Population growth is fueling competition from hospitals in the North Carolina Triangle area

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In a brand new mall near Green Level West Road in Apex, Kelly Chtcheprov pulls out a bottle of sparkling wine from the fridge. There’s that familiar rattling of bottles gently bumping into each other before Shcheprov unwraps the cork and releases it.

Jason de Bruyn

Kelly Chtcheprov pulls a draft beer at Bottle Theory, the store she recently opened with her husband, Pavel, in Apex, one of the fastest growing areas of the state.

“It’s a bottle of our house Cava. It’s a sparkling wine from Spain and a rosé, and it’s one of our bestsellers,” Chtcheprov said. “Everyone loves bubbles; everyone loves to party. “

Chtcheprov and her husband, Pavel Chtcheprov, opened this bottle store, Bottle Theory, just a few months ago. It’s in one of the fastest growing areas of southwestern Wake County, which is already one of the fastest growing areas of the state. Kelly Shcheprov says they love the area, but felt that something was still missing.

“Even though there is so much growth, there wasn’t this watering hole, this neighborhood pub where people congregate,” she said. “And we kept saying, ‘Oh, I wish someone would open a bottle store.’ And then during the pandemic, we looked at each other and said, ‘We should just open our own bottle store!’ ‘

But there was something else that made this specific place rise above the rest. Less than a mile away, Duke Health is building a new medical campus that will include a 40-bed hospital.

“If a hospital comes here, then the growth that we are seeing and the strengthening of the community that is there is here to stay,” said Kelly Shcheprov. “And that will continue for the … years to come.”

It’s not just bottle stores that have an eye on the new medical complex. Just across from the bottle store is a new neighborhood with custom homes that start in the $ 800,000 range. Chief Sales Officer Lisa Catalano called Duke Health a “great selling point” for homebuyers.

Of course, it is also beneficial for hospitals to be in areas with high growth and high net worth for households.

“It’s really just population growth, that’s what it boils down to,” said Roy Tempke, COO of UNC Rex Holly Springs, another new hospital in Southwest County. Wake, explaining the reasons the healthcare system chose this location.

Hospitals have a duty not to refuse treatment to anyone, regardless of their ability to pay. And Tempke pointed out aspects of Holly Springs Hospital, like a pantry, that help it meet the needs of an underserved community. But health systems must also generate income, and patients with good health insurance plans constitute the bulk of that income.

“All hospitals, like any business, need to have enough activities to help us cover our overhead costs so that we can pay the bills like anyone else,” Tempke said. “I would be remiss to say that is not part of the consideration. It would not be true.”

UNC Rex Holly Springs

Courtesy of UNC Rex

A medical helicopter lands at UNC Rex Holly Springs.

This is part of the reason hospitals compete so fiercely. North Carolina has strict health service regulations, and hospitals must receive approval before building. Competing hospitals almost always try to intervene. For example, UNC Health, the parent organization of UNC Rex, objected to Duke Green Level Hospital calling it “an unreasonable attempt to gain massive market share from other suppliers.”

This type of written comment is common when competing hospitals are looking to expand, and Duke Health has filed many negative comments on the claims supported by UNC Health. For a new, recently state-approved UNC Health hospital, Duke blasted UNC’s request, calling its projections “very specious”, its assumptions and methodology “flawed” and its assumptions “unfounded”.

As individual hospital systems develop, health services are increasingly consolidated in large metropolitan areas. In addition to the UNC Rex Hospital in Holly Springs and the Duke Health Campus in Cary, UNC recently obtained approval for a new hospital in County Durham. But that will put that 40-bed hospital in Research Triangle Park, about as close to Raleigh as possible, while still being geographically within the Durham / Caswell service region.

Hospitals enjoy tax breaks and shirk the responsibility for charitable care

As hospitals compete with each other, they reap tax breaks to provide charitable care and other community benefits. But a new report from the NC treasurer’s office reveals state hospitals are failing to keep their end of the bargain.

