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Report: NC hospitals that got COVID-19 relief reaped profits

Atrium Health Wake Forest Baptist Medical Center

North Carolina’s seven largest hospital systems reaped sizeable financial benefits last year, even as they received billions of dollars in federal assistance during the pandemic, according to a report released Wednesday from the State Treasurer’s Office.

The state employee health insurance plan, which Treasurer Dale Folwell’s agency oversees, and the National Academy for State Health Policy reviewed audited financial reports of the hospital systems.

They found that the systems -- Atrium Health, Cone Health, Duke Health, Novant Health, UNC Health, Vidant Health and WakeMed — reported $5.2 billion in combined net income in 2021. The seven nonprofit systems also saw cash and investments grow by a cumulative $7.1 billion from 2019 to 2021, the report said.

The report, which was reviewed by a professor at the Johns Hopkins Bloomberg School of Public Health, said the prosperity came as the health plans accepted $1.5 billion in COVID-19 relief funds and $1.6 billion from Medicare to prepay for services during the pandemic.

Folwell, whose office has released two other reports since last fall criticizing large nonprofit hospitals for their financial and charity care practices, said such federal assistance was supposed to help struggling hospitals and care for needy patients.

“As the wealthy systems gobbled up the lion’s share of COVID relief dollars among North Carolina hospitals, rural and disadvantaged hospitals starved,” the report said.

Folwell, a Republican first elected in 2016, said the seven hospital systems should return the taxpayer-funded federal dollars or scale back increasing hospital costs to patients.

The seven health systems represents more than 80 hospitals in the state, according to the North Carolina Healthcare Association, which represents for-profit and nonprofit hospitals.

The association said in a written statement that the report “falsely demonizes health systems for applying for and using” COVID-19 relief funds for medical providers, and “conveniently forgets” that hospitals were facing an “unknown virus” in 2020. Hospital systems didn't receive additional money for expenses and lost revenue related to the delta and omicron variants, which increased COVID-19 hospitalizations.

“Cherry-picking financial data, and then spinning it, is not reflective of the many immense struggles and challenges facing the hospital field,” the statement read.

Folwell also supports pending legislation that would require North Carolina hospitals to provide minimum levels of free or discounted care to low- and middle-income residents not covered by insurance.

“You should care about the massive transfer of wealth that is going on in this state from the citizens to these multibillion-dollar nonprofits,” he said at a news conference. The State Health Plan covers nearly 750,000 teachers, state employees, retirees and their dependents — making a major user of hospital services in the state.

Wednesday's speakers focused a great deal on Charlotte-based Atrium Health, which the report calculated as receiving over $1 billion in COVID-19 relief and Medicare advance payments. Atrium had $1.2 billion in net income in 2021, according to the report.

Atrium Health spokesperson Dan Fogleman told The News & Observer of Raleigh that the funds the system received covered but a fraction of what it lost because of the pandemic.

The funds helped pay for many needed services, he said, including mass COVID-19 vaccinations and testing, as well as personal protective equipment and ventilators. They also helped Atrium avoid layoffs and keep rural hospitals in their system open, according to Fogleman.

“It’s troubling that health systems like Atrium Health are being attacked while we are still caring for communities that are recovering from the pandemic,” he said.

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