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Health Care

State Treasurer, Novant Health Spar Over NC Expansions

By Johanna F. Still, posted Mar 8, 2023
N.C. State Treasurer Dale Folwell has condemned Novant Health for its acquisition activity in the state. (File photo)
The treasurer of North Carolina continues to criticize Novant Health as it further expands its reach in the state, and the Winston-Salem-based system is firmly defending itself against what it characterizes as politically motivated commentary. 

Last week, Novant inked an agreement to acquire two hospital systems outside of Charlotte for $320 million. 

In a press call Tuesday morning, N.C. State Treasurer Dale Folwell focused on Novant’s expansion and his objection to the trend of consolidation of health care systems in general, which he argues is decreasing the quality of care and increasing costs for patients. 

Novant Health purchased the once-county-owned New Hanover Regional Medical Center in 2021 for nearly $2 billion. Should Novant's attempted purchase of Lake Norman Regional Medical Center and Davis Regional Medical Center clear regulatory hurdles, Novant would grow to own 17 hospitals across the Carolinas and Georgia. The not-for-profit is the region’s largest employer, with about 8,600 employees working in the tri-county area as of December. 

“Everywhere that we've seen the consolidation of health care,” Folwell said in the call, “it's resulting in lower quality, lower access and higher cost.”

In a statement, Novant Health highlighted its accomplishments in the region since acquiring NHRMC and objected to Folwell’s criticisms. 

“Novant Health has stood silently by for years as Treasurer Dale Folwell spreads false narratives. Hospitals and health systems put patients at the center of all they do each day amid extraordinary health and operational challenges,” a spokesperson said. “Hospitals, patients and physicians are not political weapons. We encourage state officials to refrain from using our hospitals and staff for political points and instead focus on finding solutions to support hospitals given the work we do to expand access, improve quality, and drive our local economies.”

Data shared by the treasurer's office indicates that health care in the region was already monopolized even prior to the recent sale. 

Yale University professor Zack Cooper, a leading researcher on hospital consolidation, ranked Novant Health Brunswick Medical Center, Pender Memorial Hospital and New Hanover Regional Medical Center as perfect monopolies as of 2018. 

Findings released by Cooper and other researchers for the National Bureau of Economic Research last year revealed that patients receiving higher-cost care in more concentrated markets don’t receive higher-quality care. “A large body of work finds that hospitals in more concentrated markets have higher prices and that mergers can allow hospitals to raise their prices,” the report states. 

Post-merger, Novant Health emphasized the milestones it achieved, including serving more than 13,000 patients via its expanded financial assistance policy at NHRMC, granting those earning up to 300% of the federal poverty level free care. The Novant spokesperson also pointed to the pair of planned Michael Jordan Family Medical Clinics in Wilmington and other efforts to expand care access in the area.

“Novant Health hospitals and our incredible medical care teams put our patients and communities at the center of what we do. Instead of pursuing flashy headlines, we’re serving our patients day in and day out, regardless of the challenging conditions the Treasurer conveniently ignores,” the spokesperson said. “We look forward to working with state and federal officials to complete our agreement and bring Lake Norman Regional Medical Center and Davis Regional Medical Center into the Novant Health family. As a result of this transaction, these facilities will transition from for-profit to not-for-profit status.”

State Attorney General Josh Stein signed off on the NHRMC acquisition in 2021, and in 2019, approved a $1.5-billion deal for HCA Healthcare to purchase Asheville-based Mission Health. 

Folwell said he expects Stein – who has announced a gubernatorial run – to approve Novant’s purchases of the two Charlotte systems, “as he’s done with every other transaction.” (Though he has yet to announce his candidacy formally, Folwell has likewise indicated an interest in running for governor.)

“At every turn, we've seen the further concentration of health care in the hands of fewer and fewer of these multibillion-dollar corporations, many of whom disguised themselves as nonprofits,” Folwell said. 

No additional legislation is necessary to prevent the pattern of consolidation and monopolistic activity, Folwell said, asserting that Stein already has the tools necaessary to stop it, but chooses not to. He emphasized his criticism of Stein is not partisan. 

“Any amount of consumer protection would be extremely helpful from either the state attorney general or the national attorney general,” he said. “The attorney general could stop it in a moment with or without a [new] law.”

In the NHRMC-Novant and Mission-HCA deals, Stein negotiated certain requests, such as inserting more diverse representation on the legacy health care endowment boards, before approving the sales. 

A spokesperson for Stein said Tuesday he is committed to protecting patients, “which is why he is working to update state law on these health care transactions to better address rising prices and decreasing quality. We would welcome Treasurer Folwell taking action to support these needed updates to state law – which would help patients – instead of continuing his uninformed and unproductive outbursts.”

In the Tuesday press call, Folwell pointed to Novant Health NHRMC’s difficulties last summer as evidence that the new owner is mismanaging its new local entity. Regulators warned the hospital it was at risk of losing its Medicare contract after an investigation during a time of high volumes in the emergency department and reports of slow response times; the system avoided penalty after it partook in a hiring spree of travel nurses to balance ratios and demand.

“The wheels continue to go off with what's going on with health care down there,” Folwell said of Novant Health NHRMC. “My reason for saying that, is that in New Hanover’s case especially, you had one of the few, I repeat the few, independent, accessible, high-quality, affordable, profitable, independent community hospitals in the whole United States.” 
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