WakeMed halts bid to acquire Rex
Posted May 22, 2012
Raleigh, N.C. — WakeMed has withdrawn its takeover attempt of crosstown rival Rex Healthcare as part of an agreement brokered by state lawmakers, officials said Tuesday.
WakeMed made a $750 million bid for Rex last year, but UNC Healthcare, which has operated Rex for more than a decade, turned it down, saying Rex is an essential part of its hospital system and the University of North Carolina School of Medicine.
State Rep. Harold Brubaker, R-Randolph, and Sen. Tom Apodaca, R-Henderson, negotiated a pact that calls for more cooperation between the competing hospital systems.
“This agreement is good for North Carolina and good for both of these outstanding health care systems,” House Speaker Thom Tillis said in a statement. “We all know that our state has many pressing health care needs. In a time of limited resources, it is vital that we forge partnerships to get the maximum return on our resources.”
The agreement calls for UNC to spend $30 million to open a 28-bed inpatient psychiatric facility to lessen the load on area hospital emergency rooms, especially after the closing this summer of Dorothea Dix Hospital in Raleigh, the state's oldest psychiatric hospital. Also, UNC will commit another $10 million over five years to support local mental health services.
In addition to dropping its bid for Rex, WakeMed agrees to drop public records requests and other actions against UNC Health Care.
Officials from both institutions thanked lawmakers for stepping into the breach and finding common ground between the two sides, which have waged high-profile wars over physicians and patients across Wake County in recent years.
"We are grateful you have helped us settle our differences," UNC Healthcare Chief Executive Dr. William Roper said. "It's a great day for us, a great day to our two organizations."
"A collaborative relationship between Wake Med and UNC Healthcare is in the best interest of the institutions and in the best interest of the patients which we serve," UNC President Tom Ross said.
As part of the agreement, UNC will file publicly available federal tax forms for Rex and other private operations that it owns, including a physicians network, so that its financial operations will become more transparent.
WakeMed officials have argued that the state subsidizes Rex, putting WakeMed at a competitive disadvantage. UNC officials maintain that Rex generates money for the rest of the hospital system and hasn't been underwritten by state tax dollars.
Asked if the new agreement would have a bottom line impact on his company, WakeMed Chief Executive Dr. Bill Atkinson said he didn't think it would.
"This is not really about cost savings, it's about service," Atkinson said.
The hospital systems also signed a new five-year contract for WakeMed to continue its role in training UNC medical students and residents.