- Carolinas HealthCare System and UNC Health have signed a letter of intent merging North Carolina’s top-ranking academic medical center with its largest health system, Modern Healthcare reports.
- The deal, announced Thursday, will combine clinical, education and research resources with a focus on enhancing four key areas: access and affordability, clinical expertise, academic enterprise and the region’s economic well-being.
- The new entity would contain more than 50 hospitals employing more than 100,000 people and would be one of the biggest nonprofit healthcare systems in the country.
The announcement continues the industry's consolidation trend. Hospital and health system mergers were up 15% in this year's second quarter. Many of these are major deals, like this week's North Carolina merger proposal. The first half of this year included six transactions of systems with $1 billion or more in revenue, according to a recent Kaufman Hall report.
Patrick Allen, managing director at Kaufman Hall, said in the report health systems are looking to mergers as they try to stabilize in turbulent times. "Traditional providers face an aray of uncertainties, from changing federal healthcare policies to shifting payment and care delivery models," he said.
Gene Woods, president and CEO of Carolinas HealthCare, said in a press release he believes the new system will improve access to care and affordability. He cited, as an example, the health system’s Levine Cancer Institute and UNC Health Care’s National Cancer Institute designation, which could increase clinical trials and treatment options for patients.
The organizations also want to expand access to care in rural and underserved areas, including behavioral health services and telehealth.
The two organizations expect to reach a final agreement by the end of the year, following targeted negotiations. Woods will serve as CEO of the combined organization. William Roper, currently dean of the UNC School of Medicine and CEO of UNC Health Care, will be entity’s executive chair.
Carolinas HealthCare, which says it is the second biggest non-for-profit healthcare system in the U.S., was hit with a lawsuit last year alleging it required insurers to accept anticompetitive contract arrangements. In September, the system asked a North Carolina federal judge to throw out the lawsuit on the basis the U.S. Department of Justice’s case in similar litigation against American Express had recently been rejected. In April, the North Carolina judge allowed the lawsuit to proceed, according to the Charlotte Observer.
Partnerships between university and private health systems can offer major benefits for both parties by bringing on board top-tier clinical researchers and cutting technology and treatments while expanding the patient population.
Last month, University of Pittsburgh Medical Center reached a definitive agreement to acquire PinnacleHealth, expanding its market share in central Pennsylvania and paving the way for growth in its health insurance product line.