Dive Brief:
- North Carolina-based nonprofit hospital systems Atrium Health and WakeMed have proposed to merge, according to a Friday press release.
- Under the deal, Atrium, which is a part of Advocate Health, would largely take control of WakeMed, which would then integrate into Advocate. Atrium would also invest $2 billion into WakeMed over a decade.
- The deal has faced pushback from local government officials, who argue it could raise healthcare prices for Wake County residents. Concerns prompted the Wake County of Commissioners to delay a vote on the deal that was originally scheduled for Monday, after local officials argued residents needed more time to weigh in on the combination.
Dive Insight:
The merger would allow Atrium, which is headquartered in Charlotte, North Carolina, and operates 40 hospitals across the Southeast, to expand into Wake County, which includes Raleigh and is the state’s most populous county.
WakeMed currently operates three community hospitals and several outpatient facilities. The system hasn’t struggled to turn a profit: Last year, it posted $176 million in net income.
The two health systems say a combination would create the largest nonprofit mental healthcare network in the state and represent one of the largest healthcare investments in Wake County’s history. It would also create jobs and accelerate economic growth, the two systems say.
However, Wake County officials are skeptical of the proposed merger, arguing it could increase costs and lower the quality of care. The state has seen several large health system mergers, including by Atrium: In 2022, Atrium merged with Advocate, two years after it had completed another merger with Wake Forest Baptist Health.
Officials also seemed alarmed by the deal’s quick timeline, with a vote from Wake County scheduled three days after it was publicly announced.
The Mayor of Raleigh and other state lawmakers told NC Health News that the first time they heard about the proposed merger was after the Wake County board of commissioners published its agenda on Friday afternoon.
“I’ve never seen one of these hospital consolidations that ended up lowering prices and improving quality,” North Carolina Rep. Mike Schietzelt said in a Saturday post on X. “We need to slow down until we have all the information.”
Dave Boliek, a state auditor, said in a letter to the board of commissioners Sunday that residents needed time to consider the implications of the deal.
“At this point in time, it’s highly doubtful that the average Wake County citizen is even aware of the pending takeover,” he said. “The lack of transparency does not instill confidence, in fact, it calls for greater scrutiny and explanation,”
The Board of Commissioners ultimately delayed the vote on Monday.
Officials also said the transaction risked raising care costs in the state.
“I am not aware of any example where these types of transactions have resulted in patients being better off, and it is highly unlikely that this one will be the first,” said Brad Briner, the treasurer of North Carolina, in a post on X.
In another letter sent to the board of commissioners, Briner noted that benefits from the $2 billion investment proposed in the deal wouldn’t be needed. WakeMed is “highly profitable,” he said, with ample borrowing capacity and favorable growth prospects given that the county’s population is growing. Additionally, the transaction risks raising care costs in the state.
