Dive Brief:
- North Carolina-based nonprofit health system WakeMed received — and declined — an unsolicited proposal from UNC Health to combine days after agreeing to merge with Atrium Health.
- The health system received the offer to partner with UNC Health on May 5, four days after Atrium and WakeMed publicly announced plans to merge, according to a WakeMed spokesperson. Under the deal, Atrium, which is a part of Advocate Health, would largely take control of WakeMed.
- WakeMed’s board of directors rejected UNC Health’s proposal after determining Atrium’s deal was in the best interest of the health system, the spokesperson said, adding that the UNC Health offer may have carried competitive concerns.
Dive Insight:
UNC Health’s offer follows Atrium and WakeMed’s plans to merge. The deal would expand Atrium — which is headquartered in Charlotte, North Carolina and operates 40 hospitals across the Southeast — into Wake County, the state’s most populous county and where WakeMed is based.
As part of the deal, Atrium has said it plans to invest $2 billion into WakeMed’s facilities and services. But the merger has faced pushback from local government officials, who say it could raise healthcare prices and lower the quality of care.
Some were also alarmed by the deal’s timeline. Although WakeMed said in a statement Wednesday it spent two years evaluating the health system’s future, including potential partners, Wake County scheduled a vote to consider the deal three days after it was publicly announced.
Those concerns eventually prompted the Wake County Board of Commissioners to delay the vote for 90 days, after officials said residents needed more time to consider the implications of the deal.
However, UNC Health’s proposal also creates anticompetitive concerns. A merger between UNC Health and WakeMe would reduce the number of health systems in Wake County from three — WakeMed, UNC Health and Duke Health — to two.
“Combined, WakeMed and UNC Health would control 80 percent of the healthcare market in Wake County,” the WakeMed spokesperson told Healthcare Dive. “We have heard from numerous stakeholders, including the State Treasurer, that maintaining robust competition is important for our rapidly growing region.”
A spokesperson for UNC confirmed the system’s interest in exploring a “broader” relationship with WakeMed.
The two systems have a longstanding partnership to train medical students and residents, and that partnership will continue uninterrupted, they said.
“It is because of this success that we believe that even greater things can be accomplished together for our citizens. That’s precisely why we have expressed interest in furthering our relationship with WakeMed,” the spokesperson said.
UNC Health operates Rex Hospital, a cancer center, a vascular and heart hospital and other facilities in Wake County. The broader health system recorded over $870 million in profit last year, according to its annual report.
