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UNC Health Care rejects WakeMed bid for Rex, calls for truce

Posted August 26, 2011

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— The Board of Directors of UNC Health Care voted unanimously Friday to reject WakeMed's $750 million offer to acquire Rex Healthcare.

The chairman of UNC Health Care's board also called for a truce in the war between WakeMed and Rex for physicians and patients.

WakeMed made the offer for its crosstown Raleigh rival in May, saying the combination of the two health systems would improve access and lower costs by eliminating duplication of services.

UNC Health Care has operated Rex Hospital and its affiliated operations since 2000. Although the board initially stated that it didn't believe a sale would be in the best interests of UNC, Wake County residents and the state, a special committee was set up to evaluate the offer.

“After a thorough review, the board has concluded that WakeMed’s proposal, if accepted, would harm the quality of North Carolina’s patient care, increase cost to patients in the Wake County region and compromise the financial stability of UNC Health Care and the UNC School of Medicine, increasing the system’s reliance on state appropriation,” board Chairman Richard Krasno said in a statement. “Any value derived from a one-time cash infusion from a sale, however distributed, would be overwhelmed by the diminished capabilities of UNC Health Care."

WakeMed Chief Executive Bill Atkinson said UNC's decision was made without any input from WakeMed.

"We have no way of knowing what they considered or didn't consider," Atkinson said. "They may have made up their minds before they started."

The offer remains on the table, he said, adding that he hopes state lawmakers consider it next year.

WakeMed has facilities in Apex, Cary, Fuquay-Varina, Raleigh, Wendell, Zebulon and Clayton, while Rex provides medical services in Apex, Cary, Garner, Knightdale and Raleigh.

The two health systems compete fiercely for patients and affiliated physicians and specialists, and Krasno said in a letter to WakeMed Chairman Thomas Oxholm that he would like to tone down the competition so WakeMed and Rex could cooperate more.

"My earnest hope is that you share my desire to renew our long-standing ties and calm the tensions of the recent past," Krasno wrote. "Until recent history, our collaborative efforts co-existed with our competitive ones."

According to Krasno, WakeMed earns about $20 million annually by using UNC faculty members and residents in its hospitals and clinics, and a partnership with UNC allows WakeMed to be classified as a Level 1 trauma center.

He proposed a truce, saying Rex and WakeMed shouldn't try to poach each other's physician practices or contest any non-competitive efforts to expand for three years. He also asked that WakeMed stop trying to disparage Rex's operations in its advertising and stop lobbying for a change to UNC Health Care's structure.

"In stabilizing and expanding upon our partnership, I need to be assured and believe that WakeMed will abandon its antagonistic posture toward UNC Health Care," Krasno wrote. "I assure you that UNC Health Care and its members pledge to abide by the same standards of cordiality and business manners."

Atkinson, who charged in May that Rex doesn't provide a fair share of charity care while calling WakeMed one of the state's top providers of care to low-income and uninsured patients, said Friday UNC's stance doesn't address the issue of whether Rex has a competitive advantage because it is state-run.

"We have great respect for what UNC does," he said, "but we've asked some tough questions, specifically about Rex, and those questions remain."

25 Comments

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  • stormtrooper76 Aug 29, 2011

    Very deep thought there, lol. Yogi Berra much?

    ProudAmerican

    Nothing meaningful to say huh? Try adding something useful to the discussion instead of making yourself look so petty.

  • maintenanceunlimited01 Aug 26, 2011

    I think the level of care between Wake Med and Rex is light day and night. Wake Med is leaps and bounds ahead of Rex in care. I think that Wake Med could have only improved Rex BUT I am very happy that they rejected the bid b/c it would have drove health care rates up and in times like these, that is the last thing we need.

  • Qwerty27807 Aug 26, 2011

    Decreasing competition in medical services never benefits the consumer. While intentions (maybe) are pure, the reality of these types of mergers is that opposition to the status quo is squashed when only one voice gets the podium.

  • tgiv Aug 26, 2011

    "Sounds to me like UNC does not like free market health care, as they are subsidized by the State."

    Free market capitalism is not compatible with a single monopoly providing service to an entire market. If there's no competition, then there's no free market. This is what happens when you mix junk philosophy, politics, and talking points.

  • booper3112 Aug 26, 2011

    I have had care at both hospitals, if I am in a wreck in front of Rex, let me die on the way to Wake Med.

  • lasm Aug 26, 2011

    It's amazing (although, I don't know why I am continually amazed by stupidity)to read some of the misinformed comments written on this subject-as well as so many other subjects posted on wral.com. How anyone can assume that Rex is Gov't run healthcare is beyond me. As for the comment "Who the hell do these Board of Directors of UNC Health Care think they are?". I will tell you who they are: the Board of Directors of UNC Health Care, that's who. They are the ones who get to decide if they "sell out" or not. Thank God they have decided against it. Some of you need to get educated on the definition of monopoly (and how much more you will pay if this happened) and competition in the marketplace. And I too have had the same surgery in both of these facilites. Let me tell you, going from WakeMed to Rex is like going from night into the daylight. The degree of care at Rex is 150% greater and better than WakeMed. Even if I may be dying and WakeMed is closer, take me to Rex! I had rat

  • BRWB Aug 26, 2011

    As someone who recently lost a family member at Wake Med due to poor care, I am grateful that Rex will not be a part of Wake Med.

  • itsbetteronthebeach Aug 26, 2011

    Smart decision, UNC!! WakeMed has suffered greatly under the current admin if you ask anyone working there. It would be sad to see Rex suffering the same fate.

  • davidgnews Aug 26, 2011

    When elephants fight, the grass always suffers.

  • Scubagirl Aug 26, 2011

    Smart move by UNC/Rex! Wake does NOT need to buy Rex, ever!

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