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By Colin Campbell

A new report from State Treasurer Dale Folwell says hospitals are profiting from serving Medicare patients – the latest salvo from Folwell in his ongoing war on hospitals’ business model.

Produced with research from the State Health Plan and the Rice University Baker Institute for Public Policy, the report says that “only 15 hospitals consistently lost money on Medicare, while 35 hospitals posted profits over all six years in North Carolina, according to Medicare Cost Report data.” It claims that “hospitals made a total of $87 million in Medicare profits in 2020” despite claiming a multi-billion-dollar shortfall.

Folwell argues that data is important because hospitals typically charge insured patients – including state workers on the State Health Plan – higher rates for services to make up for losses on Medicare patients.

“The hospital cartel is overcharging you because they can, not because they need to,” Folwell said in a news release. “Hospital executives can’t keep hiding behind Medicare. They tried to claim huge losses to justify financially kneecapping their patients. But now we know that the majority of hospitals are actually profiting off Medicare.”

The N.C. Healthcare Association, which represents the state’s hospitals, said Folwell’s findings were the latest in “a pattern of reports that have used misinformation and half-truths and that make inaccurate conclusions.”

“This report, like others the treasurer has commissioned, fails to account for the incredible complexity of our healthcare system, including health insurance companies’ role in rising costs, and does nothing to advance affordable, high-quality healthcare in our state,” the association said in a lengthy response posted to its website.

“The reality of the current situation in North Carolina is that a majority of hospitals have negative operating margins this year and that both Medicaid and Medicare reimburse hospitals for caring for patients below the actual costs of providing that care.”

So what happens next on this issue? Nothing, probably. Folwell has proposed several bills that address his concerns about hospital billing, but the Healthcare Association has a lot of influence in the legislature, and his proposed legislation hasn’t yet made it out of committee.

Colin Campbell is editor of the North Carolina Tribune, a daily newsletter that covers the intersection of business and state politics.

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