Ballad Health is an Appalachian company that has the largest state-sanctioned hospital monopoly in the country. It may soon have to improve the level of care it provides or be broken up.
After years of complaints and protests from patients and their families, Tennessee officials are trying to hold the monopoly more accountable, according to government papers obtained by KFF Health News. These talks are happening behind closed doors.
Ballad is a network of 20 hospitals in northeastern Tennessee and southwestern Virginia. It was set up six years ago through monopoly deals with both states. Annual reports from the Tennessee Department of Health show that Ballad has regularly failed to meet the quality-of-care goals since then.
Even with these failures, Tennessee has given Ballad “A” grades and yearly stamps of approval, which let the monopoly stay in place. At least some of this is because Ballad is rated using a system that doesn’t really take into account how well its hospitals do their jobs.
That might change now. According to state documents obtained through a public records request, the state health department has pushed for hospital performance to be eight times more important in the ongoing renegotiation of Tennessee’s monopoly agreement.
This would make it “the most heavily weighted” issue on which Ballad would be judged. The talks look like the state’s biggest reaction to people in Ballad who are worried about the hospitals.
Ballad Health is a state-sanctioned hospital monopoly that treats patients in 29 counties in Tennessee, Kentucky, Virginia, and North Carolina. Patients and their families have been complaining about the care for years, and the company may soon have to improve care or be broken up.
Dani Cook is a community organizer who has been fighting Ballad for years, including a 2019 eight-month protest outside of a Ballad hospital. She said that a renegotiated monopoly agreement could be the first step toward change that people in the area have long wanted, but only if the state enforces it.
Cook also asked Tennessee why it took so long to put good care at the top of its list of priorities.
Cook said, “That’s what confuses me about this whole relationship: Ballad never seems to be held responsible.” “That’s why I think, ‘Oh, that sounds great,'” But let us see what takes place.
Ballad Health was made in 2018 when Tennessee and Virginia officials ignored federal anti-monopoly rules and allowed the largest hospital merger in the country to happen. This was done through a document called a Certificate of Public Advantage (COPA) agreement.
The Federal Trade Commission warned against it, but the region’s competing hospital systems merged into a single system with no competition. This is now the only hospital that most of the 1.1 million people who live in 29 counties in Tennessee, Virginia, Kentucky, and North Carolina can go to for care.
To make up for the risks of having a monopoly, Ballad had to make deals with the states that told it what was expected of it and restricted its power to close hospitals or raise prices.
A 100-point scale is used by Tennessee to grade Ballad every year based on this deal. The monopoly agreement says that if the company doesn’t do well, Tennessee could theoretically end the COPA and then carry out a plan to split Ballad into two different companies.
The new negotiation papers show how Tennessee wants to change this agreement. They include a list of more than a dozen changes that the health department wanted to make in February and Ballad’s response in May. It’s not clear if or how these ideas have changed over the past few months.
Dean Flener, a spokesman for the Tennessee Department of Health, said that the department would not say anything about Ballad or the negotiations that are still going on.
Ballad didn’t say anything directly about the talks in a written statement, but the company did say that it “enthusiastically agrees that the most important thing to our patients is the quality of care they receive.” In 2023, the company said that the coronavirus pandemic had caused its hospital quality to drop, but that it was working to get back on track.
An official from Ballad said in a statement, “We strongly support a shared focus on quality of care as it relates to the COPA.”
Ballad has only been held accountable for a small part of the level of care in the past. Ballad’s annual COPA score is based on measurements of hospital quality.
However, the company gets full credit for three-fourths of those measurements if they give any value, no matter how bad it is. Real-world hospital success only makes up 5% of the annual score.
In the past, Ballad would have done much worse if quality had been given more weight. The Tennessee Department of Health has been putting out annual reports for the last two years that show Ballad did not meet more than 74% of the state’s quality-of-care benchmarks.
These include benchmarks for death rates, readmission rates, emergency room speed, surgery-related infections, and patient satisfaction.
With the changes Tennessee wants to make, all of these measures would be much more important. Documents from the negotiations show that Tennessee would also lower the overall standards for Ballad’s monopoly and make it easier for Ballad to meet a charity care obligation that he has repeatedly not met.
Ballad has said it hasn’t met its duty to provide charity care because changes to Medicaid programs have made fewer people without insurance and in need of help.
From the papers we can see that:
- Tennessee wants to raise from 5% to 40% of Ballad’s annual score the part that is based on real-world quality of care, and they don’t want to give Ballad any points for just reporting quality data. Ballad made a counteroffer that would raise this number to 34% while still giving the company some points just for reporting.
- Tennessee wanted to lower the overall score that Ballad needs to get every year for its monopoly to be seen as a “clear and convincing public advantage.” The COPA agreement could be changed or “terminated” if Ballad goes below this level. The state of Tennessee wants to drop the score from 85 to 75. Ballad made a counteroffer of 70.
- There isn’t much reason for Tennessee to weaken or lower a rule for Ballad charity care spending. Under the current monopoly deal, Ballad had to give more than $100 million in free or low-cost charity care to low-income patients every year. However, it has failed to do so five years in a row, falling about $194 million short in total. Tennessee has not had to follow the rule every year.
Cook said that the new papers were a rare look into business dealings that Ballad patients never get to see. He also said that it was shocking to see the company push for lower standards.
“What is their problem with wanting to make the care people get better?” Cook said. “Why do you need the standards lowered if they really are among the best in the country? That’s what they tell everyone in the region.”