Slugging it out: Competition between two big players in Charlotte driving access, quality
The Charlotte, N.C., market stands out from other metro areas of similar population in one important aspect. While most markets with populations approaching 2 million residents are split among four to 10 hospital systems, says George Stiles, an independent healthcare consultant who works mostly on access issues, Charlotte essentially has only two.
The larger of the big two players is Carolinas HealthCare System, the behemoth that has grown out of the former public hospital, Charlotte Memorial Hospital. Presbyterian Healthcare, now part of Novant Health, Winston-Salem, N.C., is the other big player. Between them, they basically carve up the market for themselves, says Stiles, who is based in Charlotte. Yet, their competition has been great for improving access and quality in the market, he contends.
“This is a laboratory for any conservative person who wants to talk about the benefits of competition for quality and access,” Stiles says. “Not so much for the third leg of the stool—cost—but the competition has greatly benefited the community on quality and access.”
Two investor-owned companies have a small presence on the edges of the market, Stiles says. Dallas-based Tenet Healthcare Corp. owns 332-bed Frye Regional Medical Center, Hickory, N.C., and 281-bed Piedmont Medical Center in Rock Hill, S.C. Health Management Associates, Naples, Fla., owns 103-bed Lake Norman Regional Medical Center in Mooresville, N.C.
After more than a decade of Carolinas in the ascendancy, the two big Charlotte players have a relative equilibrium, with Carolinas the larger of the two, Stiles says. Still, Presbyterian's parent system, Novant, has expanded greatly outside its original two markets all the way to Northern Virginia, Stiles says. Novant acquired Prince William Health System, Manassas, Va., in 2009, its first acquisition outside the Carolinas.
The equilibrium applies to physicians as well, Stiles says: “Physicians have come to understand that if you want to be a successful medical practitioner in the Charlotte area, you need to cast your lot with one or the other.”
On the insurance side, Blue Cross and Blue Shield of North Carolina, Chapel Hill, dominates the private market: “It's Blue Cross, and whoever is in second place doesn't too much matter,” Stiles says.
The relative position of the two big players is a reversal from their long, intertwined history, says Bill Brandon, a professor of political science at the University of North Carolina-Charlotte who studies healthcare policy. The city of Charlotte was founded by Scottish Presbyterians, and Presbyterian Hospital, opened in 1903, was a major institution of the dominant WASP elite, along with Davidson and Queens colleges, Brandon says. The same elite, out of a sense of charity, Brandon says, founded Charlotte Memorial, which admitted its first patient in 1940.
It took half a century for Charlotte Memorial to overtake Presbyterian in discharges, in the early 1990s, Brandon says. The impetus, Brandon and Stiles agree, came in 1981, when Harry Nurkin took charge of what was then the four-hospital Charlotte-Mecklenburg (County) Hospital Authority. “He was a genius, as a hospital manager and administrator,” Stiles says. In the 1970s, when Stiles first came on a visiting basis to the city, “Charlotte Memorial was worse than second rate. There were long lines of indigent people sitting and waiting forever in clinics. Nurkin turned all that around.”
What is often overlooked about Nurkin's success is the substantial support he had from his board and influential physicians, Stiles says. A leading light on the board was Hugh McColl Jr., the banker who led the rapid expansion of a regional bank into what is today Bank of America, Stiles says. Dr. Francis Robichek, a cardio-thoracic surgeon who led the Sanger Clinic for many years, was influential with his peers in building Charlotte Memorial's clinical programs under Nurkin, Stiles adds. Nurkin retired in 2002. Carolinas acquired Sanger Clinic in 2005.
Brandon also points out that Charlotte is home to Steve Puckett, who founded Hospital Partners of America and MedCath Corp. in the city. HPA filed for bankruptcy in 2008. MedCath is selling off its assets and seeking shareholder approval to dissolve the company (May 16, p. 17).