Hospitals slammed for high profits

Oct. 28—TRIAD — North Carolina's state treasurer blasted the state's largest health systems Wednesday as primarily money-making operations, and a report he issued singled out the Triad's main health systems for running hospitals — including High Point's — with the largest profit margins.

State Treasurer Dale Folwell cited in particular Atrium Health's $7 billion in cash reserves and called it "an investment firm as much as a health care firm."

"We're not talking about a company that makes software or a company that makes widgets," he said. "All that profit was made on the back of a sick person."

Folwell said elected leaders need to provide state oversight and enforcement of charity care spending by nonprofit hospitals.

"North Carolina enables bad actors to pocket their tax breaks instead of paying them back to their communities," he said. "We must support the hospitals who do serve their communities and require the others to step up."

The report by researchers at the Johns Hopkins Bloomberg School of Public Health said the profit at hospitals statewide averaged 4.92% in 2019, not counting income from investments and other non-patient revenue. Nationally, the average hospital operated at a nearly 2% loss, the report said.

"Fifteen hospitals enjoyed profit margins greater than 20%," the report said, "with six hospitals belonging to Wake Forest Baptist Health, Atrium, Novant and Cone surpassing 30% margins."

The report referred to Wake Forest Baptist and Atrium Health separately because it was based on data from 2019, before the two joined.

The report showed that what is now Atrium Health Wake Forest Baptist High Point Medical Center had the fourth-highest profit margin among all North Carolina hospitals in 2019, 31.56%, while providing charity care equal to just 4.05% of its expenses.

The High Point Enterprise contacted Atrium Health Wake Forest Baptist, which had not issued a response by Wednesday evening.

Dr. Ge Bai of Johns Hopkins said that hospital profitability nationwide "has been climbing steadily for years."

Folwell and the report said the state's largest nonprofit hospital systems got tax breaks in fiscal 2019-20 worth about $1.8 billion — equal to about 5.9% of their expenses — but provided charity care equal to no more than 60% of that, or less than $1.1 billion. Fewer than 25 hospitals in the state provided charity care equal to or more than the value of their tax exemptions, the report said.

Bai said such tax breaks are intended to offset the cost of charity care.

"With tax subsidy comes social responsibility," Bai said. "Nonprofit hospitals must demonstrate distinctive charitable behaviors to deserve their tax-exempt status and the public's trust."

Folwell, who has been battling the state's hospitals in recent years to try to force transparency in pricing and reduce costs to the State Health Plan, frames his argument on hospitals' charitable obligations differently than the hospitals do.

Hospitals count in their "community benefit spending" the amounts that Medicare and Medicaid reimbursements fall short of their original charges.

Folwell contends that is misleading because in many cases hospitals' charges are too high, often because of a lack of competition to constrain pricing. Guilford County, for instance, is among the 10 least competitive hospital markets in the country, according to the report.

It also is unclear how aggressive hospitals are in pressing low-income patients to pay, including by garnishing wages, he said.

Folwell counts only the value of health care provided without any charge. Each individual hospital reports that to the government, and the Johns Hopkins researchers compiled the information.