North Carolina Senate passes bill waiving UNC Health from state, federal antitrust enforcement

North Carolina lawmakers are on track to exempt UNC Health from antitrust enforcement, a contrast to the increased scrutiny from federal regulators regarding hospital consolidation.

Monday, the state’s Senate voted 48-0 on a bill that would overhaul the governance rules for the state-owned nonprofit, academic system affiliated with the University of North Carolina.

Senate Bill 743 was passed in the state’s Senate with “almost no debate,” according to local media, and has since passed its first reading in the House and been referred to commission.

According to the bill’s text, UNC Health’s board would be able to “enter into cooperative agreements with any other entity for the provision of healthcare, including the acquisition, allocation, sharing or joint operation of hospitals or any other healthcare facilities or healthcare provider, without regard to their effect on market competition."

“When partnering with community hospitals and other health systems in various regions of the State, the System is acting according to State policy by ensuring that healthcare is made available to all parts of North Carolina; its activities constitute ‘State action’ for purposes of antitrust law,” the bill reads.

UNC Health was formed under state law in 1998 and has been operating under the same unamended statute ever since. It employs about 40,000 people across 16 hospitals, 20 hospital campuses and over 900 clinics.

Sen. Ralph Hise, a Republican and one of the bill’s sponsors, said that waiving antitrust requirements by naming UNC Health as an agent of the state would allow the system to share sensitive information and partner with other financially strained provider organizations, WRAL News reported. This could allow the facilities to be rescued before they are forced to shut down, as opposed to being purchased after closure and the resulting care interruptions, he reportedly said.

Hise and fellow Republican sponsor Sen. Joyce Krawiec are among the sponsors of another proposed bill that would repeal North Carolina’s Certificate of Need laws, which unlike SB 743 was touted by proponents as a measure to increase market competition within the state.

Senate Democratic Leader Dan Blue told reporters that he had reservations regarding the antitrust exemption but still voted in favor of the bill.

“I just have some concerns because the antitrust laws over the last 20 years have basically kept some systems from getting together and basically monopolizing health care,” he told WRAL News. “Not that UNC would do that. I just want us to be cautious.”

A spokesperson for UNC Health told the news outlet it supports the bill but has “no plans to merge or buy anyone.” Fierce Healthcare has reached out to the academic system for confirmation and additional comment.

Also included in the bill is language that would adjust UNC Health’s leadership structure and allow it to move employees off state health insurance and retirement plans and onto a new benefits plan. Those employed before Nov. 1 may remain on the state benefits plans, per the bill.

The benefits adjustments have led to opposition from the State Employees Association of North Carolina and the state treasurer, who said it would substantially raise costs for agencies and remaining state employees.

North Carolina legislators’ push to remove competition protections for UNC Health is at odds with the federal lawmakers and the Biden administration’s scrutiny into hospital consolidation.

The former has focused on these deals in recent hearings as a potential driver of increased healthcare costs. The latter has, with mixed results, instructed federal agencies to intervene on deals that would either remove competitors or increase market share of a dominant health system player.