Senate candidate wrongly says NC hospitals are 'most endangered'

For years now, Democrats in North Carolina have called on the legislature’s Republican majority to expand Medicaid. 

Not only would expansion provide healthcare access to more North Carolinians, Democrats say it would also help bail out hospitals in rural parts of the state that are struggling to make ends meet.

State Sen. Jeff Jackson brought up ailing hospitals during a forum for Democratic U.S. Senate candidates in Greensboro on Oct. 11. Jackson is one of several Democrats hoping to secure the party’s nomination and win Richard Burr’s Senate seat in 2022, when Burr plans to retire.

At the Indivisible NC forum, a moderator asked the candidates what they would do to reduce patient costs associated with going to the emergency department. Erica Smith and Richard Watkins talked about increasing access to preventative healthcare through Medicare For All. 

Jackson emphasized the need to help rural hospitals. And he suggested the situation is more dire in North Carolina than most other states in the country.

"The five most-endangered hospitals in the country are all in our state," he told the crowd after the 22-minute mark of this video.

Is it true that the five most financially vulnerable hospitals are all in North Carolina?

Jackson has a point that some of North Carolina’s rural hospitals, specifically, are struggling. In fact, experts say some are financially vulnerable — and are among the most struggling in the nation. But Jackson gave a misleading impression when he suggested they alone are at the top of a list of "the most endangered," or that North Carolina’s situation is worse than other states.

Jackson’s campaign said he was referring to a 2020 report by The Chartis Group, a firm that studies healthcare and has analyzed available hospital data. The group developed a statistical model that identifies "key indicators most likely to impact a hospital’s ability to sustain operations during the critical tipping point window."

Of the 216 hospitals Chartis considered to be the "most vulnerable," six are located in North Carolina.

Jackson "meant to say that six of the most endangered hospitals in the country are in North Carolina," campaign spokesman Dylan Arant told PolitiFact NC.

Several other states have more hospitals in the "most vulnerable" category than North Carolina, including: Texas (41), Oklahoma (17), Tennessee (15), Mississippi (14) Georgia (13), Alabama (12), Kansas (12), and Missouri (11). While researchers specifically mention those states and others for having the worst situations, they don’t single-out the Tar Heel state in their report. North Carolina is only listed among the group’s charts.

A newer 2021 report from Chartis shows North Carolina with 15 vulnerable hospitals. It again identified about 10 other states — Texas, Alabama, Georgia, Kansas, Kentucky, Montana, Mississippi, Oklahoma, Tennessee and Texas — with a higher number of vulnerable hospitals than North Carolina.

Other states also had higher percentages of vulnerable rural hospitals, as well as rural hospitals with worse financial operating margins.

Billy Balfour, spokesman for The Chartis Group, said that while its Center for Rural Health analyzes the financial health of rural hospitals, "we don’t rank hospitals based on vulnerability nor do we disclose the names of hospitals identified as vulnerable."

We were curious whether any group of experts tracks the financial health of hospitals and ranks them by how "endangered" they might be.

Representatives for the American Hospital Association, North Carolina Healthcare Association and the National Rural Health Association all said no. Neither does the Kaiser Family Foundation, a nonprofit known for its research on healthcare.

The University of North Carolina’s Cecil Sheps Center for Health Services Research is another one of the most reputable health research groups in the country. The Sheps Center keeps track of financially-distressed hospitals across the country. But it does not rank hospitals by how "endangered" they are, either, said Mark Holmes, the center’s director. 

Rural hospitals, particularly in the South, are in more financial trouble than hospitals near urban areas, experts say. And some argue that expanding Medicaid can help.

Before the passage of the Affordable Care Act, a mix of state and federal funding from the Medicaid program provided health coverage for low-income families with dependent children, pregnant women, and people with disabilities. Additional funding under ACA, also known as Obamacare, allowed states to expand their Medicaid coverage to a wider range of people, including low-income adults without children. 

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North Carolina is one of 12 states that so far has not accepted the additional funding to expand coverage.

Hospitals in states that haven’t expanded Medicaid (such as North Carolina) now have higher rates of unrecoverable debt and charity care, according to a 2019 American Hospital Association report. The association found that 80% of rural hospital closures since 2014 have occurred in non-expansion states.

"The pandemic has exacerbated financial challenges for many hospitals, especially for rural hospitals," Cynthia Charles, a vice president for North Carolina’s Healthcare Association, told PolitiFact NC.

"Some of them are having to make some difficult financial decisions," she said. "It would help struggling hospitals if the state would expand Medicaid, something being discussed as part of the state budget process."

North Carolina is home to a few hospitals suffering financial distress. In the Sheps Center’s most recent 2019 report on financially-distressed rural hospitals, researchers found that Alabama, Georgia, Texas and Oklahoma each had 16 or more hospitals facing a "high risk" of financial distress. 

North Carolina has nine rural hospitals at a "mid-to-high" risk for financial distress and four at a "high-level" risk for financial distress. North Carolina’s total of four hospitals at high-risk was tied for the lowest number among all southern states.

"It is pretty difficult to systematically examine hospitals for their finances," said Holmes, the Sheps Center’s director. "One can use ‘cost reports’ required for all hospitals accepting Medicare, but this is no substitute for knowing the details of the hospital." 

"Although we track these using (the financial distress index), it’s a model and models are not crystal balls and it would be dangerous to use them that way," Holmes said. 

Jackson said: "The five most-endangered hospitals in the country are all in our state."

North Carolina does have financially vulnerable hospitals. A 2020 report from The Chartis Group found six North Carolina hospitals to be among 216 of the nation’s "most vulnerable." A Sheps Center also found financially-vulnerable hospitals in North Carolina.

But there is no ranking among these hospitals. And, based on available data, it’s inaccurate for Jackson to suggest that the situation is more dire for rural hospitals in North Carolina than it is for those in other states.

Jackson’s spokesman acknowledged that Jackson misspoke. What Jackson did say has an element of truth, but certainly leaves out critical facts that would give a different impression.

We rate this claim Mostly False.