State Treasurer remains ‘profoundly concerned’ after WakeMed/Atrium merger approved by Wake County
After new assurances from the two systems, Wake County’s Board of Commissioners voted 5-2 on Monday to approve a merger between WakeMed, a Raleigh hospital, and Charlotte-based Atrium Health. State Treasurer Brad Briner, a Republican, previously denounced the merger proposal saying it would increase costs for State Health Plan (SHP) members.
Briner, the chair of the SHP’s board of trustees, released a video statement on Tuesday reiterating his position. In the video, he said “nothing has fundamentally changed” despite some “last-minute, minor modifications engineered by the governor’s office.”
On Sept. 17, Democratic Gov. Josh Stein sent a letter to WakeMed and Atrium executives outlining concerns, proposing a five-year cap on annual WakeMed price increases at 1.5 times the rate of Medicare price increases, and asking for a stronger commitment on a promised $2 billion investment by Atrium in WakeMed.
On Sept. 19, WakeMed and Atrium responded with their own letter acceding to Stein’s requests. Stein then said in a statement: “Because Atrium has addressed a number of concerns about the deal’s impact on North Carolinians, I do not oppose the combination.”
On Monday, Sept. 21, Wake County commissioners approved the deal under the new conditions. The deal is still subject to independent reviews by Attorney General Jeff Jackson, a Democrat, and by federal regulators. Briner called for both reviews in the video.
“Hospital consolidation leads to less competition and higher prices,” Briner said. “It’s no different than when I’m trying to lose weight and rationalize having a second dessert. All the rationalization in the world cannot change the fact that it’s a bad decision, and I know it.”
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Catch up on the WakeMed/Atrium deal
The WakeMed and Atrium’s proposal for a “strategic combination” first came to light with controversy.
On Friday, May 1, a critical vote to approve the merger was inserted into the Wake County Board of Commissioner’s Monday consent agenda, which normally wraps noncontroversial votes into one for quick passage. As part of a 1997 agreement that made WakeMed a private nonprofit, the Wake County Board of Commissioners needed to vote to approve the merger deal.
Over that weekend, news of the deal spread, and by Monday, May 4, the vote was delayed to allow time for public comment. At the time, Wake commissioners and state officials expressed surprise and disappointment at the air of secrecy surrounding the deal.
“When people in any topic try to sneak something by you, it raises many more questions than it answers, and I don’t think this is any different,” Briner said at the time.
Throughout the summer, as reported by NC Health News, the hospital systems lobbied Wake commissioners behind the scenes and simultaneously made their case in public meetings.
Some members of the public speaking at those meetings some supported the deal, but many voiced opposition to the merger.
“Atrium and Advocate (Health) are not interested in improving care in Wake County — they want to expand by any means necessary,” one Raleigh mother said in August. “WakeMed is the last of a dying breed, and time and time again hospitals have seen this kind of merger lead to under-staffing, higher patient loads, and worsening patient outcomes.”
How will the State Health Plan be affected?
The SHP is a division of the Department of State Treasurer, and provides health care coverage to nearly 750,000 teachers, charter school employees, community college employees, other state employees, retirees, and their dependents.
In May, Briner told EdNC that teachers and other state employees would likely pay “10 bucks a month more just to keep WakeMed happy.”
Briner’s “10 bucks a month” figure, representing his expected additional cost for plan members, was calculated based on the assumption of a 20% increase in WakeMed prices under the deal. Following a public statement from WakeMed President and CEO Donald Gintzig, Briner tweeted that Gintzig had said “the quiet part out loud” when saying WakeMed faces competition with other systems, receiving 10% to 30% lower compensation for care.
SHP members represent a substantial portion of WakeMed’s customer base, so price increases could significantly affect the cost of the plan.
“We’re the payer of those prices. We’re the largest customer of WakeMed by far,” Briner told EdNC in May.
What now?
Both Stein and Briner have called for an independent assessment of the deal by Jackson. However, state law means the attorney general may have limited authority to reject the deal, according to WRAL.
The deal will also need to be reviewed by federal regulators to ensure it doesn’t violate federal antitrust laws.
In the meantime, WakeMed and Atrium are moving forward. In a joint statement, they wrote:
“We recognize that trust is earned, and our focus now is to follow through on what we’ve outlined, continuing to listen to the community and demonstrating, through our actions, the value this combination will create for the people of Wake County and beyond.”