Huge transfer of wealth. North Carolina State Treasurer, At War With Hospitals, Blows Up Pandemic Profits ::

According a report released Wednesday by the State Treasurer’s Department.

The state’s seven largest systems, combined, grew by $7.1 billion from 2019 to 2021 in cash and financial investments, in part due to a booming stock market, according to The report. The Treasurer’s Office said these hospitals made $5.3 billion in profits last year and six of the seven systems had higher profits than before the pandemic.

State Treasurer Dale Folwell, a Republican, said Wednesday that pandemic-era federal spending on hospitals represents a “huge transfer of wealth to wealthy hospital systems.”

Hospital executives accused Folwell of oversimplifying their finances, saying they needed healthy reserves to cushion downturns and to keep interest rates low when borrowing money. They said federal funding allocated to them for COVID-19 has been used to keep frontline workers in place without layoffs, especially when the pandemic forced a temporary halt to for-profit elective procedures.

Folwell’s office singled out Atrium Health, saying the Charlotte-based hospital group took the most taxpayer money – more than $700 million – and then expanded its footprint through a merger last year with Wake Forest Baptist Health.

“It is troubling that health systems like Atrium Health are under attack while we are still caring for communities recovering from the pandemic,” Atrium Health spokesman Dan Fogleman said in an email.

“The reality is that the $719 million in vendor relief funds we received covers less than half of the $1.55 billion negative financial impact we experienced as a result of the pandemic,” Fogleman said.

Folwell’s feud

Folwell has fought for years with North Carolina’s biggest hospitals, calling them a cartel and calling for new laws to demand more consistent and transparent pricing for medical services, as well as curb medical debt collection. . His office has now released three reports in nine months on hospital finances, and he lambasted health officials on Wednesday, saying they weren’t getting the deep tax breaks that nonprofit hospitals get.

“These entities disguising themselves as nonprofits have lost their mission,” Folwell said. “They’ve morphed into stockbroking, private equity and real estate development companies rather than healthcare companies.”

As treasurer, Folwell oversees the State Health Plan, which insures teachers and state employees and is the state’s largest purchaser of health services.

Folwell said the average state employee has to work one week a month to pay for family health insurance, “and the health care cartel is driving up the cost of health care in this state.”

Public hospitals have repeatedly pushed back against Folwell. The North Carolina Healthcare Association said Wednesday that “the selection of financial data and then their rotation does not reflect the many immense struggles” facing hospitals, including labor shortages and “soaring supply costs”.

“The report conveniently overlooks the on-the-ground reality of what hospitals were facing [at the beginning of the pandemic]“, the association said. “In early 2020, our hospitals were in the grip of an unknown virus. Normal clinical operations came to a screeching halt. … The truth is that hospitals in North Carolina have radically changed their operations and their way of doing business at the request of the governor and other state officials.

Folwell’s report was based on the audited financial statements of Atrium, Novant, UNC Health, Duke Health, Vidant, Cone Health and WakeMed. State Health Plan researchers worked on the report with the National Academy for State Health Policy, and their work was reviewed by Ge Bai, professor of health policy and management at the Johns Hopkins Bloomberg School of Public Health.

“These rich and powerful hospitals used windfall money to engage in mergers and acquisitions,” Bai said on Wednesday. “To shore up their market, to build their power so they can get a higher price from private payers.”

Rural hospitals

Bai and others involved in the report said more of the country’s COVID aid should have gone to rural hospitals, and Folwell’s press conference on Wednesday included a handful of rural lawmakers, Republicans and Democrats alike. .

UNC Health said in a statement that many of the state’s rural hospitals, including several in its network, “would have struggled to remain financially viable and open” without federal pandemic funding.

The hospital group called Folwell’s report “laden and misleading” and said it “paints an unsubstantiated picture of excess relief funds as ‘profit’.

A spokesperson included statements from two rural hospital CEOs: Laura Easton of Caldwell UNC and Steve Elbin of UNC Rockingham.

“UNC Health has helped us survive the pandemic financially and provide the highest level of specialized care and treatment to this rural community,” Easton said.

Elbin added, “Our rural hospital was literally saved by UNC Health’s commitment to subsidizing losses and year-over-year capital needs.”

The Treasurer’s report said Duke Health’s net profit margin of 41% last year, compared to 11% in 2019, topped that of tobacco and investment banking companies. Duke Health officials acknowledged that the system’s total revenue, including stock holdings, had increased, but they said the system’s operating profit had declined significantly since COVID-19, even with federal relief funds. .

“Duke Health has not terminated or terminated any staff despite significant disruptions to normal business operations and extraordinary demands presented by the pandemic,” the system said in a statement. “While the COVID relief funds have been helpful in mitigating the negative financial impacts of the pandemic, they have not offset the lost revenue and additional expenses attributed to measures taken to care for the communities we serve.”

Folwell called on hospital systems to return some of the $1.5 billion they took for federal coronavirus aid. Failing that, he called for legislative action, although he was not specific.

“Sunshine,” he said, when asked what he would like to see. “And that answer was not based on my disposition.”

A spokesman for Senate Speaker Pro Tem Phil Berger said the chamber’s leadership “appreciates the state treasurer’s thorough investigation and is reviewing the report.”

“Any potential legislative action would come after a thorough review of the report’s findings and suggestions,” spokesman Randy Brechbiel said in an email.

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