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As health care systems get bigger, can a mid-size regional hospital system like Novant survive? Why hospitals are growing — and what it means for patients
Novant Health has been buying hospitals and expanding, part of a trend toward health care consolidation. Rival Atrium Health combined with Advocate Aurora in 2022. Executives say mergers help cut costs, but studies tend to show meager advantages for patients.
By Michelle Crouch
Co-published with N.C. Health News
When it comes to growth, it seems like hospitals can’t get enough of it.
Across the country, a tidal wave of hospital mergers and acquisitions in recent years has created multi-billion-dollar hospital giants that serve large swaths of the population. For example, just in North Carolina:
Atrium Health’s massive combination with Advocate Aurora in 2022 formed the country’s third-largest public health care system. The system’s $28B footprint now stretches south to Georgia and across the country to Illinois and Wisconsin.
HCA Healthcare’s controversial 2019 purchase of Mission Health in Asheville brought the nation’s largest for-profit hospital system into the state. With $65B in revenue and 186 hospitals in 20 states and the United Kingdom, HCA is a health care juggernaut.
Novant Health is smaller, but it, too, is focused on expansion: In the past year, it opened a new hospital in Ballantyne, purchased a hospital in Pender County, N.C., and three coastal South Carolina hospitals and inked a $320M deal to acquire two Lake Norman area hospitals.
In all, U.S. health systems announced more than 428 deals between 2018 and 2023. Some experts estimate that as much as 80% of the nation’s hospital markets are “highly consolidated.”
Even so, experts say more consolidation is on the way, as hospitals continue to look for ways to cut costs and boost revenue.
What does that mean for patients? Despite hospital promises about benefits, most research shows mergers and acquisitions drive up prices and do little to improve the quality of care.
It's also unclear in an era of mega-systems where that leaves Novant, Charlotte’s No. 2 hospital system with $8.3B in revenues.
The debt Novant took on to buy the South Carolina hospitals for $2.4B prompted two credit rating agencies to downgrade some of its bonds. And the Federal Trade Commission filed an antitrust suit earlier this year to block its purchase of the Lake Norman hospitals.
Why are hospitals supersizing?
Hospitals view growth as their best bet to cope with rapidly rising health care costs, lower payments from insurers and patients who increasingly demand the latest and most expensive health care technologies, industry experts said.
The larger a hospital’s footprint, the more bargaining power it has when it negotiates prices with health insurance companies, said Mark Hall, a professor of law and public health at Wake Forest University.
Hospitals also cite economies of scale and operational efficiencies they say will enhance patient care, Hall said.
Ken Haynes, Advocate Health’s southeast region president, told the Atrium board in December that the combined system achieved more than $180M in savings from the combination in 2023 — more than triple what it had hoped to save. Haynes said the system aimed to achieve another $363M in savings in 2024 by consolidating workstreams, leveraging contract savings and improving labor efficiency.
“We know that by coming together, we are stronger and better able to weather the storms that the entire health care sector is facing,” Haynes said.
A merger can also be what saves a small, rural hospital from closing, said Steve Lawler, CEO of the North Carolina Healthcare Association, which represents hospitals.
“There’s this idea that when there is all this consolidation, that there is some king or empire-maker in the back room, when (hospitals) are just really trying to figure out how to deliver better service and better care, and how to be relevant long-term,” Lawler said.
A study by Kaufman Hall, a health care consulting firm, found that health care mergers and acquisitions increased significantly in 2023, and more than a third of transactions cited financial distress as a driver for the deal.
The health care industry isn’t the first to go through a wave of massive consolidation.
Long-time Charlotte residents no doubt remember the flood of mergers and acquisitions in the financial services industry in the 1980s and 1990s, when Charlotte-based NationsBank was on a buying spree and later merged to become global giant Bank of America. There was another series of mergers during the financial crisis of 2008, when Wachovia was swallowed by Wells Fargo. The airline, tech and telecom industries went through similar consolidations.
“With any capital-intensive business, the more you consolidate, the more you improve your operating margin,” said Matthew Hanis, a Charlotte-based consultant and expert in the business of health care.
Studies: As hospitals grow, prices rise
Growth may help hospitals save money, but it’s far from clear that patients benefit from those cost savings.
