Atrium, UNC Health put merger plan on ice

Dive Brief:

  • Atrium Health, formerly known as Carolinas HealthCare System, announced Friday that its planned merger with UNC Health has been suspended because of disagreements between the two systems on which would control the combined company, The Charlotte Observer first reported. The now-stalled deal would have created a system with more than 50 hospitals and 100,000 employees.
  • The lapse in negotiations comes less than a month after Atrium signed a letter of intent to partner with Navicent Health.
  • Although consolidation among hospital systems has ramped up over the past year, the failure of the two groups to come to terms shows it’s not always a smooth path.

Dive Insight:

The merger plan was announced in September, but the deal now appears to be going nowhere.

“In our letter sent to UNC Health Care today, we informed them that while we have not been able to reach an agreement, our respect for UNC Health Care, its team and UNC Health Care’s accomplishments has grown through this process,” said an Atrium Health statement also obtained by Healthcare Dive.

Merger mania is still clearly evident in the industry, however.

Advocate Health Care and Aurora Health Care recently moved closer to merging to form the 10th largest nonprofit healthcare system in the U.S. after receiving regulatory approval from both the Federal Trade Commission and Illinois.

Meanwhile, Ascension and Presence Health recently signed a definitive agreement to combine, and Ascension is reportedly in talks to also buy Providence St. Joseph Health. Catholic Health Initiatives and Dignity Health are also working to merge into a new health system, which would have 139 hospitals operating in 28 states.

The mergers are evidence that health systems continue to search for ways to capture economies of scale and cut costs as hospitals face lower reimbursements and patient volumes. But despite the trend, combining massive health systems can be difficult with regulatory and other challenges.


UNC Health Care, Atrium execs reportedly frustrated by issue of control over merged entity

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Executives at Chapel Hill, N.C.-based UNC Health Care and Charlotte, N.C.-based Atrium Health have reportedly addressed a number of shared concerns regarding their proposed merger. However, the issue of control over the merged organization has yet to be decided — a decision that will have ramifications for both institutions, according to The News & Observer.

William L. Roper, MD, CEO of UNC Health Care and dean of the UNC School of Medicine, provided an update about the organizations’ negotiations Feb. 20 following a closed-door session with a special committee of the UNC System’s board of directors earlier that same day.

“I had a lengthy conversation with our Charlotte friends this morning, and I think we are making some progress in narrowing the differences but we have not yet reached agreement,” Dr. Roper told The News & Observer. “Both sides are interested in the key questions of who’s in charge, how are decisions going to be made, how can we balance the interests so that both sides feel fairly represented in the decision-making process. Those are the big questions and we’re still working on them.”

The decision of who maintains control over the merged entity, which would comprise 60 hospitals and at least 90,000 employees, would have significant effects on UNC’s medical research and the UNC School of Medicine, a state-owned entity belonging to the UNC System.

The organizations entered into negotiations regarding a potential merger last August. At that time, officials selected Atrium Health CEO Gene Woods to serve as CEO and Dr. Roper as chair of the combined system’s board of directors. Dr. Roper said Feb. 20 that following the completion of his term as chairman, Atrium Health’s board chairman would assume the role. After that, UNC Health Care and Atrium Health would alternate appointing leaders to the role.

Dr. Roper’s update comes after multiple organizations, including the state’s largest insurer, Blue Cross Blue Shield of North Carolina, said they could not support the proposed merger. North Carolina Attorney General Josh Stein wrote a letter Feb. 15 to the chief executives of both health systems demanding additional information regarding the proposed deal, stating the systems had not provided enough information about how the transaction would affect healthcare costs for consumers.

Dr. Roper’s announcement Tuesday also reportedly did not satisfy concerns voiced by North Carolina Treasurer Dale Folwell, who last week called on UNC Health Care to issue a $1 billion performance bond to guarantee cost savings from the proposed deal.

Mr. Folwell said Tuesday Dr. Roper’s update did not provide assurance healthcare costs would decrease and that the update underscores the huge stakes involved in the negotiations, according to the report.