State attorneys general crack down on health systems

In the last month, the offices of the state attorneys general in Tennessee, North Carolina and Connecticut have scrutinized health systems over various concerns, including care quality and access, the potential violation of an asset purchase agreement and questionable financial practices.

Here are three updates from cases involving health systems and attorneys general in Tennessee, North Carolina and Connecticut:


Tennessee Attorney General Jonathan Skrmetti has called for the state to look into operations at Ballad Health after residents in upper East Tennessee voiced concerns about the quality and access to care provided by the system.

The offices of the state attorney general and department of health oversee a certificate of public advantage agreement that allows Johnson City, Tenn.-based Ballad to operate hospitals in Northeastern Tennessee without the fear of competition in exchange for the system meeting various charitable obligations and quality of care requirements. 

However, over a four-year period, Ballad was about $148 million short of the annual charity care obligation it made to Tennessee while suing thousands of patients to collect medical bills, according to KFF Health News. This shortfall ostensibly occurred during years when Ballad had reported overall profits, including a net income of more than $143 million in 2022 and $63 million in 2021 while it landed $175 million in pandemic relief funds.

Ballad, a 20-hospital system, also failed to meet about 80% of the benchmarks designed to monitor and improve its care quality, including rates of infection and death, in the most recent year for which data is available. CMS cited some of these problems in July after issuing one-star ratings to three Ballad hospitals, including a flagship, Johnson City Medical Center.

"The State of Tennessee and the attorney general actively and thoroughly supervise the COPA and have concluded each and every year that Ballad Health is in compliance with state law and that it constitutes a public advantage," a spokesperson for the system told Becker's. "As part of the state's active supervision, prior changes have been agreed to with regard to the COPA, and as it has with each change, Ballad Health agrees with the attorney general that ongoing assessment and adjustment of the terms of the COPA are both healthy and welcome."

North Carolina

The North Carolina attorney general could sue HCA Healthcare for an alleged violation of the 2019 asset purchase agreement to acquire Asheville, N.C.-based Mission Health.

The agency notified Dogwood Health Trust — the nonprofit entity established to receive the proceeds of the $1.5 billion sale — of its intent to sue if violations Nashville, Tenn.-based HCA allegedly committed around the reduction in cancer and emergency room services at Mission Hospital are not resolved.

The asset purchase agreement lists a range of services that should not be discontinued at Mission facilities for 10 years following the closing date of the transaction, Feb. 1, 2019. The services include cardiac and cancer care, behavioral health, and emergency and trauma care. 

The North Carolina attorney general can enforce the agreement if Dogwood fails to correct a violation within 40 days of becoming aware of it. Dogwood received the notice on Oct. 31, meaning the state attorney general can file a suit by Dec. 10. North Carolina Attorney General Josh Stein has been investigating Mission Hospital for potentially not adhering to the APA after recent deficiencies in cancer care services, according to the Asheville Watchdog

"We are confident that we have and will continue to meet our commitments under the APA," a spokesperson for HCA told Becker's.


The Connecticut attorney general is investigating Los Angeles-based Prospect Medical Holdings for back taxes it owes the state, and is widening the scope of its investigation to include the for-profit system's "financial practices," according to CT Insider.

A spokesperson for the Connecticut attorney general told Becker's that an investigation is "active and ongoing," but did not disclose details of the investigation.

Prospect, which has 16 hospitals across four states, is attempting to sell three Connecticut hospitals to Yale New Haven (Conn.) Health, which recently asked the state for $80 million toward the initially proposed $435 million transaction and for a reduction in the price tag.

Yale New Haven Health signed a deal in November to acquire the three Prospect hospitals, but the high price tag, slow regulatory approval process and a recent cyberattack that disrupted the hospitals' IT systems raised concerns about the viability of the transaction.

Prospect did not respond to Becker's request for comment.

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