Carolinas and UNC together have 14 hospitals located in rural North Carolina.
Carolinas HealthCare, based in Charlotte, reported operating revenue of about $9.4 billion in 2016. The system includes more than 7,600 licensed beds and employs more than 60,000 full-time and part-time workers.
Chapel Hill-based UNC Health Care, which is owned by the state, recorded $4.56 billion in operating revenue for its fiscal year ended June 30. It has 2,785 beds and employs 1,864 physicians.
Together, the combined organization would employ 3,936 physicians and more broadly, about 100,000 employees. The deal must win regulatory approval.
The two CEOs and their boards began discussing a partnership over the summer. In the last week and a half, they met with North Carolina elected officials about the joint venture, including Gov. Roy Cooper and Attorney General Josh Stein. Roper said he also spoke with Blue Cross and Blue Shield North Carolina CEO Brad Wilson about opportunities for partnering with the combined healthcare system.
Elected officials, the health systems' employees and others have responded well to the partnership announcement, Roper said.
But the Federal Trade Commission has recently come down hard on proposed hospital mergers in other states, stating huge consolidation raises prices for consumers.
Carolinas and UNC don't anticipate any antitrust issues and said competition will remain strong in the state.
That's despite the U.S. Justice Department last year suing Carolinas, saying it illegally placed restrictions in its contracts with insurers that forbids them from offering narrow networks that steer patients. A U.S. District Court judge earlier this year ruled that the DOJ had proven Carolinas takes advantage of its market power in Charlotte in ways that raise prices for patients.
Carolinas HealthCare has said that it follows the law and that it is dedicated to making health care more affordable.
In Charlotte, Carolinas' largest competitor is Novant Health, which owns 14 hospitals in North Carolina and Virginia.
Woods said he's confident Carolinas and UNC don't have much geographic overlap, which would ease FTC concerns. The systems hope to secure the agency's approval by next summer.
The systems also anticipate needing more talent as the combined organization grows.
They serve about half of the 200,000 discharges from rural hospitals in the state. The CEOs hope to combine capabilities to transform the way care is delivered to patients in those parts of the state, through telehealth and other new models of care, but also to create sustainability in terms of jobs, Woods said. The joint venture could also serve to recruit physicians if it results in the city's first medical school.
The combined system will also focus heavily on advancing cancer treatment. UNC is a National Cancer Institute-designated cancer center with more than $70 million in cancer research grants from the National Institutes of Health, while Carolinas cares for more than 10,000 cancer patients per year at its Levine Cancer Institute.
"You combine that together and it really is incredible in terms of the world-class clinician access that every Carolinian will have, and will frankly not have to travel outside of their communities in the state to receive," Woods said.
An edited version of this story can be found in Modern Healthcare's Sept. 4 print edition.
