On August 31, 2017, UNC Health Care announced a plan to merge with Carolinas HealthCare. This merger, if approved, would bring together the nation’s second largest healthcare system with a renowned, academic-based teaching hospital that together would employ more than 85,000 workers. Ultimately, this partnership will create the largest system in North Carolina, and one of the largest systems nationally.
Reasons and Advantages for the Partnership
Both systems emphasized that a partnership will improve patient access, create efficiencies, provide better outcomes, and lower costs. Specifically, the letter of intent refers to the goal of creating “one system that blends the best of both.” At this time, headquarters for the new entity have not been agreed upon but speculation is that it will be in Charlotte.
For Carolinas HealthCare, the merger will add a wealth of new clinical researchers and academic resources. For example, it will provide Carolinas HealthCare a vast training ground for future clinicians and accelerate cancer research and treatment by combining the Levine Cancer Institute with UNC Health Care’s notable research funding and grants.
Potential Impacts on Consumers
Historically, hospital mergers have increased costs to patients. This is primarily because the new mega systems have more leverage with the insurers, allowing them to negotiate higher reimbursement rates from the insurance companies. These higher reimbursement rates get then passed back to the consumers and employers in the form of higher insurance premiums and/or leaner benefit plans. Leading healthcare policy experts from Duke, Carnegie Mellon, and Johns Hopkins have expressed doubts that a partnership of this magnitude will result in any patient savings.
Further complications may arise when considering that UNC Healthcare is a state asset; meaning that a merger will require support of the North Carolina Legislature. While leaders of each entity feel confident they will receive approval, the deal will have to be approved by the Federal Trade Commission and could come under additional scrutiny. North Carolina, like the rest of the country, has seen a rise in provider consolidation which has put these mergers in the spotlight of the regulators.
There is more to come on this arrangement but for now employers should remain skeptical of any promises to reduce costs.