Tennessee's attorney general says the state needs to pay attention to concerns of East Tennesseans about Ballad Health, a state-approved hospital monopoly.
"I think there has to be a lot of thought given to where things are moving," Attorney General Jonathan Skrmetti said in a recent interview. "Obviously, people in upper East Tennessee are not happy with the current situation.
"There's a reason Ballad's there. There was an effort to make things work and provide better health care, and we need to be constantly looking at the arrangement to make sure that it's providing better health care."
Skrmetti's office, along with the Department of Health, oversees an agreement called the Certificate of Public Advantage, which allows Ballad to operate hospitals in northeastern Tennessee without the fear of competition in exchange for the company meeting various charitable obligations and quality of health care requirements.
He declined to say whether he thought Ballad was meeting its obligation or if he would take any action to force Ballad to meet requirements that an investigation by KFF Health News revealed the hospital isn't meeting.
"But," Skrmetti said, "I would certainly encourage everybody to listen to the people up there who have concerns and look at ways that we might all work to get better health care. ... We need to make sure that the arrangement is working."
Ballad Health CEO Alan Levine defended operations in a recent interview with KFF news, saying hospitals were going to close without Ballad and the merger agreement.
Yet the company reportedly failed to meet numerous requirements under the certificate.
Tennessee Department of Health documents show Ballad fell short of charity care obligations by $148 million over four years while suing thousands of patients to collect bills, according to the September KFF news report.
It also failed to meet 80% of the requirements to bolster care, such as those affecting death and infection rates.
The shortcomings took place even though Ballad profited during recent years, with net income exceeding $143 million in 2022 and $63 million in 2021 while it landed $175 million in federal COVID-19 pandemic relief money.
What will state lawmakers do?
State lawmakers are caught in a quandary. Some say the situation is dire, while others contend Ballad is doing the best it can.
State Sen. Rusty Crowe, a Johnson City Republican who sponsored the 2018 bill allowing Mountain States and Wellmont to merge into Ballad through the unique monopoly operating deal, considers Ballad's problems indicative of what other health care systems are facing.
"I know they've worked really hard, from what I can gather, on paying nurses much more than they did in the past," Crowe said, adding he understands one of the problems is the expense of paying travel nurses.
(READ MORE: The ER invoices didn't find Tennessee woman, but a lawsuit did)
A recent a MIT Sloan Management Review report ranked Ballad Health 131 out of 146 hospital systems in organizational support for nurses.
When Crowe sponsored the bill five years ago, he declared a conflict of interest because he works for Ballad Health in wound and hyperbaric care. At the time, he said he followed all Senate ethics rules.
Crowe said his connection with the company doesn't affect his views on how it is operating and added when he fields constituent complaints, he takes them either to the state or Ballad's corporate leaders. Based on his conversations with the Attorney General's Office and Department of Health, Ballad is meeting the agreement's requirements, he said.
Crowe contends the legislature doesn't need to get involved again and rework the agreement.
"If it ever turns into a situation where it's not to the advantage of the patients that use that system, then I guarantee you the department will do away with it," he said.
State Sen. Jon Lundberg, a Bristol Republican, said he saw a response from Ballad to KFF news reports, saying it was meeting the conditions. He noted, however, that the situation is always open for review.
Lundberg added that Ballad is reason many hospitals are still open in rural parts of upper East Tennessee and southwest Virginia.
State Rep. Gary Hicks, R-Rogersville, pointed out lawmakers don't want Ballad to fail but said it wasn't what they expected.
"It's not the health care we all signed up for," he said.
And Rep. Bud Hulsey, R-Bristol, is at a loss. He said he has met with the Ballad Health CEO numerous times in an effort to make sure the hospital system is offering high-level health care.
Hulsey pointed out the Ballad operating plan is the result of multiple public meetings on how to maintain hospitals in the region with two major systems becoming insolvent. Most people wanted a merger instead of a buyout, which could have led to the loss of 400 to 600 nurses, he said.
(READ MORE: Report: Uninsured Tennesseans would drop 27% with Medicaid expansion)
The Federal Trade Commission told them the deal would create a monopoly and lead to the risk of fewer services at a higher price, which is often the result of one company taking over. The terms were designed to offset the negative aspects of a monopoly.
"I think they stuck to most of them," Hulsey said.
But considering the low reimbursement rate Tennessee and Ballad receive for Medicaid and Medicare patients, with an aging populace, operating is difficult, he said.
"Ballad's kind of behind the curve," he said.
Tennessee has refused to expand Medicaid to more than 300,000 uninsured and under-insured working residents, forgoing about $1.4 billion in federal funds that could be used to provide insurance to that group.
Tennessee Lookout reporter Adam Friedman contributed to this report. Read more at TennesseeLookout.com.