Some lawmakers call for review of decades-old law that governs hospital authorities like Atrium Health – North Carolina Health News
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Three North Carolina legislators said they are interested in revisiting the state law that gives special privileges to hospital authorities such as Atrium Health, noting that today’s multibillion-dollar hospital systems are nothing like the ones lawmakers had in mind when the law was written.
The hospital authorities act was written in 1943, “when a lot of county-owned hospitals were struggling to keep their doors open,” said Rep. Donny Lambeth (R-Winston-Salem), a former hospital administrator who is a co-chair of the House Health Committee in the state legislature.
“It’s different today when they’re making billions.”
Rep. Larry Potts (R-Lexington) and Sen. Jim Burgin (R-Angier) told The Ledger/NC Health News that they, too, have concerns about the law. Potts is senior chairman of the House’s health committee, and Burgin is a co-chair of the Senate’s health care committee.
The lawmakers’ call for a review comes after a recent Charlotte Ledger/NC Health News article examined the benefits Atrium enjoys as a unit of local government called a “hospital authority.”
Those benefits include the power of eminent domain, which means the hospital can force property owners to sell to make way for hospital expansion; extra tax breaks, even on property that is not being used for medical purposes; and protection from certain federal regulations, including antitrust damages.
Those advantages have helped Atrium grow into a powerful, multi-state hospital chain whose executives receive millions in compensation. The hospital system tied to the authority reported $9.3 billion in annual revenue in 2023. And the company has an additional $19 billion in revenue under its combinations with Wake Forest Baptist and Advocate Aurora Health.
Lambeth said he wants to consider whether the hospital authority law gives Atrium “such an advantage that we need to either enforce or change the law.”
Burgin said he would like to have “some very candid, frank, adult conversations” about the law, asking, “Do these (laws) make sense? And is it right and fair? Because I think some of it is not fair.”
Potts pointed out that much has changed in the 75 years since the original hospital authority act was written. “We need their services and their benefits,” he said. “We also need to look at the costs of what those benefits are.”
The lawmakers also expressed disappointment that Atrium receives those benefits but doesn’t operate in the same open and transparent manner as other government entities.
Asked to respond to lawmaker concerns, an Atrium spokesman emailed a statement that said the Charlotte-Mecklenburg Hospital Authority, which does business as Atrium Health, “will continue to operate and abide by the law.”
It also said:
Atrium Health continues to fulfill the original intent of the North Carolina Hospital Authorities Act — to “protect the public health, safety, and welfare, including that of low income persons” … With deep roots in every community we are privileged to serve, we proudly embrace our “for all” approach that ensures no patient needing care is turned away because of their ability or inability to pay for their care.
The statement said Atrium provided $2.8 billion in free care and other community benefits in its larger service area in 2022.
Atrium has emphasized in court filings that as a governmental unit, it “must comply with North Carolina’s public records and open meetings laws.” However, it doesn’t interpret the public records and open meetings laws in the same way as other government boards.
For example, the authority doesn’t release the agenda for its board meetings in advance or set aside time for the public to speak. It also closes its committee meetings to the public, even though that is where most deliberation happens.
For comparison, CarolinaEast, a hospital authority in Craven County, N.C., does allow the public to attend committee meetings and speak to its board.
“They can’t have it both ways, quite frankly,” Lambeth said of Atrium. “I don’t think you can take advantage in one arena but not another. Either act like a government entity or act like a not-for-profit system.”
All three lawmakers said they think Atrium’s board should follow the state’s open meetings laws in the same way as other appointed and elected government boards. That means conducting deliberations in the public eye, Burgin said.
“If they’re going to be a quasi-governmental agency, they’ve got to play by those rules,” Burgin said. “If they don’t want to, then they need to be some other entity. They may have to make a choice — you can do it this way or you can do it that way, but you can’t do it both ways.”
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The legislators said they have heard complaints for years that Atrium and other public hospitals have an unfair advantage over the state’s private hospitals. In particular, critics say, lower levels of federal antitrust scrutiny have made it easier for Atrium to merge and combine with other hospitals, allowing them to demand higher reimbursement rates from insurance companies.
