Asheville – There is a huge controversy over healthcare in North Carolina, and it affects everyone in the state. According to new peer reviewed reports, North Carolinians are paying three times what patients in other states pay. The reason might not be what you think. It might be a CON.
Unintended Consequences of Government Overregulation
The federal government passed a law back in the 1960s called the Certificate of Need (or CON), which put states in charge of micro-regulating hospitals and medical facilities. The federal government then forced states to comply or lose their funding. The idea was to keep multiple hospitals from buying extremely expensive equipment to be competitive, which federal regulators felt drove up health care costs. Because of these laws, medical facilities have to get permission from the state to add beds, buy equipment like new MRI machines, or build new hospitals and clinics. As usual, what looked good in theory, wasn’t. The CON laws created monopolies and antitrust situations, completely squashing competition. Many states have now seen that these CON laws are actually causing prices to soar, and patient care, especially in rural areas, to tumble.
The FTC Chimes In
In a 2015 Federal Trade Commission report, Certificate of Need Laws: A Prescription for Higher Costs, the FTC says, “State certificate of need (CON) laws—which require state approval for new entry and expansions by health care providers—stand out as an example of regulation that squelches the beneficial effects of competition in health care markets without delivering valuable public benefits in return… In practice, CON laws funnel benefits of indeterminate size to some incumbent health care providers, often without any meaningful political oversight or public transparency.”
Other States Ease CON laws, NC Elected Officials and Hospital Lobbyists Still Push CON
May states are repealing large parts of their CON laws, some are trying to repeal all of them. However, North Carolina is not one of those states. We are one of only 11 or 12 states left that have strong CON laws.
The NC Attorney General, Josh Stein, approved the original monopoly when it was decided that Mission Hospital could purchase St Joseph’s and the hospitals in outlying counties in western North Carolina. Mission took over Angel Hospital in Franklin, Transylvania Regional Hospital, Highland-Cashiers Hospital, McDowell Hospital, Spruce Pine Hospital, Care Partners, and Asheville Specialty Hospital. However, the real damage came after AG Stein approved the sale of Mission to the mega, for-profit hospital corporation HCA.
CON Laws Reduce Patient Access and Care While Driving Up Cost
We can see the actual reality of these CON laws right here in WNC. In HCA’s purchase agreement, it states that they only have to keep the outlying hospitals open for 10 years. What HCA has done to get around that is to do what area doctors call “strip mining” the hospitals, turning them into glorified urgent care clinics. Many of the long time doctors have been fired, or force to quit by being pushed to work longer hours, see double the patients, and with no additional pay. Most of our seasoned, experienced doctors are gone, and, as reported before, we are down to a skeleton crew of nurses. If you live in rural WNC counties, you can no longer get services such as maternity/delivery, chemo treatments, and certain surgeries. You have to come to Asheville for those services. With rising gas costs that adds more financial stress, and hours on the road, to local families. If you’re having a baby, you have a very long drive and can’t have your baby doctor, a very intimate relationship. You just get a doctor you don’t know.
NC Treasurer Fights Back
North Carolina State Treasurer Dale R. Folwell, CPA, is behind the push for higher quality, more accessible, and less expensive healthcare for North Carolinians. Treasurer Folwell has good reason to want that, he administers the State Health Plan (SHP), which covers the state health insurance plan for 750,000 employees and retirees. He’s basically NC Hospital’s largest customer. He is worried about the State Health Plan’s sustainability, and for the past five years, he has bluntly battled the state’s hospitals for lower prices and greater transparency. It has left him frustrated with what he calls a health care “cartel.” The good news is that the work he is doing for the SHP, he is also doing for all citizens of North Carolina.
Treasurer Folwell has been meeting with people across the state who have been devastated financially by skyrocketing medical debt. At a recent forum at AB Tech, Treasurer Folwell and Mayor Maureen Copelof stated that in dealing with these people they have uncovered instances where the hospitals are not living up to their charity care for people who need financial help with medical treatment and that the hospitals are not billing Medicare and insurance when available, but are billing the patient directly. If the patient doesn’t pay, they are sent to collection. Some have lost their life savings and homes, even though they had insurance, or their families are having to deal with the debt. Folwell calls it the weaponizing of medical debt.
Cartelization and Weaponization of Medicine and Debt
This lack of charity care, improper billing, and lack of quality medical care hits low-income citizens the hardest. In an interview, Folwell stated, “We are in a situation right now where people cannot see themselves past their poverty in North Carolina, because of the billing practices of hospitals. The problem is a transparency problem, a lack of charity care that is equal to the hospital’s tax benefit problem, and weaponizing the credit scores of people who don’t pay for their services. Every national and international study shows that cartelization of health care in this state is leading to lower quality, lower access, and higher cost, which negatively and disproportionally effects lower and fixed income people more than anyone else.”
When asked why North Carolinians are paying three times more for healthcare, the state treasurer said, “Think about how you normally think about the word cartel. Cartels control the supply. Cartels control the quality. Cartels control the access, the price, and whether they break your kneecaps if you don’t pay for their product.” We have the same healthcare issues across the country, but in North Carolina we pay more because, according to the Treasurer, “The Certificate of Need is stronger here than anywhere else.”
A New Wrinkle in the Healthcare Circus
While HCA, under the guise of Mission Hospital, is “strip mining” the local WNC hospitals they acquired when they purchased Mission and closing oncology and other facilities in Buncombe and outlying counties, the State of North Carolina has determined that we need 67 more acute care beds for Buncombe, Graham, Madison, and Yancey counties. Toward that end, Novant Health, Mission, and Advent Health have all bid for the opportunity to expand services in Buncombe County.
Pardee, who is not included in the expansion, sent a letter of dissent to the North Carolina Department of Health and Human Services, stating that we do not need these new facilities and that the decision was made in the midst of COVID. Our existing hospitals now have beds available, and any new facilities would harm our local hospitals by taking patients away from them.
A Case of CYA
To confuse things further, in a recent press release, Attorney General Stein urged the court to allow the lawsuits that the City of Asheville, Buncombe County, the City of Brevard, and Madison County have taken against HCA to go forward, in essence, trying to offset the damages that his earlier decision that allowed HCA to decimate our hospital system has caused. The municipalities have filed an antitrust lawsuit that alleges that Mission Health is engaging in anticompetitive conduct, including using all-or-nothing contracts, anti-steering provisions, and price confidentiality provisions to prevent insurers from directing patients to lower cost, higher quality services.
In his statement, AG Stein says, “Patients are best served when they have choices. Unfortunately, hospital consolidation has decreased choice in western North Carolina, and patients are paying the price. While consolidation isn’t necessarily illegal…the plaintiffs in this case allege that Mission Health is illegally using its size and strength to further decrease choice in the region.”
Maybe he should have thought of that before he not only approved but pushed through the sale of Mission to HCA.