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Prof: Hospital merger would lead to higher costs, lower quality

Posted May 13, 2011
Updated May 17, 2011

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— WakeMed's $750 million bid to buy rival Rex Healthcare would be a bad deal for Raleigh patients, a health care industry expert said Friday.

"What we've seen in other markets is the hospitals will consolidate and increase their prices to the public (and) to the insurers and exert monopoly power," said Dr. Kevin Schulman of Duke University.

Schulman, a physician, is director of the Health Sector Management Program at the Fuqua School of Business and Duke's Center for the Study of Health Management.

Rex Healthcare flag Prof: Hospital merger would lead to higher costs, lower quality

WakeMed Chief Executive Dr. Bill Atkinson said Thursday in announcing the takeover bid that the combined health care system would lower costs for consumers by eliminating redundancies and would provide more access and better care.

"I don't see how or why they'll spend time improving the customer experience," Schulman said. "Consumers are going to have no other place to go, and they're going to have to go there irrespective of the quality of care provided."

Rex has been part of UNC Health Care for more than a decade, and both University of North Carolina system officials and hospital administrators have dismissed the takeover bid. They insist that UNC can best accomplish its health care mission with Rex in the fold.

Still, the UNC Health Care board will consider WakeMed's offer, which officials said would help erase a projected $2.4 billion state deficit in the fiscal year that starts in July.

Schulman said WakeMed should focus on using its assets to compete with Rex instead of taking it over.

"I'd love for them to take the $750 million and put it toward lowering the cost of care, making care more accessible and affordable and let them gain market share from Rex," he said.

Patients and their families said quality care should be the main priority in ultimately deciding Rex's fate.

"The most important thing is the patients. What type of well-being are they going to have?" said Mike Leach, who was visiting his mother at Rex Hospital on Friday. "A situation like this isn't even about money."

13 Comments

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  • lottatoes May 17, 2011

    I love Rex Hospital, would not go to Wake for anything, the merge would certainly be bad for me, please consider its different strokes for different folks, we do not need a monopoly and Rex has always been excellent in all areas, why change a good thing....I hope they really think about this....its not a good deal at all.

  • RB aka Spirit Warrior Woman May 13, 2011

    Conservator - "Rex would then come under the political influence of local government with all the problems and become a "Public" hospital attracting patients that are uninsured, and place a burden on other patients."

    Rex can't turn away anyone in need by law, so the uninsured in need of immediate care are already going there too.

  • grimreaper May 13, 2011

    Choice? Quality? Right...no chance of that...Obamacare will see to that...hospitals will have to merge just to stay afloat of the government bloat.

  • RB aka Spirit Warrior Woman May 13, 2011

    sarcasticles -

    How is it owned by a Democratic-government when Republicans are now in control of our state congress?

    It's really owned by US, the taxpayers.

  • Carolina Conservator May 13, 2011

    This merger is not in the best interest of Wake and area residents.As part of Wake Med, Rex would then come under the political influence of local government with all the problems and become a "Public" hospital attracting patients that are uninsured, and place a burden on other patients. As it is it is a arm of the states largest teaching hospital and provides quality care. UNC/Rex, hopefully will not be tempted by$.

  • RB aka Spirit Warrior Woman May 13, 2011

    First of all, I'm not for this merger. Competition is good for a business - keeps it honest.

    But why should a merger cost any more or affect services???

  • SARCASTICLES May 13, 2011

    (Insert comment here outlining how evil left wing democrat-government-owned hospital must be sold to Neo-Con free-market-good-for-"business" hospital glitterati in order to restore the space-time continuum, and to rescue the galaxy from progressive action, and rational thought.) ;)

  • bekin May 13, 2011

    horrible! WMC sold thier outpatient surgery @ WMC Cary hosp to SCA last year for profit. That deal cost jobs and quality of care patients recieve. Raleigh will be hurt if this TAKEOVER is allowed! .

  • thinkin out loud May 13, 2011

    Schulman said WakeMed should focus on using its assets to compete with Rex instead of taking it over.

    Why should WakeMed have to compete with the State of NC which is exactly what they are having to do. Rex is operated by UNC and UNC is owned by the State of NC.

    Lets open a state run burger joint next to every Burger King and McDonalds and see what happens. NC Burgers could run the others out of business on the backs of the tax payers.

  • howdiditgettothis May 13, 2011

    Sounds like a letter I received from Direct TV.......we're raising your prices because we've got a good product and we want to continue your customer loyalty......HUH?

    Corporate greed trying to make us think it will benefit us.

    And BTW - my last experience at Rex was fine surgically, but the people in the billing department are terrible, uninformed and make no effort to be helpful in the least. The worst "customer" service.

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