Carolinas HealthCare to merge with UNC Health

Charlotte-based Carolinas HealthCare System, already the largest health system in North Carolina, has announced plans to grow even bigger by creating a joint venture with University of North Carolina (UNC) Health Care.

The combined entity would control more than 50 hospitals and employ more than 90,000 people, making it one of the largest hospitals systems in the country. The merging systems emphasized the consolidation would improve rural healthcare and cancer treatment in the state.

“By integrating our organizations, we are combining the strengths of two great health systems, providing greater access to a full range of services and leading-edge treatments for patients, enabling better coordination of care and advancing research,” said William Roper, MD dean of the UNC School of Medicine and CEO of UNC Health Care. “Carolinas HealthCare System is one of the most innovative healthcare organizations in the nation, particularly in combining world-class clinical care with a community care model. By combining our two extremely mission-focused organizations, we will offer an unparalleled array of services, expertise and experiences for our patients and communities—beyond what either of us could do independently.”

Roper would serve as executive chair of the new organization. Current Carolinas president and CEO Gene Woods would serve as chief executive. The two entities hope to reach a final agreement by the end of 2017 and then secure approval from the Federal Trade Commission next year.

Regulators, however, may balk at the size of the new entity and antitrust allegations which have already dogged Carolinas. In a lawsuit filed by the U.S. Department of Justice last year, it was accused of illegally pressuring insurers from working with lower-priced hospitals by including provisions in contracts allowing Carolinas to terminate network agreements if patients are steered away from their facilities.

Additionally, the system is already dominant in the market and controls or operates more than 800 medical facilities, making it the 10^th largest integrated health system in the country.

The FTC has also been successful over the past year blocking proposed hospital mergers in Illinois and Pennsylvania, pointing to evidence consolidation drives up costs for patients and payors.