SOUTHEASTERN N.C. — While businesses closed, people across the country lost jobs and the economy suffered during the pandemic, hospitals in North Carolina profited — and greatly.
Winston Salem-based Novant Health — which took over New Hanover Regional Medical Center 16 months ago for $1.5 billion — received the second largest payout of federal taxpayer dollars in 2020. It cashed in on more than $630 million in Covid-relief funds and earned a net profit of $812 million. In comparison, its charity care, free or reduced medical services for uninsured patients, was only 6% of its cash growth, according to a financial audit requested by State Treasurer Dale Folwell.
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As a tax-exempt organization, Novant is required to offer free or reduced services in conjunction with its tax breaks. However, North Carolina does not require a minimum threshold for charity care spending, and there is little accountability at the state or federal levels for nonprofit hospitals’ tax exemptions.
North Carolina is among states with the most unaffordable health care in the nation and Wilmington was ranked in the top five monopolistic cities in the nation for healthcare during 2012 to 2019. Covid relief funds enabled hospitals to grow cash earnings even more, according to Folwell.
“They’re a cartel and cartels don’t care what the rules or laws are,” he said. “They will continue in cartel-like activities as quality health care is declining rapidly.”
Novant received $261.4 million in Covid-relief funds from the Coronavirus Aid, Relief and Economic Security Act (signed into law by former President Donald Trump in March 2020) and $373.7 million in Medicare Accelerated and Advance Payments. MAAP funds were issued to hospitals in an effort to offset lost revenue during the pandemic when admissions dropped and elective procedures were canceled.
Along with Novant, the state’s seven largest hospital systems — Atrium Health, UNC Health, Duke Health, Vidant Health, WakeMed and Cone Health — reported a combined cash growth of $7.1 billion and net profits of $5.2 billion from 2019 to 2021. Duke Health made the largest, a 41% profit of $1.8 billion in 2021 and Atrium Health took home the most relief dollars, totaling $589 million — a $1.7 billion profit.
As hospitals financially benefited, under- and uninsured patients face debt from health bills. Legislation known as the Medical Debt Deweaponization Act, is in the House now, which would help qualifying patients mitigate the burden of healthcare costs.
Folwell requested a review of the seven hospital’s financials, compiled into a report released last week by the National Academy of State Health Policy (NASHP). The findings were peer-reviewed by John Hopkins Bloomberg School of Health. The report found hospitals provide less charity care than they receive in tax breaks.
Novant Health provided more than $1.1 billion in community benefits (programs addressing health needs), including $192.8 million in financial assistance to the community members it serves.
“Research shows, especially during the pandemic, many instances where these corporations disguise themselves as nonprofits putting profits over patients,” Folwell added. “There’s been a massive transfer of wealth from individuals to multi-billion-dollar corporations.”
The NASHP report states independent physicians, who received less in Covid relief, struggled to stay afloat. As a result, many got gobbled up by large hospital systems, reducing competition. The report predicts this could eventually lead to lower quality health care and higher costs.
Treasurer Folwell is calling on hospitals to either return the Covid money he says they didn’t need to begin with or do a better job offering lower-cost care to patients who need financial assistance.
“Our mission is to get them to stop punishing people, stop ruining people’s credit and reverse course,” he said.
According to a Novant spokesperson, the hospital system used its Covid relief funds to open Covid testing centers, vaccination clinics and respiratory assessment clinics. With Novant’s 10 hospitals across the state, charity care spending rose by $57.5 million from 2019 to 2020, which is 6% of Novant’s $921.4 million growth in cash and investments during the same time.
Novant’s financial assistance policy provides free or reduced-price care to uninsured patients who earn less than 300% of the federal poverty level. The 2022 poverty guideline for a family of four is $27,750, so a family earning up to $83,250 could qualify for free or reduced medical care.
Prior to the hospital sale, Novant Regional Medical Center’s threshold was 200%.
“Like other hospitals throughout the country, we still are experiencing a healthcare crisis — one that stems from a strained and overwhelmed system dealing with staffing shortages in nearly all areas of care, driving labor expenses higher and profit margins lower,” a Novant spokesperson said.
However, Folwell indicated Novant (among the others) is “weaponizing people through medical debt policies” by billing under- and uninsured families who could not afford to pay. The report also states some hospitals in the state sued patients for not paying. Novant confirmed it was not one of them. Per its financial policy, Novant “does not take legal or judicial action against a patient for non-payment.” It also offers no-interest payment plans for patients.
Folwell is supporting House Bill 1039, the Medical Debt De-Weaponization Act to set transparent parameters for financial assistance. It would also limit large medical facilities from charging “unreasonable” interest rates and “unfair” tactics in debt collection.
The proposed legislation would require medical facilities to post price information online and implement a medical debt mitigation policy, mandating certain steps prior to seeking payment for care and services. It would also limit the measures debt collectors can take to obtain outstanding balances.
If signed into law, North Carolina could become one of the top states in the nation at protecting patients from medical debt. Right now, it’s ranked number 28.
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