A substantial body of research has found that hospital mergers lead to higher prices for patients, with increases ranging from 6% to 30% in concentrated markets. Even mergers between hospitals not close to each other have been shown to raise prices.
Studies examining whether mergers and hospital consolidation hurt patient care have had mixed results. A comprehensive look at the issue, published in The New England Journal of Medicine, found that mergers were “associated with modestly worse patient experiences” but did not increase death or readmission rates.
However, news headlines following two controversial purchases in North Carolina have not been positive:
In Wilmington, not long after Novant Health took over New Hanover Medical Center, patient complaints prompted a state inspection that found dire nursing shortages and emergency room wait times that resulted in an unsafe environment for ER patients, according to WECT.com. (Novant said it has hired nurses and made other changes to rectify the problems.)
And in Asheville, after HCA Healthcare purchased Mission Health, physicians and nurses accused the for-profit health system of delays and lapses in care that harmed patients and resulted in patient deaths, according to Asheville Watchdog. In February, federal authorities placed Mission in immediate jeopardy, the most severe sanction a hospital can face. (HCA said it is addressing concerns.)
Where does that leave Novant?
As hospital consolidation continues, Hanis said, smaller hospitals are either going to be swept up by a larger system — or have to find a way to grow larger themselves.
“If you’re $5B (in revenues) or under, you’re either already merged, something is keeping you safe or nobody wants you,” Hanis said.
Novant’s $8.3B in revenues should help keep it from being a target, Hanis said.
Strong leadership, high profits and geographic isolation from competitors can also help protect a hospital or health care system from acquisition, he said.
Lawler, of the North Carolina Health Care Association, dismissed the idea that Novant executives are worried about getting acquiredbutsaid they may be talking to other health care systems about how to work together.He praised Novant’s strategy of targeting medical centers and physician practices in Carolina coastal areas for acquisition.
Hanis said he wouldn’t be surprised if Novant was eyeing another mid-size system for a merger, such as ECU Health in eastern North Carolina or Prisma Health, a $6B system based in Greenville, S.C.
Novant did not directly respond to questions about its expansion plans, but it sent a statement that said, in part, that it is “always open to new opportunities, including mergers and acquisitions.” It went on to say:
We recognize there will always be a need for new clinic and hospital locations, but our approach to creating a healthier future blends in-person and virtual care with novel partnerships to extend our expertise beyond the walls of our facilities. Everything we do at Novant Health starts with the patient and is built around community health needs.
More pushback on hospital monopolies?
Recently, the Federal Trade Commission has taken a more active role against health care mergers and the harms they can cause, said Barak Richman, a professor of law and business administration at Duke University.
One of its first tests: The antitrust suit against Novant’s $320M acquisition of Lake Norman Regional Medical Center in Mooresville and Davis Regional Medical Center in Statesville.
In its complaint, the FTC said the deal would grant Novant control of nearly 65% of the market in the eastern Lake Norman area, likely leading to “millions of dollars in increased healthcare costs” and reducing investments in improving quality of care.
Novant responded with a 37-page filing saying the FTC’s case is “premised on a distorted and artificially narrow view of healthcare competition in the Charlotte area.” Most notably, Novant said, the FTC’s analysis excluded a planned Atrium hospital in Cornelius (Atrium Health Lake Norman) that will compete with the Novant facilities when it opens in 2025.
“Novant Health's purchase of these hospitals will ultimately benefit quality of care, long-term outcomes and competition,” a spokesperson for NovanttoldBecker’s Hospital Review. “Our commitment to purchase is, fundamentally, a commitment to restore services lost over time and to provide new, leading-edge technology that will enhance the clinical capabilities available to the greater Charlotte community.”
Richman said “it’s not a slam dunk case” for the FTC, but he’s heartened that the agency seems to be taking a more aggressive approach.
“The policy community has been working for a long time to convince policymakers this is a problem,” he said, “and I think we are finally succeeding.”
Michelle Crouch covers health care. Reach her at mcrouch@northcarolinahealthnews.org.
This article is part of a partnership between The Ledger and North Carolina Health News to produce original health care reporting focused on the Charlotte area. We make these articles available free to all. For more information, or to support this effort with a tax-free gift, click here.
