Originally in the Charlotte Observer

February 15, 2018

North Carolina’s attorney general is demanding more details on a proposed combination between Atrium Health and UNC Health Care, saying it’s impossible for his office to review the deal off the little information he’s been given.

In a letter Thursday to the CEOs of both hospital systems, Josh Stein said that since he met in August with the executives to discuss the deal, he hasn’t received enough additional information about its likely effects on consumers.

“Experience cautions that large-scale health system mergers are often not in the public interest,” Stein wrote to Atrium CEO Gene Woods and UNC Health Care CEO William Roper. “The state and the public have a right to know the facts behind your proposal.”

Stein said he was issuing civil demands to the nonprofit systems for information to assess impacts of the proposed combination, such as whether it would increase health care costs and reduce choices for patients.

In a statement, Chapel Hill-based UNC Health said it looks forward to working with Stein and the N.C. Department of Justice to provide the requested information in a timely and transparent manner.

“UNC Health Care’s goals in pursuing this partnership are to improve the health of all North Carolina’s citizens, increase access to much-needed medical care and reduce rising costs,” UNC Health said.

Charlotte-based Atrium, formerly known as Carolinas HealthCare System, said in a statement: “We have received the request for information. … This is expected for the complex and transformative combination we have been working on, and we look forward to answering their questions, since we both want what is best for the citizens of North Carolina.

“As teams from Atrium Health and UNC Health Care are negotiating the remaining details of the joint operating agreement, our goal remains as it always has – to improve the health for North Carolinians by increasing access and affordability, advancing clinical care and contributing to our state’s economic vibrancy.”

It’s not unusual for attorneys general to demand more information about big business deals, said Barak Richman, a Duke Law School professor. Sometimes it can simply mean the attorney general wants to know more about a transaction, but often it’s a reflection of genuine concern, he said.

“This is an enormous merger that is fraught with lots of implications for the health and finances of millions of North Carolinians, so it ought not be surprising that it has attracted the AG’s attention and concern,” said Richman, who has studied hospital mergers.

In a press release titled “We Need Details,” Stein said mergers between large health systems tend to drive up costs for patients and businesses, and that he intended to make sure that didn’t happen with the Atrium/UNC combination.

The megadeal, for which negotiations are ongoing, is expected to create one of the largest hospital systems in the U.S., employing 90,000 people and operating 60 hospitals. Woods is expected to become chief executive of the new public, nonprofit corporation, while Roper will chair its board.

The two hospital groups have said the combination will improve access to care in the state, such as in rural areas suffering from a shortage of doctors and services.

But others say hospital consolidations can lead to higher prices charged to insurance companies, which in turn charge higher premiums to customers. Citing such concerns, Blue Cross and Blue Shield, the state’s largest health insurer, last month came out against the Atrium/UNC Health deal.

N.C. Treasurer Dale Folwell, whose office oversees the State Health Plan, has also expressed concerns about the deal. Folwell has said the health plan is the single largest customer of UNC Health, giving rise to his worries about possibly higher health care prices.

Previously, Stein’s office told the Observer its review of the combination also involved whether it might affect the operations of UNC Health Care, an entity created by 1998 state legislation.

The transaction does not require approval from the state attorney general. But Stein, a Democrat who took office last year, can sue to block the deal if he believes it will hurt consumers or competition.

Thursday’s order is not the first such demand Stein has issued to a company. Last summer, for example, he sent one to the company Chemours for discharging an unregulated chemical, GenX, into the Cape Fear River.