RALEIGH — North Carolina's hospital sector has seen a number of mergers and acquisitions over the past decade, and now the pace of change is only accelerating.
Guilford County's largest hospital, Cone Memorial, was just acquired by Kaiser Permanente's charitable arm. Novant Health, also based in the Triad, operates hospitals in Winston-Salem, Charlotte, Wilmington and more than a dozen other areas in and around North Carolina. Novant, which just shelved its plans after clashing with the Federal Trade Commission over the acquisition of two hospitals in Iredell County, is competing with Asheville-based Mission Health for a permit from the state to build a new hospital in Buncombe.
The once-independent Mission Health was acquired by Tennessee-based chain HCA Healthcare in 2019. Most of North Carolina's hospitals are part of the sprawling network or are likely to become so in the coming years.
I am very concerned about hospital centralization, and you should be too. The empirical evidence is ample about its relationship to health care costs. But the problem isn't the existence of multistate networks; it's the existence, or lack thereof, of competition.
So whether a hospital is locally owned and operated is effectively less important than whether it's your only option. In Wake County, where I live, three major systems operate hospitals, urgent cares, physician offices, and other facilities: UNC Health, Duke Health, and WakeMed. Two of them are based in neighboring counties. WakeMed is local, having changed hands from the county to nonprofit ownership decades ago.
Our family was treated in all three systems at various times — in fact, my wife was also treated at Duke University Hospital in Durham and the Mayo Clinic in Minnesota when she was ill with a life-threatening illness. We couldn't have cared less about the ownership structure; we were trying to save her life, and we were fortunate to have the means and opportunity to choose accordingly.
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Last year, the Health Cost Institute used a standard measure of market concentration to evaluate the degree of hospital competition in 183 metropolitan areas across the U.S. In North Carolina, Wilmington had the highest index, ranking second in the nation for hospital concentration. The MSAs of Asheville, Greensboro, Winston-Salem and Burlington also had above-average concentration. The Hickory and Charlotte regions fared better (Raleigh-Cary and Durham-Chapel Hill were not included in the study).
Rather than fixating on local government and state-owned enterprise ownership, policymakers should focus on encouraging competition among providers within metropolises and regions. Avik Roy, founder of the Equal Opportunity Research Foundation, made some practical suggestions in a recent paper.
• Lawmakers should further require pricing and contract disclosure from entities that receive Medicare and Medicaid funds, and they should amend the Affordable Care Act to remove restrictions on physician-owned hospitals.
• State lawmakers should repeal North Carolina’s certificate of need system, which clearly creates and protects hospital monopolies in counties and regions, and ease regulatory restrictions on surgery centers, birthing centers and telehealth.
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What about antitrust enforcement? In general, I believe antitrust laws do more harm than good. Consumer interests should come first, but too often private companies use antitrust laws as a weapon against larger competitors that cannot compete effectively in the private market. The hospital sector is unique because it is already heavily subsidized and regulated by federal and state governments. If any sector needs more scrutiny from antitrust enforcement, it is this sector.
It is essential that North Carolinians approach this issue with realistic expectations. Regardless of the policy environment, rural residents will have fewer neighborhood options than their urban and suburban counterparts. This is not a conspiracy; it is a geography issue. Yet without strong competition among hospitals and other health care providers in metropolitan areas, and without practical, accessible ways to transfer patients from remote areas to competitive markets, North Carolinians will continue to pay too high for health care and receive too little in return.
John Hood is a trustee of the John Locke Foundation. His latest book is Mountain People and Forest PeopleIt combines epic fantasy and early American history (FolkloreCycle.com).
