Blue Cross of North Carolina comes out against Carolinas-UNC merger

Blue Cross and Blue Shield of North Carolina, the state's largest health insurer, publicly opposed the proposed merger between Carolinas HealthCare System and UNC Health Care, arguing it will drive up prices for patients.

In a letter Wednesday to the health systems' CEOs, Blue Cross and Blue Shield CEO Dr. Patrick Conway wrote the insurer has a responsibility to its roughly 3.9 million members to slow rising healthcare costs.

"After a thorough review of independent research which shows that when healthcare systems combine costs for consumers go up, Blue Cross NC cannot support your proposed combination," Conway wrote. "However, we are open to continued dialogue if you can demonstrate how this combination will lower costs and improve quality over the long-term."

Carolinas and UNC Health Care signed a letter of intent to create a joint venture in August. The systems' leaders said at the time they planned to enter final agreements by the end of 2017. The deal will be reviewed by North Carolina's attorney general and potentially the Federal Trade Commission. A six-member panel appointed by the University of North Carolina's board of governors will also review the plan.

Carolinas spokesman Chris Berger said the two systems are simply taking time to make sure they're doing everything correctly.

"What's interesting is the very reason this is taking so long is we want to be thoughtful," he said. "We want to make sure we're doing this the right way."

Berger rejected Conway's assertion that studies have found mergers drive up prices, arguing "apples to apples" comparisons to this deal haven't been done within the past decade.

The union would create one of the country's largest health systems, with about $14 billion in annual operating revenue, more than 50 hospitals and more than 90,000 employees. It would meld the systems' clinical, medical education and research resources. Carolinas CEO Gene Woods would be the combined entity's CEO, while Dr. William Roper, CEO of UNC Health Care, would be its executive chairman.

Woods and Roper have said they aim to improve access for patients in rural and underserved areas. Woods has said that about 70% of the state's residents would live within 20 miles of the organization's facilities.

Executives representing Charlotte-based Carolinas and Chapel Hill-based UNC Health Care have said there would still be plenty of competition in the state.

Berger said Carolinas hasn't heard either definitive support or opposition to the deal from North Carolina lawmakers, but said that his team is prepared to answer questions.