County not obligated to pay $17.8M hospital charity care

A North Carolina county is off the hook for paying for charity care provided by Carolinas HealthCare System in a small win for the county. The court ruling Wednesday, which dismissed part of the health system's lawsuit, leaves a $40 million-per-year contract hanging in the balance, Charlotte Business Journal reported.

Carolinas HealthCare, which filed a lawsuit last July, requested that Mecklenburg County pay $17.8 million annually in indigent care subsidies under a 2000 agreement between the two, Charlotte Observer reported. But the superior court judge ruled that Carolinas doesn't have the right to sue and that the county could end indigent care subsidies at its discretion.

The county eliminated the indigent care funding this year, according to Charlotte Business Journal. The judge did rule the contract between the county and Carolinas HealthCare was valid, but the only way to resolve the breach-of-contract claim is to terminate it.

"We have always taken great pride in our role as a safety net provider," hospital system CEO Michael Tarwater said in the Charlotte Observer article, who noted that he was disappointed with the verdict. Since the 1940s, "we have played a crucial role in the ensuring that all of our neighbors have access to needed healthcare services."

Carolinas HealthCare must decide whether it wants to continue its county contract or terminate it within 30 days.

Charity care provided by hospitals has been particularly volatile, especially as providers struggle with reduced reimbursements. For example, Illinois hospitals are battling for tax-exemptions for their institutions. In New Jersey, lawmakers are considering more equitable sharing of funding for hospitals that provide charity care.

Hospitals on average dedicate 11.3 percent of their total spending toward community benefits, including free care, community health improvement programs and subsidized services, according to an American Hospital Association report this month.

For more information:
- read Charlotte Observer article
- read the Charlotte Business Journal article

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