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Advocate Health Mega Merger Garners Cost, Access Concerns

Analysis  |  By Melanie Blackman  
   December 08, 2022

The newly merged health system, which recently announced its appointed executive team, promises lower healthcare costs and expanded access for patients, but stakeholders have concerns.

The mega merger between Illinois-based Advocate Aurora Health and North Carolina-based Atrium Health is complete, creating a $27.1 billion health and wellness delivery system that has some healthcare stakeholders worried.

The combined system, Advocate Health, will serve 5.5 million patients in Illinois, Wisconsin, North Carolina, South Carolina, Georgia, and Alabama. New headquarters will be established in Charlotte, North Carolina, while a new institute for health equity will be established in Milwaukee, Wisconsin.

While the organization has transitioned to a new umbrella brand, the Advocate Aurora and Atrium Health brands will continue to operate in their markets as they did prior to the merger, with Wake Forest University School of Medicine serving as the organization's academic core.

The system now operates 67 hospitals and more than 1,000 ambulatory locations, and will be supported by 148k teammates, 7.6k employed physicians, 18.5k aligned and medical staff physicians, and 41k nurses.

Executive leadership team named

Additionally, the organization, along with co-CEOs, Eugene A. Woods and Jim Skogsbergh, announced the merged organization's executive leadership team, earlier this week, comprised of previously appointed Advocate Aurora and Atrium Health employees and leaders.

"This is a stellar leadership team—each with diverse experience and a proven track record to boldly lead our new organization into the future," Woods said in a statement.

"Our executive leadership team will chart the course for our journey to reimagine health and well-being, advance health equity and improve the lives of individuals, communities and teammates," Skogsbergh said in a statement.

President-level leaders:

  • President, Atrium Health Navicent: Delvecchio Finley, MPP, FACHE
  • President, Advocate Health - Southeast Region: Ken D. Hayes, MSHA, MBA, FACHE
  • President, Atrium Health Wake Forest Baptist: Kevin High, MD
  • President, Advocate Health Enterprises: Scott Powder, MBA
  • President, Advocate Health - Midwest Region: William (Bill) P. Santulli, FACHE
  • President, Atrium Health Floyd: Kurt Stuenkel, MBA, MHA, FACHE

Executive vice president leaders:

  • EVP, chief academic officer and CEO of Atrium Health Wake Forest Baptist: Julie A. Freischlag, MD, FACS, FRCSEd(Hon), DFSVS
  • EVP, chief information officer: Bobbie Byrne, MD, MBA
  • EVP, chief community and social impact officer: Kinneil Coltman, DHA
  • EVP, chief financial officer: Anthony C. DeFurio, MBA, MHA
  • EVP, chief legal officer: Brett J. Denton
  • EVP, chief people and culture officer: Jim Dunn, PhD, DHA, DAST, FACHE
  • EVP, chief brand, communications, and consumer experience officer: Kelly Jo Golson, MBA
  • EVP, chief nursing officer: Mary Beth Kingson, PhD, RN, FAAN
  • EVP, chief of staff: Richard (Rick) G. Klein
  • EVP, chief of staff and chief integration officer: Carol A. Lovin, MHSA, MN
  • EVP, chief physician executive: Scott Rissmiller, MD
  • EVP, chief innovation and commercialization officer: Rasu B. Shretha, MD, MBA
  • EVP, chief strategy officer: Shoeb J. Sitafalwalla, MD
  • EVP, chief medical officer: Gary Stuck, DO, FAAFP

Senior vice president leaders:

  • SVP, chief diversity, equity, and inclusion officer, and president of Advocate national Center for Health Equity: Cristy Garcia-Thomas
  • SVP, chief population health officer: Don Cacagno, MBA
  • SVP, chief government affairs officer: Kristen Morris
  • SVP, chief population health officer: Terry G. Williams, DrPH candidate, MBA
  • SVP, chief government affairs officer: Meghan Woltman

The organization's board of directors has an equal number of members from Advocate Aurora and Atrium Health. Thomas C. Nelson, who previously served as chair of Atrium Health's board of directors, will serve as chair of the new organization's board until December 23, 2023. Michele Richardson, who previously served as chair of Advocate Aurora's board of directors will immediately succeed Nelson to serve a two-year term.

