What Sank Atrium's UNC Health Care Deal?

Steven Porter, March 5, 2018

Executives at loggerheads over who would lead, questions from the North Carolina attorney general, and other business opportunities all contributed to the noise around the since-suspended merger discussions.

Talks of a potential merger between Atrium Health and UNC Health Care fell apart Friday, when the North Carolina-based organizations released separate statements reflecting the power struggle that had plagued their negotiations.

Atrium, the Charlotte-based nonprofit formerly known as Carolinas HealthCare System, said it suspended the discussions with UNC Health Care in a letter Friday from Atrium President and CEO Gene Woods and Board of Commissioners Chairman Ed Brown.

The statement that followed from UNC Health Care suggested, however, that the matter was more of a joint decision.

“After months of discussions and due diligence, UNC Health Care and Atrium Health have determined that we cannot satisfy our mutual organizational goals through a proposed partnership and joint operating company,” UNC Health Care System CEO William L. Roper, MD, MPH, and UNC Health Care Board of Directors Chairman Dale Jenkins said in a statement.

The news comes after talks between the two organizations hit a snag last month over which would retain a top leadership role after the merger, as The News & Observer reported.

Sarah E. Wilson, principal analyst of market access insights at Decision Resources Group in Nashville, said this contention over which leadership team would steer the joint operating company appears to be the main issue that sank the Atrium-UNC deal.

“You have two powerhouse systems in their respective markets, and I think neither system wanted to give up any control,” Wilson told HealthLeaders Media.

“There were also questions as to how this merger would impact patients in North Carolina,” Wilson added. “That may have added pressure to the negotiations, though that has not been stated by either party outright.”

Neither Atrium nor UNC Health Care responded to follow-up questions submitted Friday.

Questions from the attorney general

In addition to conflict between the two organizations, the potential merger faced pressure from North Carolina Attorney General Josh Stein, who sent a letter last month to the CEOs of both hospital systems, as the Charlotte Observer reported.

“Experience cautions that large-scale health system mergers are often not in the public interest,” Stein wrote in the letter. “The State and the public have a right to know the facts behind your proposal. Therefore, we seek information to assess whether the proposed combination would increase prices for health care, reduce choices available to patients and payors, or otherwise harm North Carolina patients, North Carolina businesses, or the State itself.”

Steven Porter

Steven Porter is editor at HealthLeaders Media.

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