WakeMed, Atrium Health plan merger, and face criticism

WakeMed and Atrium Health are planning to join forces, and they are touting the benefits of coming together in a strategic partnership.

Still, some North Carolina state officials have raised concerns about the transaction, and WakeMed officials have acknowledged that some are anxious about the planned deal.

Atrium Health is part of Advocate Health, the third largest nonprofit health system in the United States. Atrium has pledged $2 billion in investments in Wake County and vowed to create more than 3,000 jobs and expand care for 1 million North Carolina residents. The organizations announced the merger plans earlier this month.

Dr. Thad McDonald, the chairman of the WakeMed Board of Directors, said at a news briefing that he recognizes there are some concerns about the deal, but he says it’s the best way to secure the future for the health system.

“I am acutely aware of the angst this announcement has caused with staff, with community leaders, and patients, and will say at the outset, I completely understand,” McDonald said at a news briefing. “When first presented with the possibility, our executive committee felt the same, but after two years of due diligence, we came to see the pure beauty of it.”

Under the planned partnership, WakeMed says the system would not be sold to Atrium Health. WakeMed says the system would join Atrium Health. The system says the WakeMed brand would remain but there could be changes in the organization’s identity to reflect joining Atrium Health.

Assuming regulators approve the deal, WakeMed says the integration of the systems would take place over two years.

‘Not about today’

Donald Gintzig, president and CEO of WakeMed, said at that news briefing that the system has been approached several times about joining another system in recent years. But he says joining Atrium Health is important for the system’s long-term future.

“It really is not about today, not even about tomorrow, not even about next year, but where we are 5, 10, 15, 20, years down the line,” Gintzig said at the news briefing.

“It's our job as the custodians and fiduciaries and responsible to the people of this community, but in particular WakeMed, to make sure that it is strong and viable and able to meet the needs of an ever-changing healthcare world,” Gintzig said.

The WakeMed CEO also pointed to dealing with two strong competitors in UNC Health and Duke Health.

“We're in the most competitive healthcare market in North Carolina,” Gintzig said at the briefing.

By joining with Atrium, he said, “WakeMed has the opportunity to be able to compete in a good way and collaborate in a great way to improve the health of this community.”

‘Will not benefit the public’

WakeMed is holding a series of public meetings to gather public input on the deal.

Some North Carolina state officials have publicly aired their reservations about the proposed merger since the plans were first announced.

North Carolina Treasurer Brad Briner said in a news release that consolidation doesn’t benefit consumers.

“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,” Briner said.

Briner said he looked forward to reviewing the planned WakeMed-Atrium merger, but added, “If history is any guide, this merger will not benefit the public.”

State Auditor Dave Boliek also issued a statement expressing concerns about the plans shortly after they were announced.

“The rollout of the proposed hospital takeover raises questions. The lack of transparency does not instill confidence, in fact, it calls for greater scrutiny and explanation,” Boliek said.

Adding beds and services

WakeMed and Atrium said the plans under the consolidation call for expanding and upgrading WakeMed’s flagship Raleigh campus, adding more beds and upgrading technology. WakeMed’s Cary Hospital, North Hospital, and Garner campus would all get more inpatient beds, the organizations said.

Steve Smoot, executive vice president and president of Advocate Health’s North Carolina and Georgia division, said at the news briefing this month that the goals of bringing Atrium and WakeMed together are straightforward.

“We're here to build on what WakeMed has already created, and together make it even stronger for the people of Wake County and North Carolina,” Smoot said.

Smoot said the partnership would address affordability. With the partnership, Smoot said charity care benefits for WakeMed patients would be extended to those who are 400% over the federal poverty line, and those who are under 300% of the poverty line “won't even get a bill.”

Smoot said other benefits would be expanding virtual care options, including at least 100,000 more telehealth visits each year so patients could see doctors more quickly.

WakeMed says that with growing challenges with reimbursements and other changes in the industry, more hospitals are partnering with other systems. WakeMed notes that less than 10% of North Carolina’s hospitals are independent.

McDonald said WakeMed remains financially sound, but the road is getting harder.

“It's important to understand that the current healthcare landscape is more and more challenging for safety net hospitals like ours,” McDonald said.

If the deal is approved, Wake County would continue to appoint the majority of WakeMed’s board members, the systems say.

“This partnership is about more than shared values,” Smoot said at the briefing. “It includes clear written commitments to this community, including local governance, public reporting, and ensuring that Wake County always has a seat at the table.”

WakeMed operates three full-service hospitals, a children’s hospital, a rehabilitation hospital, and more than 175 physician practices.

Atrium Health merged with Advocate Aurora Health to form Advocate Health in 2022. Advocate Health operates 69 hospitals in Alabama, Georgia, Illinois, North Carolina, South Carolina, Wisconsin and Michigan.

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