Keeping healthcare costs low

The two systems told HealthLeaders during a previous interview that the merger will result in better, more efficient care delivered at a lower cost to consumers.

"We are coming together to better serve our patients and communities with more access and better care at a lower cost, while addressing the root causes of health inequities," Advocate Aurora told HealthLeaders. "We can expand access to key subspecialties via technology, extend the reach of our population health approach to improve outcomes and affordability, and provide more opportunities to recruit diverse teams with the cultural competence to confront the toughest equity issues."

Advocate Aurora says it has controlled the growth of medical costs in its value-based plans with increases of 1%–2% while the national average is 6%–7%. Mortality rates have also fallen by 11%, team safety events are down 20%, and compliance with sepsis protocols is up by more than 50%.

"Together we can undoubtedly do more, be better, and go faster," Advocate Aurora added.

Concerns regarding the megamerger

North Carolina Attorney General Josh Stein released a statement on December 1 regarding the Atrium transaction and said the office concluded that there is no legal basis to prevent the merger following a thorough review.

"I appreciate Atrium’s efforts to respond to our numerous inquiries and its commitments to comply with its obligations under the antitrust consent order with my office, as well as our state law’s requirements governing municipal hospitals across its service area," Stein said.

He added, however, that he is concerned about the merger's possible effects on healthcare access in rural and urban underserved communities.

"Atrium has estimated that it will invest $25-50 million in the coming years to expand services in underserved communities in North Carolina; given the size and strength of this new combined entity, it is my strong belief that it can and should do more," he said.

"My office will continue to monitor the combined entity’s operations and its impact on North Carolinians’ health and well-being. If Atrium-Advocate Aurora is not in compliance with its legal obligations, my office will not hesitate to take action," he added.

North Carolina State Treasurer, Dale R. Folwell, shared deep concerns about the merger's cost implications in a statement published on December 2.

"Hold onto your wallets, the Attorney General has failed the patients and taxpayers of North Carolina yet again," he said. "There is widespread evidence that mergers make hospital care less affordable and less safe."

He voiced his concerns about the merger, citing Atrium Health's "notorious" aggressive medical debt collections and has sued more than a thousand North Carolinians, while encouraging thousands more to open medical credit cards that could charge up to 18% interest.

He also said that Advocate Aurora "is facing an antitrust lawsuit alleging anticompetitive behavior that has made health care prices higher in Milwaukee, Wisconsin, than in New York City."

"When hospitals make health care unaffordable, patients suffer the consequences. Millions of Americans have rationed medicine, gas, food, or skipped medical treatment, sometimes at the cost of their lives," he added. "This is just another example of the cartel putting profits and protectionism over patients. Merry Christmas for all."

Michael Abrams, MA, managing partner of Numerof & Associates, rejected the systems' claims that as a combined system they would achieve efficiencies and lower care costs, in a previous interview with HealthLeaders.

"If research on the subject is any guide, patients can expect that neither the cost of care nor the quality will improve as a result of the merger, certainly in the short term," he said.

It could also affect smaller, local vendors, since larger organizations tend to want to deal with national vendors for massive discounts.

"I can't see this as offering anything for the local economies, patients, or consumers. I think at the end of the day, this is all about hospitals putting the squeeze on payers and extracting from them concessions in their contracts," he said.

"In the long term, what this means for patients is they can expect that Advocate Aurora will control the cost of care in their markets, which means that costs will rise, and quality will, at best, remain the same because they can," he added.

Melanie Blackman is the strategy editor at HealthLeaders, an HCPro brand.


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