Atrium wants to expand across NC. What that could mean for health care in Charlotte.

Atrium wants to expand across NC. What that could mean for health care in Charlotte.
Atrium Health's flagship hospital in Dilworth. (Credit: John Simmons | The Charlotte Observer)

CHARLOTTE, NC (Deon Roberts/The Charlotte Observer) - Atrium Health would be able to provide health care anywhere in North Carolina under a change to state law the Charlotte-based hospital system is pushing for that could greatly expand its footprint.

The largest hospital system in the Carolinas wants to repeal a restriction that constrains how it can operate outside Mecklenburg County and a surrounding 10-mile zone. Specifically, the law bans Atrium from doing business in other counties unless it forges a deal with a hospital in one of those counties.

Across the Charlotte region, Atrium owns five hospitals in Mecklenburg County and seven outside the county. It also manages or has affiliations with hospitals across the Carolinas.

For consumers, lifting the ban could lead to higher health care costs, some experts say.

"As a general matter, when large hospital systems control health care delivery, prices go up," said Barak Richman, a Duke Law School professor specializing in health care policy.

"If Atrium's expansion means fewer options for patients, prices will go up," he said. "And if Atrium's expansion means less flexibility for independent physicians, prices are likely to go up, too."

Atrium says the change is needed to better serve patients from other parts of the state who often show up in Atrium's Charlotte-area emergency departments.

Atrium said it does not turn those patients away, due to its role as a safety net hospital and its mission to provide care for all and address the lack of access to primary care.

But Atrium said it would like to have the ability to serve those patients closer to where they live. While it does not have immediate plans to start offering services in any particular counties, Atrium wants the flexibility to, it said.

Removing the geographic ban is also part of its continuing efforts "to look for ways to improve the health of our North Carolina citizens," the system said.

It's a change Atrium has been seeking for years to North Carolina law governing hospital authorities, which are public, tax-exempt entities.

The system's latest push is happening during the short session of the General Assembly, which lawmakers have said they want to bring to a close by July 1.

The repeal was included in insurance legislation, House Bill 382, last week but has since been removed. It could appear in legislation again, but it's unclear when or where.

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Rep. Kelly Hastings, a Republican representing parts of Cleveland and Gaston counties, said he met Monday to discuss the issue with representatives from Atrium and rival CaroMont Health, a Gastonia-based nonprofit health care system.

"At this point, it is my understanding that there is neither a bill nor a proposed committee substitute that would address these issues," Hastings said, declining to comment on potential legislation without seeing bill language.

'Rushed through'

Competing hospital systems in the Charlotte region are expressing concerns about the proposal, which they see as a big change for the state's health care industry that could open the floodgates for Atrium to get bigger.

Novant Health, based in Winston-Salem and Atrium's largest rival in Charlotte, said the repeal would make "substantive" changes to the hospital authority statute. Novant doesn't face the same restrictions on where it can operate, because it is not a hospital authority.

The proposal was tucked into the second-to-last page of the 40-page bill, but Novant said patients and health care providers should have time and opportunity to weigh in on such big changes.

"Provisions that change the fundamental landscape of health care in our state should be fully vetted and discussed before being passed into law," said Novant, a nonprofit like Atrium. "They should not be masked as innocuous changes and rushed through without careful consideration during the quickly waning days of a legislative session."

Iredell Health System, a nonprofit community-owned health system, expressed similar concerns.

"Atrium has not shared with us why they want to see the current legislation changed, and we do not feel that the current requirement mandating they seek agreement with independent hospitals already serving the community before expanding into a new service area is unreasonable," said Ed Rush, CEO of the system, which operates one hospital, Iredell Memorial, and other primary and specialty care locations in Iredell County.

Competitors also pointed out that as a hospital authority Atrium is granted certain powers others hospitals don't have. Atrium isn't being asked to give up any of those powers in a proposal that would grant it even more rights, competitors said.

One of those existing powers is eminent domain, which means Atrium can force property owners to sell at a fair market value to make room for hospital projects. Atrium said it's never used that power.

CaroMont Health said the existing law helps maintain critical collaboration and cooperation between hospital authorities and nonprofit hospitals.

"Making changes to the way any hospital operates, particularly one of the largest in North Carolina, will affect the way care is delivered in our communities and across the state," CaroMont said in a statement.

Even if the repeal passes, Atrium, like other hospital systems, would need state approvals before opening new hospitals.

The North Carolina Healthcare Association, the largest trade group representing hospitals in North Carolina, declined to comment.

Medicaid patient challenges 

Atrium for years has grown through acquiring other hospitals. In its most recent deal, it plans to combine with Georgia health care system Navicent in a transaction that's pending. Atrium is already allowed under state law to operate outside of North Carolina.

Atrium said the repeal push is not part of a strategy to get bigger. Rather, it's an attempt to take a smaller financial hit as it treats Medicaid patients, the system said.

Medicaid, funded jointly by states and the federal government, provides health coverage to low-income adults, children, people with disabilities and others.

Being able to give treatment to those patients closer to where they live increases the likelihood patients will seek that care, Atrium said. That decreases the likelihood they will defer treatment until they get seriously ill and are forced to go to Atrium's emergency department, the system said.

North Carolina's Medicaid program is expected to make changes in the near future that will allocate a certain amount of funding to treat Medicaid patients for a particular health issue. That means Atrium will eat more costs to treat those patients if they wind up in the emergency department for the same issue, the system said.

"Because the emergency department is the most expensive place to treat chronic conditions, we believe these patients who have chosen Atrium Health will be best served by Atrium Health being able to provide continual care in the counties where they live," Atrium said.

Atrium said it provided $2.03 billion in free and uncompensated community benefits last year, including losses to treat Medicaid and Medicare patients.