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Today’s supporting sponsor is Landon A. Dunn, attorney-at-law in Matthews:
👗 New at the prom this year: Corsages are out; small bouquets and patterned prom dresses are in
Charlotte-area high schools are in the midst of prom season, and with a new year comes new trends as teens prepare for the big night.
Halter top dresses are in style this year, according to Sophie Matz, marketing and advertising manager for Poffie Girls, a high-end bridal and formal dress shop in Gastonia. Printed fabrics, particularly florals, and ruffles have also been a popular choice. And for the color, Matz said black, gold and champagne seem to be what girls are gravitating toward.
Poffie Girls has some “out of the box dresses” on the racks this year, Matz said, including holographic, reflective dresses from designer Ellie Wilde called “supernova.” The fabric changes color with light, like a camera flash.
Other metallic-fabric dresses, like ones from designer Sherri Hill, have been popular. Matz said her customers spend between $300 and $800 on prom dresses.
For the flowers: Corsages are taking a backseat this year, says Midwood Flower Shop designer Alisha Elliott. The shop, located on Central Avenue, has received an influx of requests for nosegay bouquets, which are small, hand-held bouquets typical for bridesmaids in weddings.
Elliott said she thinks small bouquets might be more popular this year because they are easy to hold and don’t hide any bracelets girls may wear. She also said girls seem to prefer how the bouquets look in photographs compared to typical wrist corsages.
The nosegay bouquets can range anywhere in price from $50 to $100 depending on the type of flowers that are used and the size of the bouquet, Elliott said. —LB
✈️ You Ask, We Answer: Why was a late-arriving international flight diverted from CLT to Miami?
Welcome to the latest installment of “You Ask, We Answer,” The Ledger’s attempt to help satisfy your questions about all things Charlotte. Typically, people write in about development mysteries, but today’s question is about the airport — namely, what happens when international flights arrive late at Charlotte Douglas?
Reader Tonya Miller reached out recently about her March 16 flight to Charlotte from Liberia, Costa Rica, which was originally due to touch down in Charlotte at 6:56 p.m. But a delay moved the expected arrival to 8:58 p.m. As a result, American decided to reroute the flight to Miami, where passengers cleared customs before being flown to Charlotte,landing in the earlyhours of March 17.
Here’s an excerpt of Miller’s questions to The Ledger:
How does an “international” airport such as Charlotte have immigration that closes at 9 p.m.? On a return trip from Costa Rica for spring break, our direct flight to CLT had to be re-routed to Miami — in which we had to deplane, go through immigration and customs and then get back on the plane to Charlotte. While our original “direct” flight was supposed to land us in Charlotte around 9 p.m., we were not able to return directly because immigration closes at 9 p.m. We ultimately did not reach Charlotte until after 1 a.m. …
So what’s the deal? … There were so many people on our flight who missed their connections in Charlotte and arrived [at] the airport after 1 a.m. and were left with limited options. I was heartbroken for all those people we’d seen attempting to sleep on the floors at the airport.
We took Miller’s case to American Airlines spokeswoman Bri Harper, who said the reason for the Miami diversion was about more than just immigration agents. Harper said the aircraft landed in Miami because if it had flown to Charlotte, the crew would have timed out, flying beyond the hours permitted by the Federal Aviation Administration.
We also spoke with Rob Brisley, the Atlanta-based spokesman for U.S. Customs and Border Patrol, who said customs and border patrol agents process international flights “in accordance with carrier requests and scheduled arrivals.”
He said that on March 16, the day of Tonya Miller’s flight, customs and border patrol processed five international arrivals after 9 p.m.
“Often, a flight diversion is airline-driven,” Brisley said. “We work closely with the airlines when it comes to their scheduling or possible diversion of a flight to still process and accommodate those international passengers.”
Normally,Charlotte’s immigration and border patrol staff operates daily from 1 p.m. to 9 p.m., in line with airlines’ scheduled international arrivals, Brisley said.
Miller’s case raises the question: What happens when an airplane is diverted outside of regular hours? Do passengers have to sit on the aircraft until immigration opens?
