UNC Health Care in merger talks with Charlotte health system

UNC Health Care officials said Thursday that they are working to join forces with Charlotte-based Carolinas HealthCare System, creating a network of hospitals, related health facilities and physician practices stretching across most of North Carolina.

Posted 4:15 p.m. Aug 31, 2017 — Updated 10:41 p.m. Aug 31, 2017

CHAPEL HILL, N.C. — UNC Health Care officials said Thursday that they are working to join forces with Charlotte-based Carolinas HealthCare System, creating a network of hospitals, related health facilities and physician practices stretching across most of North Carolina.

The two systems have signed a letter of intent to join their clinical, medical education and research resources, and officials said they expect to hammer out a final deal by the end of the year and, pending regulatory approvals, begin operating under a new, as-yet-undetermined name by next summer.

"It's a decision based in patient care and patient service," said Dr. William Roper, chief executive of UNC Health Care and dean of the UNC School of Medicine.

UNC Health Care includes UNC Hospitals in Chapel Hill and Rex Hospital in Raleigh, as well as hospitals and affiliated practices in Chatham, Johnston, Wayne and other counties, while Carolinas HealthCare is the largest health care system in the state.

Roper, who will serve as executive chairman of the new organization, said the deal is about surviving amid a shifting health care industry and its uncertain future.

"Health care is a bit chaotic right now. The waves are a bit choppy, and we want to join together with another strong partner so that we together can chart a good course for the future of health care in North Carolina," he said. "We think this is a big idea, a transformative idea, for our state and beyond."

The combined system will have enough leverage to drive down health care costs, Roper predicted. An analysis of recent hospital system mergers, however, shows costs continued to rise for patients and their insurance companies.

"There's no regulator that's going to make sure, if we have promises today that costs are going to come down, that that actually happens," said Dr. Kevin Schulman, a professor of medicine, business administration and global health at Duke University.

A spokeswoman for Attorney General Josh Stein said he would review the proposed merger to ensure that it benefits North Carolina consumers. Gov. Roy Cooper didn't comment on the deal Thursday, although he expressed concerns about such mega-mergers when he was attorney general.

The Federal Trade Commission also will weigh in on the merger, especially since the U.S. Justice Department filed an antitrust lawsuit last year against Carolinas Healthcare, alleging that the health system used its size in the Charlotte market to prevent insurers from sending patients to seek cheaper health care elsewhere.

"I'm concerned about consolidation and hospital markets in terms of the cost, in terms of the quality of care we receive, in terms of availability of services. Obviously, those are all unanswered questions at this point," Schulman said.

"Should we take ourselves out of the game and sit on the sidelines while health care consolidates around us? I don't think so," Roper said, adding that outreach remains the key to lower costs and better outcomes for patients.

"Diagnosing or preventing their illness, treating them early, keeping them out of the hospital" are important, he said.

Officials said some of the services the combined system will offer include the following:

Options for care close to home for both urban and rural populations
Seven nationally-ranked adult clinical service lines and nine nationally-ranked pediatric clinical service lines
Research opportunities to find new cures and change the way care is delivered
Nearly 1,400 active clinical trials to help uncover health solutions and deliver treatments
Physician training at the UNC School of Medicine, through more than 100 residency programs in a network of teaching hospitals across the state and through lifelong learning for providers
Collaboration with other health care providers to improve patient experience and bring affordable care to the state

"Together with UNC Health Care, we believe that the opportunities to be a national model and to elevate health in North Carolina are nearly limitless," Gene Woods, president and CEO of Carolinas HealthCare, said in a statement.

Woods, who is slated to become CEO of the combined system, cited rural health care and cancer treatment as two areas that will benefit from the merger.

"Since our organizations already serve almost 50 percent of all patients who visit rural hospitals in our state, we are perfectly positioned to participate in the reinvention of rural health care in partnership with others," he said. "Ensuring there is great health care in rural counties is not only important to our patients’ physical well-being, but is also vital to the economic well-being of those communities as well."

The Lineberger Comprehensive Cancer Center in Chapel Hill has been a National Cancer Institute-designated cancer center for more than 40 years and has received more than $70 million in cancer research grants for clinical trials. Meanwhile, the Levine Cancer Institute in Charlotte serves more than 10,000 new patients every year, and more than 1,000 of them participate in clinical trials in dozens of locations in North and South Carolina.

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