Medical monopoly in rural Appalachia: 6 things to know about the Ballad Health merger
An unusual and controversial merger of two competing hospital systems in northeast Tennessee is raising fears among some residents, doctors and nurses about access to quality care in a large segment of Appalachia.
Ballad Health, the newly formed hospital company, now functions as the only hospital system for the majority of residents — about 1.2 million people — in a geographic area the size of New Jersey.
Earlier this year, Ballad announced its first major health care cuts to a neonatal intensive care unit and trauma center at a Kingsport, Tennessee, hospital. Since May 1, residents have staged a round-the-clock protest outside the hospital.
What is Ballad Health?
Ballad Health is the product of a merger between the nonprofit hospitals Wellmont Health Systems and Mountain States Health Alliance, both based in Johnson City, Tennessee.
The newly formed hospital system operates 21 hospitals in southwest Virginia, northeast Tennessee and parts of Kentucky and North Carolina. For most people in the region, Ballad hospitals are the only option for inpatient care.
What changes has Ballad made?
Ballad is planning to downgrade a NICU and trauma center in Kingsport, diverting the sickest and most critically injured patients elsewhere. Since the merger, Ballad has also moved some clinical services inside hospitals, allowing it to add "facility fee" charges.
Why did federal officials oppose the merger?
Officials with the Federal Trade Commission opposed the merger on the grounds that a medical monopoly — giving patients no other alternatives — can limit patient choices, cut services, raise prices and diminish quality.
The merger happened anyway. Why?
The merger was made possible only by a change in Tennessee law to bypass FTC anti-monopoly rules. The 2015 law made a "certificate of public advantage" available to hospitals wanting to merge. The COPA law requires that a hospital merger's benefits to the public must outweigh the cost of eliminating competition. It also requires ongoing state supervision.
State Sen. Rusty Crowe, R-Johnson City, sponsored the legislation making the COPA possible. Crowe served as a paid consultant to Mountain States Health Alliance when he brought the legislation. He remains a paid consultant to Ballad Health.
The law required approval from the Tennessee Department of Health and the state attorney general. Both agencies granted approval for merger to form Ballad Health in 2018.
What is a COPA?
About 20 states have laws allowing for a certificate of public advantage, but only a handful have given the green light for a COPA in the past. None have granted a COPA the size and scope of Ballad's.
A certificate of public advantage is legal mechanism for states to approve mergers that reduce or eliminate competition in return for commitments to provide a public benefit and control health care costs.
Under the terms of Ballad's COPA, the hospital system has agreed to invest $308 million in preventative public health measures, medical school education and other initiatives, and to suspend closure of any rural hospital for five years.
Who oversees the Ballad COPA?
The Ballad COPA is overseen by the Tennessee Department of Health and state attorney general. A COPA "compliance monitor" was appointed to oversee the COPA as well. A COPA Local Advisory Council also monitors the COPA.
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Reach Anita Wadhwani at awadhwani@tennessean.com; 615-259-8092 or follow her on Twitter @AnitaWadhwani
