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.”
Stein included a civil investigative demand for a wide range of documentation dating back to 2015 pertaining to the proposed merger, and he set a deadline of 5 p.m. March 16.
A spokesperson for Stein’s office told HealthLeaders Media that Atrium and UNC Health Care had not produced any records responsive to the demand, although there were still two weeks left before the deadline.
“Now that their proposed deal is off, I will suspend my investigation,” Stein said Friday in a statement on Twitter.
The Atrium-UNC deal had also faced opposition from BlueCross BlueShield of North Carolina.
“After a thorough review of independent research which shows that when health care systems combine costs for consumers go up, Blue Cross NC cannot support your proposed combination,” President and CEO Patrick H. Conway, MD, MSc, wrote to each system’s CEO in January. “However, we are open to continued dialogue if you can demonstrate how this combination will lower costs and improve quality over the long-term.”
Major partnerships
Let’s not forget that Atrium has other irons in the fire. The day after it announced its name change last month, the system reached across state lines to partner with Navicent Health in Macon, Georgia.
“We are committed to being an organization that is agile enough to respond to the quickly changing dynamics of our field, and also serve as an effective platform for growth that will attract other like-minded partners committed to the same goals to transform care together,” Atrium said in its statement Friday.
One of the big lessons healthcare executives should learn from the demise of the Atrium-UNC deal is that “the devil is in the details,” Wilson said.
“Figuring out certain aspects of the deal, including control and culture, before moving too far along in the process can save a lot of heartache and money in the long run,” she said. “I also think employee and community buy-in when merging is a definite consideration, not just with this deal, but any consolidation deal.”
The statements released Friday by Atrium and UNC Health Care are published in full:
Atrium Health statement
The following statement was released by an Atrium Health spokesperson:
"Atrium Health has suspended discussions with UNC Health Care to form a joint operating company. Atrium Health Board of Commissioners Chairman Ed Brown and Atrium Health President and Chief Executive Officer Gene Woods informed UNC Health Care’s leadership in a letter sent earlier today.
"Atrium Health is committed to the patients and communities of North Carolina more than ever and remains committed to creating an organization that will serve more people in better ways and enhancing our ability to address our state’s most pressing issues including rural care, behavioral health, and affordability.
"In our letter sent to UNC Health Care today, we informed them that while we have not been able to reach an agreement, our respect for UNC Health Care, its team and UNC Health Care's accomplishments has grown through this process. Their desire to work collaboratively to improve the health of every North Carolinian is something we highly value and to which we are also committed.
"Atrium Health’s priority will always be its patients and communities. We are committed to being an organization that is agile enough to respond to the quickly changing dynamics of our field, and also serve as an effective platform for growth that will attract other like-minded partners committed to the same goals to transform care together. We will remain steadfast in our mission to improve health, elevate hope and advance healing – for all, and committed to ensuring the people of the Carolinas and beyond have access to world-class care."
UNC Health Care statement
The following statement was signed by UNC Health Care System CEO William L. Roper, MD, MPH, and UNC Health Care Board of Directors Chairman Dale Jekins:
"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.
"In late August, UNC Health Care and Atrium Health (Carolinas Healthcare System at the time) announced our intention to form a partnership that would bring our two organizations together in a joint operating company.
"We have agreed that the best path forward for both organizations is to identify specific opportunities to work together, as we have previously, to improve health care across the state and region. Though we will not form a joint operating company, UNC Health Care and Atrium Health will continue to partner on important issues such as improving rural health care and expanding medical education.
"As we have said since the beginning of this process, UNC Health Care remains focused on the best interests and health of the people of North Carolina.
"We would like to express our gratitude to the leadership teams at Atrium Health, UNC Health Care, and the UNC School of Medicine for the time and effort spent working on the joint operating company proposal.
"We are also grateful to our respective boards of directors, UNC Chapel Hill and UNC System leaders, the UNC Chapel Hill Board of Trustees, the UNC Board of Governors, and State leaders for their support of our continued efforts to improve health across North Carolina."
Editor's note: This article was updated to include the full statements released Friday by Atrium Health and UNC Health Care.
Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.