Dean: Rex a critical part of UNC Health Care
Posted September 22, 2011
Raleigh, N.C. — The dean of the University of North Carolina medical school told lawmakers Thursday that selling Rex Healthcare to WakeMed would damage UNC's ability to provide care and train physicians.
A House committee studying the potential sale of some of the state's more than 11,000 assets met for the first time Thursday morning, and WakeMed's $750 million bid to acquire Rex was among the assets discussed.
"We've always thought there are some things that the state can do better and some things the private sector can do better," said Rep. Edgar Starnes, R-Caldwell. "So, we're just looking at Rex Hospital and trying to figure out where it fits into that equation."
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 formally rejected the offer last month, but officials said they want to increase the cooperation between the Chapel Hill-based health system and WakeMed.
WakeMed Chief Executive Bill Atkinson has said offer to buy Rex remains on the table, and he hopes state lawmakers consider it.
UNC Health Care has operated Rex Hospital and its affiliated operations since 2000, and Dr. William Roper, dean of UNC's School of Medicine and chief executive of the health system, said separating the two now would hurt them both, which in turn would cost the state.
"Rex is not an isolated entity that can be peeled off or removed from UNC Health Care without harming the entire organization," Rope told lawmakers.
UNC would have a harder time training physicians without the clinical opportunities that Rex provides, he said. The hospital system also would take a financial hit since it wouldn't be able to achieve economies of scale as a smaller system and since Rex helps subsidize operations in Chapel Hill.
"Without Rex, the UNC Health Care system would be forced to rely on additional state funding, not less," Roper said, arguing that the Raleigh hospital doesn't receive a penny of state money.
The state provides the UNC system with $18 million a year to help offset the cost of treating patients on Medicaid or without health insurance. Roper said Rex also has shifted about $2 million a year to the UNC hospital system over the last decade.
"I believe North Carolina gets an outstanding return on its investment," he said, noting that state funding accounts for less than 1 percent of the hospital system's annual budget.
Although WakeMed has charged that Rex doesn't provide its fair share of care to low-income and uninsured patients, Roper said UNC and Rex provide $300 million combined in charity care a year. He said that is about double WakeMed's level.
UNC Health Care provides an estimated economic boost to the state of $5 billion a year, employs 12,000 people and attracts more than $400 million annually in research funding, he said.
"One-time cash (from a sale to WakeMed) would not equal the value we provide year in and year out," he said.
WakeMed officials are expected to meet with the House committee next month. Starnes said lawmakers might not make a decision on selling Rex for years.
"There are a lot of ways to make money, but you don't want to be penny-wise and pound-foolish," he said. "If you sell the hospital, it's one-time money, and it's gone. So, we've got to see, is Rex essential to the core functions of UNC Health Care."