Carolinas HealthCare, UNC Health Care to merge

Published 6:46 am Friday, September 1, 2017

Associated Press

RALEIGH — Two North Carolina health care systems have announced plans to join and create a network that will employ about 90,000 people and operate more than 50 hospitals.

The News & Observer of Raleigh reports that executives of UNC Health Care and Carolinas HealthCare said in an interview published Thursday that the combined systems would give them the leverage to negotiate better deals with insurance companies and vendors, saving the hospitals millions of dollars.

Also, the two systems promise to increase access to health care in rural areas and provide their patients access to experimental treatments through their research programs.

UNC Health Care is based in Chapel Hill. Carolinas HealthCare is based in Charlotte.

The organizational structure would have to be worked out during upcoming negotiations, then submitted for review by the Federal Trade Commission for a ruling on whether a health care organization of that scale would limit patients’ ability to choose doctors and hospitals. The FTC also would consider whether such a system would inflate health care prices in North Carolina.

“We think we have good answers to all the questions that will come,” said Bill Roper, CEO of the UNC Health System and dean of the UNC medical school. “We’re not doing it to be against anybody or to compete with anybody.”

According to the letter of intent signed by both sides Wednesday, Roper will be the executive chairman of the board that will oversee the combined system. Gene Woods, CEO of Carolinas HealthCare, will be CEO of the new entity, which doesn’t have a name yet.

The partners will operate as a single entity with one management team, budget and business strategy.

UNC Health Care employs about 30,000 people and owns or manages 12 hospitals across North Carolina. Carolinas HealthCare employs more than 65,000 and owns or manages 40 hospitals in North Carolina and South Carolina. Each employs thousands of doctors who refer patients internally to company specialists, labs, clinics and hospitals.

Last year, UNC Health Care posted a record $3.6 billion in revenue and an operating income of $196.6 million; Carolina’s HealthCare posted revenue of $9.8 billion and operating income of $422 million.

N.C. Attorney General Josh Stein’s office said in an email that it is noncommittal about the deal.

“The Attorney General’s Office looks forward to receiving further information about this transaction and will be reviewing it closely to ensure that it benefits consumers,” the statement said.

Donald Gintzig, CEO of WakeMed Health & Hospitals in Raleigh, UNC’s primary competitor in Wake County, said he was not familiar enough with the details to say if WakeMed would oppose or support the merger before federal regulators.

“This could be good if it increased access, especially for vulnerable populations who end up forgotten,” Gintzig said. “But I haven’t seen any evidence that the largest health systems are the lowest-cost providers in their communities. If that were the case, there would be lots of evidence to support that.”