Carolinas HealthCare System, which operates both hospitals in Burke County, has announced that it will merge with UNC Health Care to form a new organization with hopes of expanding rural access to health care, improving quality of care and leading innovation.
The announcement came Thursday, one day after a letter of intent was signed by the two systems to join their resources, according to a release from the two systems.
Gene Woods, the current CEO of CHS and future CEO of the new organization, said the new entity will provide “nearly limitless” opportunities for improving health care in North Carolina.
“For example, since our organizations already serve almost 50 percent of all patients who visit rural hospitals in our state, we are perfectly positioned to participate in the reinvention of rural healthcare in partnership with others,” Woods said in the release.
But experts are warning that a system with such a large service area could increase costs for patients.
Kevin Schulman, a business administration and medical professor at Duke University, told The News Herald that insurance providers could be led to increase deductibles, co-pays or premiums if the new system uses its size to drive up prices.
“Unfortunately, (I believe) one of the reasons they went for this merger was to have increased negotiating leverage with health care plans,” Schulman said. “There is some chance for someone to review this and stop this … But once (the organization begins operations), it’s very hard to force the genie back in the bottle.”
A federal antitrust lawsuit was filed last year against CHS, which alleged that it engaged in efforts to prevent competition, therefore driving up health care costs in the Charlotte region.
A Charlotte Observer reporter said at a press conference Thursday that someone involved with the UNC-CHS deal said the reason for combining resources was to decrease competition, according to a transcript of the press conference. But Bill Roper, the CEO of UNC Health Care, denied the allegations, according to the transcript.
“There’s lots of competition in health care in North Carolina,” Roper said. “There will be the day after we come together, presumably we are successful. So competition in healthcare will continue, and we welcome that. We are better because we have competitors.”
In order for the deal to be successful, there is a regulatory process that must take place. But Woods said he is not as concerned about regulation hurdles as other organizations might be in a merger, despite the size of the proposed organization.
“If you look at mergers (and partnerships) in other parts of the country, sometimes you have the phenomena that in any particular community, there’s additional market presence from two organizations coming together,” Woods said at the press conference. “That’s really not the case here. We have complementary health delivery systems.”
Woods said the complimentary systems will allow the organization to reach patients in all parts of the state who need specified services, such as pediatric care, heart care and cancer treatment.
Representatives from the two systems say they plan to use combined resources to improve existing facilities, build new facilities, drive research and bring affordable care to the region, the release said.
“Obviously, the enhanced buying power that we will have now collectively when we’re trying to buy medical suppliers or pharmaceutical supplies, actually, we believe that will ultimately enhance our ability with respect to our affordability agenda,” Woods said.
And, by combining resources and not duplicating infrastructure or technology, the organization plans to decrease costs for patients by saving itself money, Woods said at the conference.
But by combining resources, “there will likely be some restructuring required to integrate operations,” according the proposed organization’s website. However, Woods said the new entity should ultimately increase job growth and retain talented professionals.
“What we’ve said is that our intent is to grow,” Woods said. “So we believe that what’s required here is actually more talent and more clinicians to help us expand in areas like rural care, in areas like behavioral health.”
Many details, such as a new name or headquarters for the organization, have not been announced. The new entity is expected to begin operations in 2018, if succesful, according to its website.