(The other big public systems in the state are UNC Health and ECU Health. They are not hospital authorities but are considered agents of state government.)
The lawmakers said they want to level the playing field.
Lambeth said a review of the laws regulating hospitals — including the hospital authority act, as well as certificate of need laws, which govern how and where hospitals can add facilities — is higher on the legislative priority list now that critical issues such as Medicaid expansion and mental health have been addressed.
Barak Richman, a Duke University law professor who studies health care financing, said it’s surprising it took so long for lawmakers to examine the hospital authority statute.
“This is one of those instances where the statute has grown to be wildly obsolete and a severe mismatch to the current reality,” he said. “Atrium has used this law in ways that both undermine the original intent of the law and other principals of health policy.”
Richman has argued in court filings that Atrium is not a legitimate unit of government. But in two cases, the courts have ruled that the hospital system is indeed a government entity — largely because N.C. law says so. Richman has also conducted studies critical of Atrium’s now rescinded policy of suing patients for payment.
The three Republican legislators are influential members of committees that control health care legislation coming out of Raleigh. Republicans hold a supermajority in the House and Senate, and Republican support is essential to pass laws out of the General Assembly.
The General Assembly could consider a number of changes to the law. It could eliminate the hospital authority act altogether, forcing Atrium to convert to a private nonprofit corporation like Novant Health. It could clarify that hospital authority boards must follow the same rules as other public bodies, such as allowing the public to speak and attend committee meetings. Or it could take away some of an authority’s powers, such as the ability to condemn land for hospital expansion or the ability to avoid property taxes on real estate that is not being used for medical purposes.
Richman said he’s glad lawmakers want to update the law, but he worries any rewrite of the statute could be influenced by hospital lobbyists and end up giving Atrium more power. Public filings show Atrium Health spent $334,452 on lobbyists to influence N.C. legislators in 2022 and $383,798 in 2023.
Legislative actions in recent years have largely leaned toward giving hospital systems more authority and control, not less, Richman said.
In fact, the most recent proposed change to the hospital authority law was a little-noticed sentence in the 2023 Senate budget bill that didn’t make it into the final state budget.
It would have eliminated the part of the statute that prevents hospital authorities from expanding much past their county borders. The restriction is part of the reason Atrium had to “combine” with Wake Forest Baptist rather than merge with or acquire the system.
Lifting the restriction would have allowed Atrium to start exercising its hospital authority powers outside the Charlotte region and across the state.
The legislators who talked to The Ledger/NC Health News said the laws related to hospitals are complicated, and many need updating. Here are some other topics they said they would like to tackle:
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by Michelle Crouch and Charlotte Ledger, North Carolina Health News
February 26, 2024
This <a target="_blank" href="https://www.northcarolinahealthnews.org/2024/02/26/lawmakers-call-for-review-of-law-that-governs-atrium-health/">article</a> first appeared on <a target="_blank" href="https://www.northcarolinahealthnews.org">North Carolina Health News</a> and is republished here under a Creative Commons license.<img src="https://i0.wp.com/www.northcarolinahealthnews.org/wp-content/uploads/2021/10/cropped-favicon02.jpg?fit=150%2C150&ssl=1" style="width:1em;height:1em;margin-left:10px;"><img id="republication-tracker-tool-source" src="https://www.northcarolinahealthnews.org/?republication-pixel=true&post=52388" style="width:1px;height:1px;">
Michelle Crouch is an independent journalist with more than 20 years of experience who covers the Charlotte region. She joined the NC Health News team in late 2022 as part of a partnership with the Charlotte Ledger, a business-focused digital newsletter.
As a freelancer, she has penned hundreds of stories about health, wellness, parenting and other topics for local and national outlets, including Reader’s Digest, Prevention, The Washington Post, Parents, Real Simple, WebMD and AARP The Magazine. Previously, Michelle worked at The Charlotte Observer, where she covered higher education, local government and growth/zoning before moving into an editor’s role.
Reach Michelle at mcrouch at northcarolinahealthnews.org.
The Charlotte Ledger is an online publication that produces business and general local news for Charlotte. It is led by two award-winning former Charlotte Observer reporters. See more at Charlotteledger.substack.com
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