Brisley said that Customs and Border Patrol “does not make the determination on whether passengers clear at the airport which the flight diverts to, or if the passengers remain in place to proceed onward to their original destination. The decision is situationally driven and usually determined by the airlines.”—Ted Reed
➡️ Do you have a question we can help answer? Send us an email.
You might be interested in these Charlotte events: Country music performance for charity; TreeFest
Events submitted by readers to The Ledger’s events board:
THURSDAY: An Evening of Stories, Songs, and Celebration!, 6-10 p.m., The Union, Charlotte. Award-winning country music performers Rivers Rutherford and Brett James will perform their hit songs and tell the stories that inspired the lyrics, in an event by the Physicians’ Impact Fund and the Mecklenburg County Medical Society. Southern BBQ and alcoholic/non-alcoholic beverages included with ticket purchase. All proceeds from this event will benefit Hopeway. $300.
SATURDAY: Second Annual TreeFest, hosted by TreesCharlotte, 2-5 p.m., Olde Mecklenburg Brewery. Join TreesCharlotte for the Second Annual TreeFest, a family fun day of celebrating our city's tree canopy, sustainability, & community. The day features live music, tree seedling giveaways, arts & crafts, raffles, & food trucks. Free.
◼️ Check out the full Ledger events board.
➡️ List your event on the Ledger events board.
In brief:
Cheslie Kryst’s mother-daughter memoir: A new memoir comes out Tuesday by the late Charlotte-area native Cheslie Kryst, the former Miss USA, lawyer and TV correspondent who died by suicide in Manhattan in January 2022. Before her death, Kryst left a note for her mom, April Simpkins, asking her to finish the book, and the result is a cowritten memoir that shows Kryst’s heartbreaking feelings that she didn’t belong and that she wasn’t enough. Proceeds from the book will go to Cheslie Kryst Foundation, which supports mental health programs for youth and young adults. (People)
In memoriam: Roman Gabriel, the former N.C. State quarterback who later played for the Los Angeles Rams and was the league’s MVP in 1969, died Saturday at age 83. He was also a former radio broadcaster for Carolina Panthers games in its first few seasons in the 1990s. (CBS Sports)
Historic church: The Charlotte City Council is expected to vote tonight on designating the Parkwood Avenue Associate Reformed Presbyterian Church in Villa Heights as a historic landmark. It opened in 1929 and “remains the most architecturally significant church building in the Villa Heights neighborhood,” according to a summary by the Charlotte-Mecklenburg Historic Landmarks Commission.
Legislature returns: North Carolina’s 2024 legislative session starts Wednesday, and lawmakers will have an estimated $1B budget surplus. In addition to adjusting the state budget, lawmakers could take up issues including immigration, childcare, education and rules on homeowners associations. (WRAL)
Cotham named committee chair: House Speaker Tim Moore named Mecklenburg Republican Rep. Tricia Cotham as chair of the House Education Appropriations Committee. Moore called Cotham’s appointment a “testament to her dedication, expertise and unwavering commitment to enhancing education.” Cotham, who infuriated Democrats by switching parties last year, faces Democrat Nicole Sidman in November.
BofA criticized: A group of 15 officials representing 13 states is accusing Bank of America of closing accounts of conservatives and Christian groups. Kentucky’s state auditor said the bank is taking advantage of the “divided political climate to engage in politicized de-banking.” The bank denied the claims, with a spokesman saying it’s “absurd to think religious beliefs are a factor in any account closing decision.” (Fox News)
Abortion influx ahead? Florida’s six-week abortion ban that takes effect May 1 could result in additional women seeking abortions in North Carolina, because it will be the closest state to get an abortion after six weeks. (Axios Charlotte)
Stadium expansion: The UNC Board of Governors approved a $60M expansion of UNC Charlotte’s football stadium, with construction expected to start after the 2024 season. (Axios Charlotte)
Taking stock
Unless you are a day trader, checking your stocks daily is unhealthy. So how about weekly? How local stocks of note fared last week (through Friday’s close), and year to date:
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Executive editor:Tony Mecia;Managing editor:Cristina Bolling;Staff writer: Lindsey Banks; Business manager: Brie Chrisman, BC Creative
