North Carolina treasurer joins FTC's opposition to Novant Health's $320M hospital deal

The Federal Trade Commission's push to nix Novant Health's $320 million purchase of two Community Health Systems hospitals has the official backing of North Carolina Treasurer Dale Folwell.

In an amicus brief filed Monday, Folwell outlined his role as a fiduciary of the North Carolina State Health Plan for Teachers and State Employees, and therefore one of the state's largest healthcare purchasers.

The Republican noted that the deal would eliminate a primary competitor and allow Novant to demand higher reimbursement from payers. In this case, this would force taxpayers and state employees "to subsidize the resulting monopolist's profits," he wrote. 

Novant's nonprofit status is no shield from the proposed acquisition's market effects, he continued, as the state's nonprofits have posted "extraordinary profits," been willing to sue patients for payments and "generally fail to provide sufficient charity care to justify their tax-exempt status."

North Carolina's Certificate of Need law also limits the threat of significant competitors entering the market and challenging Novant for several years, he wrote. Here, the treasurer pointed to the six years it took Atrium Health to receive the signoff for a 30-bed hospital it will be opening nearby in 2025.

"The harm from this proposed acquisition is very real to the Plan and the people of North Carolina," Folwell wrote in the filing. "Therefore, the Treasurer respectfully requests that the Court pause the transaction until the FTC completes its administrative proceeding."

Folwell has previously positioned himself as an opponent of Novant Health's deal, citing North Carolina's already high healthcare costs and spending. He's also called for the state to repeal its Certificate of Need law to introduce more competition. 

Novant Health and Community Health Systems unveiled their deal for the 123-bed Lake Norman Regional Medical Center and 146-bed Davis Regional Medical Center over a year ago. FTC announced its opposition in January and filed for a preliminary injunction in late March. 

The FTC has described Novant in releases and filings as one of North Carolina and the southeast’s largest hospital systems, as well as one of its most expensive. Novant Health reported nearly $7.6 billion in total operating revenues and other support in 2022 and, as of early January, projected about $8 billion in revenue for 2023. It has 16 medical centers, over 700 medical group clinics and records 6.7 million annual patient encounters.

In filings, Novant Health and Community Health Systems defended their plans to "revitalize two struggling hospitals" by arguing that the FTC's stance is "premised on a distorted and artificially narrow view of healthcare competition in the Charlotte area."

The FTC, they wrote, is also incorrectly dismissing Atrium Health's role as the "dominant hospital system in the Charlotte area" and is poised to become "an even more significant competitor" in the coming year when it opens the 30-bed hospital "directly between the two hospitals on which the FTC myopically focuses." 

While the FTC has Folwell on its side, letters in support of the deal have also been filed by a longtime advisory board member for Lake Norman Regional Medical Center and the president of an Iredell County, North Carolina community college, the latter of whom said the deal would allow better opportunities for its health sciences students.