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Dec 12, 2022

North Carolina Nonprofit Hospitals and Community Benefits


On May 11, 2022, Charlotte-based Atrium Health and Advocate Aurora Health, headquartered in Milwaukee, announced plans to merge their health systems. On Dec. 2, 2022, they announced the merger had been successfully completed after a brief delay in September by the Illinois Health Facilities and Services Review Board. The resulting system, now known as Advocate Health, will have 67 hospitals and employ approximately 150,000 individuals, including 40,000 nurses and 7,500 physicians. Revenue of the combined system is estimated to exceed $27 billion. This merger creates a health system that provides care in six states: Illinois, Wisconsin, North Carolina, South Carolina, Georgia and Alabama. Based on the number of hospitals alone, the new Advocate Health will be the eighth-largest health system in the United States.

As major health systems continue to merge, one of the main questions for commentators and researchers concerns the somewhat vague idea of community benefit. The Atrium Health–Advocate merger is set to provide approximately $5 billion in annual community benefit, targeted to aid vulnerable communities and individuals. Community benefit can be understood as any action, investment or program provided by a tax-exempt hospital or health system that promotes the health and wellness of the community they serve. In addition to community benefit, Advocate Health described a $2 billion pledge to disrupt the root causes of health inequities across the rural and urban communities it serves.

It is hard to argue that this type of investment would not be a major boon to North Carolina communities; however, the challenges arise in how community benefit is defined and measured. On Oct. 25, 2022, the North Carolina state treasurer’s office and the State Health Plan released a report highlighting major discrepancies in how nonprofit hospitals are reporting community benefit. The report contended that Atrium reported a $640 million loss to Medicare in 2019 when, in actuality, it claimed $82 million in profits from Medicare and $37.2 million in profits from Medicare Advantage.
These discrepancies are hard to ignore. To help ensure that all stakeholders are aligned, it is important that the healthcare community and policymakers develop a better shared definition of community benefit; agree upon robust reporting standards, including how examples of community benefits are reported by NC health systems; and make clear what changes might be in store.

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