Because of some creative accounting and bad law, North Carolina hospital systems have been able to evade paying sales tax on their purchases. A bill is in the process of being passed that would reverse that situation.
The hospital systems have been able to use this tax exemption to further build their empires and pay their executives multi-million dollar earnings packages– in spite of egregiously over-charging customers.
This is facilitated by the privileged competitive circumstances they enjoy in our state.
Using a standard Herfindahl–Hirschman Index for assessing market concentration, a team of Yale University researchers recently ranked North Carolina second only to West Virginia in the Southeast in hospital concentration, and the 12th-most concentrated state in the country.
This is actually worse than it appears, because nearly all the higher-ranked states are small or sparsely populated — conditions that tend to reduce the number of potential competitors. Among America’s most-populous states, North Carolina sticks out like a sore thumb. The share of our hospitals located in monopoly or near-monopoly markets is 71.2%. It is 61.7% in Georgia, 50% in Pennsylvania, 47.4% in Michigan, and below 40% in New York, Texas, Florida, Illinois, Ohio, and California.
Even in states that continue the archaic process of requiring hospitals to get state permission to enter new markets, North Carolina is another outlier. As of 2023, it subjected 25 medical services to such certificate-of-need regulation. New York and Georgia regulated 22, Michigan 19, Illinois 15, Florida six, and Ohio only one. Such constraints on competition are no more in Texas, California, and Pennsylvania.
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