UNC Health Care, Charlotte health system break off merger talks

Atrium Health said Friday that merger talks to combine the Charlotte-based hospital system with UNC Health Care have been suspended.

No reason for the decision was provided publicly, although UNC Health Care officials said the two sides couldn't "satisfy our mutual organizational goals through a proposed partnership."

The two systems signed a letter of intent last August to join their clinical, medical education and research resources. Officials said at the time that they expected to have a final deal in place by the end of 2017 and to be operating in partnership by this summer.

"In our letter sent to UNC Health Care today, we informed them that while we have not been able to reach an agreement, our respect for UNC Health Care, its team and UNC Health Care's accomplishments has grown through this process," Atrium officials said in a news release. "Their desire to work collaboratively to improve the health of every North Carolinian is something we highly value and to which we are also committed."

"We have agreed that the best path forward for both organizations is to identify specific opportunities to work together, as we have previously, to improve health care across the state and region," UNC Health Care officials said in a statement, citing improving rural health care and expanding medical education.

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 Atrium, formerly known as Carolinas HealthCare, is the largest health care system in the state.

Rumors that the combination was on rocky footing have swirled for months.

Some members of the University of North Carolina Board of Governors, which oversees UNC Health Care, were skeptical about the combination, and Blue Cross Blue Shield of North Carolina, the state's largest health insurer, openly opposed it, fearing the clout of a statewide network of hospitals and physicians would drive up health care costs.

State Treasurer Dale Folwell last month asked for UNC Health Care to put up a $1 billion performance bond so that the State Health Plan wouldn't be on the hook for any cost increases, and Attorney General Josh Stein's office recently asked for more details of the consumer impact of the merger.

"We never acquired enough information to ensure that the combination of these two health care entities would not have a negative impact on the taxpayers of North Carolina," Folwell said in a statement. "I was also concerned that this proposal involving billions in state assets never came before the Council of State, whose primary function is to review the disposition of state property."

The U.S. Justice Department filed an antitrust lawsuit last year against Atrium, alleging that the health system used its size in the Charlotte market to prevent insurers from sending patients to seek cheaper health care elsewhere.

A class-action lawsuit was filed in federal court in Charlotte on Wednesday alleging anti-competitive conduct and high payments for thousands of patients.