When Raleigh, N.C.-based WakeMed Health & Hospitals and Charlotte, N.C.-based Atrium Health shared plans May 1 to combine into a single system with a $2 billion investment from Atrium, minimal details were shared. During a May 5 press conference, recorded by WRAL, the two parties unveiled a collaboration two years in the making.
“It takes a while to do due diligence,” WakeMed President and CEO Donald Gintzig said during the conference, referring to questions that systems must answer when identifying a partner. “Are they who they say they are, how can we do things together and what are the possibilities?”
WakeMed began considering possibilities to move closer to another health system when it launched an oncology program during the COVID pandemic and began the hunt for a radiation oncology partner. When the system put out a request for proposals, it received just one response: from Atrium Health, part of Charlotte-based Advocate Health.
“The more we started talking about cancer, the more they learned about what we’re doing around hearts, the more we learned around what they were doing around hearts,” Mr. Gintzig said during the press conference. “Then the discussion was, ‘You sound a lot like us. We sound a lot like you. What could something bigger look like?'”
Two years later, their proposed answer is a combination that would add more than 3,300 healthcare jobs across Wake County, N.C., over five years and expand services to 1 million people statewide.
Mr. Gintzig said one of the core challenges WakeMed faces includes how to finance a nearly $1 billion rebuild of the system’s 65-year-old Raleigh campus without the resources that competitors like academic medical centers UNC Health and Duke Health have. Mr. Gintzig said that reality made finding a partner not only appealing, but necessary.
“We’re the smallest health system of the competitive world now in North Carolina,” Mr. Gintzig said. “You continue to see those that are able to access capital, those that are able to access large scale purchasing at a lower cost … and we’ve seen our costs go up 10%, 15%, 20%.”
Mr. Gintzig also reiterated that Atrium isn’t purchasing WakeMed, it’s a strategic commitment where the system will remain locally managed and led.
“We’re joining the family,” he said. “They are not buying us … we are willfully, under our choice, going into this.”
Steve Smoot, executive vice president and president of the North Carolina and Georgia Division for Atrium and Advocate Health, said during the conference that the strategic logic ran both directions.
“What excites me most about today is how we both can help each other,” he said. “WakeMed brings 65 years of community trust in one of the fastest growing regions in the country, a reputation of high quality, compassionate care and a team that shows up every day to do what’s right for their neighbors. That’s the foundation, and it’s a strong one.”
The Wake County Board of Commissioners were set to vote May 4 on an amendment to WakeMed’s Transfer Agreement, but it has since been delayed — possibly until August.
“WakeMed and the Wake County Board of Commissioners agreed to move the date for the transfer agreement amendment vote in order to provide additional information about the benefits this combination will provide to WakeMed and the community,” a spokesperson for WakeMed said in a May 5 statement shared with Becker’s.
“The amendment to the transfer agreement is anticipated to be brought back in front of the Board of Commissioners in about 90 days,” the spokesperson added. “This adjustment in timing does not indicate a change in the plan to move forward with the strategic combination, but is intended to provide the time and space to bring others into the conversation to improve understanding.”
While leaders from both parties expressed excitement during the press conference, the proposed combination has faced backlash.
North Carolina Treasurer Brad Briner sent a May 2 letter to Wake County commissioners that urged them to reject the proposal or require Atrium to provide an endowment exceeding $1.5 billion, suggesting that the combination could heighten healthcare costs for residents.
Mr. Briner said in a May 5 X video that the WakeMed and Atrium merger pause was “good news.”
“Leaders from the hospital systems said today that they’ve been working on this for over two years, but we only learned about it days ago,” he said. “Buried in the consent agenda item, it would allow Atrium to take control of WakeMed, a major shift for healthcare in our community. The issues here are very clear: Hospital mergers of this sort always lead to higher prices.”
However, Mr. Smoot rejected this claim during the conference, and said the two parties coming together would expand financial assistance and strengthen the “ability to keep care affordable in a healthcare environment that’s becoming more complex and more costly every year.”
At the Becker's 11th Annual IT + Revenue Cycle Conference: The Future of AI & Digital Health, taking place September 14–17 in Chicago, healthcare executives and digital leaders from across the country will come together to explore how AI, interoperability, cybersecurity, and revenue cycle innovation are transforming care delivery, strengthening financial performance, and driving the next era of digital health. Apply for complimentary registration now.