Collectively, North Carolina’s largest hospital systems have benefited from federal, state and local tax exemptions valued at more than $ 1.8 billion in 2020, according to the report, which was produced in collaboration with the Johns Hopkins Bloomberg School of Public Health. However, charitable care at these hospitals totaled only about $ 1 billion, or less than 60% of the value of those tax exemptions.

The NC treasurer’s office oversees the state health plan, the health insurance plan that covers over 720,000 state employees and their dependents. Treasurer Dale Folwell oversees the plan and has supported for years the plan overpaying medical providers, especially hospitals. In releasing the report on charitable care, he again criticized health systems.

“Charitable care is at the heart of what it means to be a nonprofit hospital,” Folwell said in a statement. “Our hospital systems justify overcharging government employees and taxpayers by pointing the finger at their charitable care costs. But now we know that’s not quite right. They profit at the expense of sick patients. . “

Charitable Care Treasurer Report.jpg

Johns Hopkins University

Johns Hopkins analysis of charitable care figures prepared for the North Carolina Treasurer’s Office suggests North Carolina’s largest nonprofit hospital systems have reaped tax breaks estimated to be worth more than $ 1 , $ 8 billion in 2019-2020. In the majority of these systems, charitable care spending did not exceed 60% of the value of their tax breaks. Fewer than 25 hospitals have exceeded the value of their tax exemption with the amount of their charitable spending in North Carolina.

Some health hospitals, especially smaller ones, suffered a financial blow during the pandemic. But many large systems well performed financially. In fiscal 2020, Duke University Health System reported $ 125 million in operating income. That same year, the hospitals of the University of North Carolina reported $ 91 million in operating revenue, according to audited financial reports.

The fiscal years of these organizations run from July to June. For the fiscal year ended June 30, 2021, DUHS reported operating income of $ 121 million and UNC hospitals reported operating income of $ 257 million.

In addition, the non-operating result has been particularly strong over the past year. DUHS reported non-operating revenue of $ 1.6 billion and UNC hospitals reported non-operating revenue of $ 373 million. Much of this income comes from investments in the stock market and elsewhere, so it is not necessarily cash available to organizations. If organizations keep these investments, their value could be affected if the markets go down.

Competition leaves rural counties with fewer health care options

The urban-rural divide that cuts across North Carolina is hitting healthcare particularly hard. Consider that there is a rate of 80 physicians per 10,000 people in County Durham, but only 3 per 10,000 in County Caswell, according to the data from the Sheps Center for Health Services Research. Brandy Bynum Dawson, senior director of policy and advocacy at the North Carolina Rural Center, said these disparities exist across rural counties in the state.

“We certainly see that there are huge gaps when it comes to medical providers, and there is a huge shortage in the state, and it has been for a very long time,” she said.

Yet rural areas have not been completely neglected, according to rural center president Patrick Woodie.

“There isn’t a lot of new hospital construction going on in rural communities. But there has been, I would say, quite a bit of investment in rural health care infrastructure, ”he said.

Shortage of health workers

Shepherds Center

North Carolina faces a health workforce shortage in all areas, but particularly in rural areas.

This infrastructure takes the form of partnerships. Large systems, including Duke and UNC, formed various types of partnerships with dozens of rural health systems that were in danger of shutting down altogether. But it is always the economy which dictates the decisions of the management of the hospital. Rural areas have a higher percentage of people who fall into what is called the coverage gap. They don’t earn enough money to afford private insurance, but because Medicaid hasn’t been extended, they’re not poor enough to qualify for the government-run program. Woodie said there are different ways to help, but one particular policy change stands out.

“There is no single public policy decision that could be made that would cover more people than a scaled-up version of Medicaid would,” he said.

It has been a political non-starter for many rural lawmakers, many of whom are Republicans. But Woodie said the rural center was working to find a compromise on this issue that would benefit millions of people, many in rural communities.


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