Wake commissioners question Atrium-WakeMed merger

Wake County commissioners heard from officials from WakeMed, Atrium Health, and others on the proposed merger between the two hospital systems at a work session on Monday.

Atrium and WakeMed plan a “strategic combination,” including a $2 billion Atrium commitment to WakeMed’s initiatives.

Atrium, frequently described as North Carolina’s largest hospital system, is part of Advocate Health, which labels itself the nation’s third-largest nonprofit hospital system.

Founded in 1961, WakeMed has three acute-care hospitals, a physical rehabilitation hospital, and a mental health hospital for a total of 973 beds, according to its website.

“Our physician practices are home to more than 350 physicians representing nearly every specialty,” according to the site.

County commissioners gave both nonprofits a list of over 100 questions about the merger.

Dr. Thad McDonald, chairman of the board for WakeMed, told the commissioners that the overall tone from the community has been receptive, but that local control, cost, quality of care, transparency, and the future have been concerns.

Talks between the two hospital systems began in 2022, when WakeMed put out a request for proposal (RFP) looking for a partnership in oncology. According to McDonald, Atrium was the only system that replied, noting that WakeMed is “almost a mirror image” of Atrium.

“In January of 2024, this concept of a combination was presented to the executive committee of the board,” he said. “Our initial response as an executive committee was much the same as some of you here and members of the community: What? Give up our autonomy? We’ve always been fiercely proud of our independence; however, looking at the future of health care and especially the challenges facing safety net hospitals like ours, we felt it would be irresponsible not to give it vigorous due diligence.”

McDonald said the board asked three questions before moving forward: What does the future have in store for safety net hospitals like WakeMed? Given the obstacles identified in the strategy and the strategic plans they’ve already made, along with the acute need to renovate the New Bern campus, can they be certain of their ability to financially meet the needs of their ever-growing population, and will Atrium Advocate be a sound and suitable partner to help continue that mission?

Eugene Woods, CEO of Advocate Health, the health system that includes Atrium, spoke of the benefits of the proposed merger, including the fact that they are one of the largest providers of behavioral health in North Carolina, having three psychiatric hospitals and 100 psychiatrists on staff.

“Every investment creates a tenfold impact,” he told commissioners.

Advocate Health resulted from the merger of Advocate Aurora Health and Atrium Health in December 2022.

Woods said since the merger, they have reduced mortality by 14% across the system, closed 230,000 care gaps, including hypertension and have 26 Leapfrog A-rated hospitals across the country, including 10 in North Carolina, more than any other system in the state. Leapfrog is an independent company that evaluates health care quality of hospitals throughout the country.

“I think there’s a fear that an organization that comes out from the outside that doesn’t really know the different community not for-profits will all of a sudden make arbitrary decisions,” he said. “We haven’t done that in any single organized community that we serve.”

But, he did state that there are real concerns that all health systems will face in the next decade, including intensifying financial strain that will come with Medicaid reductions and inflation on supplies, pharmaceuticals, and technology; workforce shortages; persistent access gaps; behavior health demand surging past capacity; accelerating cybersecurity threats; and AI reshaping every aspect of health care.

Dr. Kevin High, who had been with Wake Forest Baptist Health prior to its merger with Atrium in October 2020 to become Atrium Health Wake Forest Baptist, said the hospital is “exponentially better five years later after this deal was initiated” and the process was very collaborative.

“They have delivered in every way,” he told commissioners. “It’s been a true partnership, not a takeover. Some of the best ideas and care models came from Wake Forest Baptist Health, some of the best ideas and care models came from Atrium Health. But far and away, the majority came from us asking: Well how do you do it? And Atrium saying: How do you do it? And the third way combined the best of both.”

But, not everyone has been impressed with the idea of the merger of WakeMed and Atrium.

In May, State Treasurer Brad Briner, among others, voiced his concerns about the proposal.

“There is a simple business principle that when suppliers consolidate and competition is reduced, it is the consumers who suffer,” Briner said in a prepared statement. “This has been proven to be true time and again in the health care landscape, where prices continue to rise and patients are left with mounting medical debt.”

“I look forward to the attorney general and FTC carefully scrutinizing this proposal and what it could mean for the people across our state,” Briner added. “If history is any guide, this merger will not benefit the public.”  

Wake County commissioners were set to vote on the merger soon after the announcement was made by the two hospital systems but postponed it to hold hearings and work sessions like the one on Monday for the public and others to gain more information.

At Friday’s State Health Plan Board of Trustees meeting, a question was raised on what impact the merger would have on the tier structure for providers.

Tom Friedman, executive administrator of the State Health Plan (SHP), said that Atrium is anywhere from 15-40% more expensive in aggregate than WakeMed, and if WakeMed were to apply those rates based on State Health Plan utilization, it would be on average between $7-$11 more per member per month.

“We will cross that bridge when we come to it,” he said.

Dr. Brian Miller, vice-chairman of the SHP board, said his op-ed in Carolina Journal with Ardis Watkins, shows that hospital mergers increase prices.

“They increased prices for the services, and they increase prices for health insurance premiums,” Miller said. “So the merger, if those prices are adopted as Tom said, would increase costs if they adopt higher prices. I think the good thing about this tiering strategy is that this gives us the opportunity to say here’s someone who’s going to offer us a better price that’s a preferred provider and those preferred providers that have better prices for the members in the State Health Plan. That’s an opportunity for us to drive volume to then purchase better access. So, if someone else is going to become bigger, this is a dynamic strategy that allows us to counteract that.”

Wake County commissioners are set to vote on the merger on Aug. 4.

“Wake commissioners question Atrium-WakeMed merger” was originally published on www.carolinajournal.com.