Updated 2:43 p.m., August 31, 2017
Two major healthcare organizations in North Carolina are planning a merger. UNC Health Care of Chapel Hill wants to join with Carolinas Health-Care System of Charlotte.
The move would create an organization with more than 90,000 employees and 4,000 doctors.
Leaders of the two nonprofits say merging would allow them to make better deals with health insurance companies and improve access to doctors for rural communities. The deal needs approval from the Federal Trade Commission.
"Together with UNC Health Care, we believe that the opportunities to be a national model and to elevate health in North Carolina are nearly limitless," said Gene Woods, current president and CEO of Carolinas HealthCare System, in a news release.
Woods would serve as future CEO of the new entity.
Dr. William Roper, dean of the UNC School of Medicine, CEO of UNC Health Care, and future executive chair of the new organization, said by integrating, the two organization will combine the strengths of both systems.
"The academic roots of our institution, twinned with Carolinas' extraordinary reach as far as the communities (where) they are and their commitment to academics ...we think is a great combination," said Roper.
Anti-Trust Regulators To Scrutinize Proposed Merger
The proposed merger will receive scrutiny from anti-trust regulators not only for its sheer size, but also for competitive reasons that could affect health care costs for patients.
Health systems can exert pressure on health insurers through their size. Hospitals and insurers negotiate reimbursements for any medical procedure.
If a patient with health insurance undergoes knee replacement surgery, for example, that patient's health insurer has already negotiated a pre-arranged reimbursement for that procedure. The hospital will send the patient a bill with the full charges, but hospital executives know they will never receive that full amount. The hospital will receive only the previously negotiated amount.
With size, hospitals can pressure insurers for higher reimbursements. If a hospital and insurer don't agree on a price for a procedure, then that hospital will go on the insurer's "out of network" list, which typically brings higher prices to the patient. Therefore, patients are more likely to choose from an insurers' in-network providers.
North Carolina has a relatively competitive healthcare market, especially in the metro areas of Charlotte, the Triangle and the Triad. Even with the merger, patients still have choice for their health needs. In Charlotte, Novant Health, based in Winston-Salem, operates 15 medical centers, including five in the greater Charlotte area, as well as hundreds of physician clinic locations.
In the Triangle, UNC Health Care faces competition from both Duke Health and WakeMed Health and Hospitals.
UNC Health Care and Carolinas Health-Care have agreed to start a period of exclusive negotiations, with the goal of entering into final agreements by the end of the year.