RALEIGH – Public hospitals want to maximize the benefits of government ownership and minimize its costs. That may be rational from their perspective, but it would be irrational for the General Assembly, elected to represent the citizens and taxpayers of the state, to comply. So far, irrationality reigns.
On Monday, the North Carolina Senate voted unanimously to change state law regarding public disclosure of employee compensation at government-owned hospitals. That was well worth doing. It was a response to a court ruling in a lawsuit by The Charlotte Observer that had challenged the unwillingness of Mecklenburg County’s Carolinas Healthcare System to provide a full accounting of the compensation of its executives. The court ruled that only the salary, not bonuses or other forms of compensation, was required to be disclosed under current law. The Senate wisely agreed to change the law to require disclosure of the total compensation package.
However, a significant majority of senators then decided to endorse a bill from Majority Leader Tony Rand (D-Cumberland) to shield another critical piece of information about government hospitals from public view: the amount of money such hospitals spend acquiring medical practices. This matter also involves a lawsuit, a successful one by the Wilkes Journal Patriot against a local hospital, Wilkes Regional Medical Center, that withheld the price tag of a physician practice it purchased. The trial court ruled that Wilkes did, in fact, have to release the information, and earlier this year the North Carolina Supreme Court agreed. Rand’s bill essentially reversed the court decision, taking information private that ought to be public – because it involves a government-owned enterprise – on the grounds that disclosure would create a competitive disadvantage for the public hospital.
At best, there may be an argument for limited confidentiality akin to those advanced for shielding the details of land transactions or economic-incentive negotiations while the transactions are still pending. It may be reasonable to contend that even a government enterprise should still have some ability to engage in market activities in real-time without a strict disclosure rule. But surely after the fact, the citizens and taxpayers of a government jurisdiction have every right to know what their government-owned hospital is spending its money on – just as shareholders have every right to know about the finances of companies in which they own stock, or directors and donors have every right to know about the finances of nonprofits with which they are involved.
More broadly, the notion that government enterprises deserve to be treated like nonprofit or for-profit private institutions is a dubious one. Government-owned hospitals already enjoy significant competitive advantages. They typically don’t carry the same tax costs as their competitors. Often, they receive direct taxpayer subsidies on top of that. It is unfair and nonsensical to extend the confidentiality expectations of private companies to their public-sector competitors.
I was glad to see that Sen. Steve Goss, the Democrat elected last year to a district that includes Wilkes County, had opposed Rand’s bill on basic public-accountability grounds. I just wish he hadn’t been so lonely over there in the “no” camp.
Hood is president of the John Locke Foundation.