WakeMed-Atrium deal ‘deserves close scrutiny,’ governor’s office says ahead of possible merger vote – WRAL

A proposed merger of WakeMed with Atrium Health — a deal that would combine two multibillion-dollar hospital systems, one based in Raleigh and the other in Charlotte — is drawing new scrutiny from North Carolina’s governor.
WakeMed is one of the smallest hospital networks in the state. Atrium is one of the biggest in the nation. The proposed merger would put Atrium in charge of WakeMed. 
Other WRAL Top Stories
Under the deal, Atrium Health would assume the leading role of the nonprofit entity that operates WakeMed. In return, Atrium has promised to invest at least $2 billion in WakeMed’s expansion plans throughout the county. The deal would enable Atrium to enter the fast-growing Triangle market and compete with other networks such as UNC Health and Duke Health. State and public officials, however, have been skeptical of the deal, questioning whether it would lead to increased costs for patients. 
Gov. Josh Stein’s office this week sent a letter to WakeMed Chief Executive Donald Gintzig, asking about a dozen questions about particulars of the proposal.
“North Carolinians rely on high quality, affordable health care,” Stein’s office said in the letter. “WakeMed has long provided access to such care in Wake County. WakeMed’s recently announced proposed combination with Atrium Health will therefore have a significant effect on health care in Wake County and beyond. Accordingly, the proposed combination deserves close scrutiny and careful consideration.”
Stein has no formal say in the merger, but he has substantial political sway he could deploy either for or against the deal — which is up to the Wake County Board of Commissioners to approve or deny. All of the commissioners are Democrats, as is Stein, and they were all sent copies of the Aug. 17 letter. Stein’s office distributed the letter to media outlets late Friday. 
A spokesperson for Stein said Friday that WakeMed acknowledged receipt of the letter but hadn’t yet responded in writing to the questions posed in the letter.
Atrium, which was not a recipient of the letter, didn’t immediately provide a comment about the letter when reached. A spokesperson for WakeMed said the system is “currently working to address the governor’s questions about this important combination and its impact on the long-term health of WakeMed and our community.”
Skeptics of the deal fear that WakeMed could stray from its mission to serve everyone in the community, particularly lower-income residents. Others fear that as has been the case with many prior hospital mergers nationwide, it would start charging more and possibly cutting staff.
WakeMed says the $2 billion offered by Atrium over 10 years would enable or accelerate the renovation and expansion of its Raleigh campus, the expansion of hospitals in Cary and North Raleigh, further development of its Garner campus and build two additional health complexes in the county. They say the investment would lead to 3,300 jobs in the county. They also say the closing of the translation “will not result in any layoffs” and that the deal could lead to expanded charity care.
The letter from Stein’s office, signed by Deputy General Counsel South Moore, asks WakeMed: “What guarantees has Atrium provided to ensure that WakeMed’s prices will not increase if the combination is consummated?”
It also asks: “WakeMed devotes more than 12 percent of revenue to financial assistance for indigent patients. … Has Atrium committed to keeping that excess revenue in WakeMed for indigent care?”
WakeMed and Atrium have each sought to dissuade the concerns about their proposed merger, with Atrium promising to inject billions of dollars more into WakeMed’s operations, and hire new staff, rather than making cuts.
WakeMed has said that it, like many healthcare companies, is wrestling with higher costs and ambitious expansion plans and that the combination with Atrium would help it survive while still providing charity care. 
Many state political leaders are skeptical the deal would be good for the general public — or for state government, which spends billions of dollars a year on healthcare.
State Treasurer Brad Briner, a Republican, has been among the most outspoken critics of the deal, raising concerns that it would send healthcare prices skyrocketing for Triangle residents who are WakeMed patients. Briner leads the State Health Plan. It insures more than 700,000 state employees, retirees and family members, many of whom live in the Triangle.
Stein himself has been measured in prior public comments about the proposed deal. When the proposal first became public, he noted that the attorney general’s office — which he ran for eight years prior to becoming governor — has some power to review hospital mergers but that state lawmakers need to give that office “more tools in the toolbox to ensure these types of transactions are transparent and actually benefit the public.”
The Wake County Board of Commissioners, which has the final say over WakeMed and must vote to approve any such deal, was prepared to take a vote on it earlier this year but drew heated criticism after it was discovered the commissioners included it on what’s called a “consent agenda” — a logistical move that would’ve allowed them to vote to approve the deal with no debate, and without specifically mentioning that’s what they were voting on.
Wake officials have questioned hospital executives on governance of the combined company, and what role the county would play in it. They have also asked how the Atrium transaction would affect competition, access to care, local jobs, community investment, commitments to underserved communities, among other topics.
WakeMed executives have been adamant that decisions would be made locally, even though WakeMed would be giving up full governance autonomy. Under the deal, Wake County would retain control of eight of WakeMed’s 14 board seats. Atrium, which would control six, would become the sole corporate member of the nonprofit entity that runs WakeMed. WakeMed would remain a nonprofit charitable organization. 
The letter also asked about the governance issues, pointing to deal terms that appear to weaken the county’s oversight.
“Why did WakeMed agree to a governance structure that limits the Wake County Board of Commissioners’ role in selecting the WakeMed Board of Directors to merely vetoing the WakeMed Board of Directors’ nominees for the eight Community Directors who serve on the fourteen-member Board of Directors?” the letter inquired.

source