North Carolina Treasurer Brad Briner is urging state and federal regulators to closely scrutinize the proposed combination of Raleigh, N.C.-based WakeMed Health & Hospitals and Charlotte, N.C.-based Atrium Health, arguing the deal could reduce competition and raise healthcare costs.
The Wake County Board of Commissioners voted 5-2 Sept. 21 to approve the proposed combination, which will now move through regulatory review.
Mr. Briner said he remains “profoundly concerned” about the transaction after months of public hearings and revisions to the proposed agreement. He said the changes did not address his broader concerns about hospital consolidation and its potential effects on prices and competition.
“Hospital consolidation leads to less competition and higher prices, and I’m not talking about a rural hospital getting acquired when it desperately needs a lifeline to ensure that rural North Carolinians have access to healthcare,” Mr. Briner said. “I’m referring to when the merger happens as a means of having better market leverage.”
Mr. Briner has opposed the transaction since it became public in May and previously called for the proposal to receive scrutiny from North Carolina Attorney General Jeff Jackson and the Federal Trade Commission.
Following the commissioners’ vote, Mr. Briner renewed that call.
“I’m echoing the call for Attorney General Jeff Jackson to step in and conduct a thorough, independent assessment of this transaction, its effect on prices, competition and access, and I’m hopeful that federal regulators will step in to consider how cross-market mergers like this one harm competition,” he said.
The North Carolina Justice Department is expected to review the transaction. State law requires certain nonprofit corporations to notify the attorney general before disposing of all or a majority of their property, and the attorney general’s office has said it will review the WakeMed-Atrium agreement after receiving the required materials.
Mr. Briner also said he is concerned about the proposed combination’s implications for the North Carolina State Health Plan and other employer-sponsored health plans. He co-chairs Gov. Josh Stein’s Health Care Affordability Commission, which was created earlier this year to develop proposals aimed at addressing rising healthcare costs.
Advocate Health, Atrium’s Charlotte-based parent organization, pushed back on Mr. Briner’s competition and pricing concerns in a Sept. 23 statement provided to Becker’s.
“We share the treasurer’s commitment to making health care more affordable,” the health system said. “It is important to keep four facts in mind.”
“There are three major health systems competing in the county today, and there will continue to be three after this combination,” the statement read. “Second, to our knowledge, this is the only proposed health system combination in the country that would limit price increases based on Medicare rate increases. No other health system transaction in North Carolina has included this level of protection. Third, based on publicly available information, WakeMed is a low-cost provider in Wake County, and it will remain a low-cost provider.”
WakeMed and Atrium announced plans in May to combine into a single health system. The proposed transaction includes a $2 billion investment from Atrium to expand WakeMed facilities, technology, workforce and care access across North Carolina. It also includes a $150 million Wake County Whole Health Program and strengthened charity care commitments.
Atrium Health is part of Charlotte-based Advocate Health and operates 19 hospitals and more than 1,060 care locations across North Carolina. WakeMed comprises three full-service hospitals, a mental health and well-being hospital, eight emergency departments and more than 175 physician and physical therapy offices.
WakeMed did not respond to Becker’s request for comment.
