Prognosis Profits

October 6, 2012

Statement from the N.C. Hospital Association

Statement from the N.C. Hospital Association in response to questions about healthcare costs in the state.

This story was originally published in the Observer on 10/6/12.

Consolidation in North Carolina healthcare is being driven by an evolving regulatory and market environment, one that demands higher quality and lower costs. These two goals can be achieved only through economies of scale and greater efficiency among providers. Consolidation is a nationwide phenomenon. For community hospitals and physicians the traditional model of delivering health care cannot provide the economies of scale that are needed to accommodate healthcare reform. As a result, both are joining systems to benefit from the scale, resources and expertise that systems provide while meeting patients’ healthcare needs.

The notion that consolidation is driving North Carolina healthcare costs upward in an inordinate way is not supported by the facts. North Carolina hospitals’ expenses per inpatient day are second lowest when compared with similar states including Florida, South Carolina, Texas, Tennessee and Virginia, according to the Kaiser Family Foundation website The Dartmouth Atlas of Health Care provides a similar comparison, noting North Carolina’s price-adjusted Medicare payments per enrollee are below the national average and tied for lowest among Florida, Georgia, South Carolina, Tennessee and Virginia.

A key element of healthcare reform is a more coordinated approach to care, where physicians, hospitals and other providers must collaborate closely to improve care as well as contain costs. The federal Affordable Care Act (ACA) includes numerous initiatives aimed at improving care through coordination among hospitals, physicians and other providers and improved communications through the use of electronic health records and other technological advancements. The ACA also calls for new models of care delivery such as Accountable Care Organizations (ACOs), medical homes and other arrangements that bring together hospitals, physicians and others to manage the health of the population.

A collaborative approach to care delivery has the potential to fix many of the problems inherent in our fragmented system. Collaborative care can eliminate costs resulting from duplicate tests, redundant paperwork and overlapping facilities or equipment.

North Carolina hospitals are committed to complying fully with federal and North Carolina antitrust laws, and will pursue affiliations with other hospitals or physicians only within the confines of those laws. Additional legislation is not needed, but could be harmful to advancing the goals of health care reform. We welcome the opportunity to discuss appropriate antitrust policy and the multitude of factors driving healthcare costs with the Attorney General.

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