’s debt collection is much more aggressive. Opponents also worry about the loss of local control and the reduction in indigent care. WakeMed is the largest provider of care for the uninsured and poor in the market. Further, there is incomplete transparency in the proposed “combination” paperwork, so much so that even the Governor warns that much of the proposed $2 billion investment comes from WakeMed’s current surplus funds.

Allow me to add another. Gene Wood, CEO of Atrium Health received a reported $25.8 million in 2024, the latest year we can find. This included a salary of $4.6 million, bonus of $14.4 million, benefits of $3.8 million and retirement and deferred pay of $2.9 million. Compare that with the CEO of Novant Health, who received $8.2 million; UNC Healthcare’s CEO who was paid $2.36 million; and Duke Health’s CEO was paid $2.0 million. Currently, WakeMed’s CEO earned a more reasonable $1.9 million.

Admittedly, being the chief executive officer of a large medical care facility dealing with many employees, doctors, insurance companies, lawyers and the public is a big job. But $24 mill? Even $8 mil seems heavy. Somebody has to to shell out the bucks to pay these CEOs and other highly paid administrators. We’re guessing it is primarily the patients.

We believe in competition and nowhere could competition be put to better use than in healthcare.

We certainly don’t want healthcare providers to cut corners with our health care, but we believe in more, not less competition.

We should have learned from experience that monopolies are bad.

Tom Campbell is a Hall of Fame North Carolina broadcaster and columnist who has covered North Carolina public policy issues since 1965.  Contact him at tomcamp@ncspin.com