Wake County leaders are pumping the brakes on the proposed merger of WakeMed and Charlotte-based Atrium Health. Atrium, the state’s largest hospital system, made the announcement Friday. Wake County commissioners had quietly added an amendment to WakeMed’s articles of incorporation and property agreement to the consent agenda for its Monday meeting, but removed it after backlash over the lack of public engagement.
While the county commission has no legal authority to approve or block the merger, its sign-off on key legal changes is needed to move forward with the deal as currently configured; they get a say because of the county’s role in an agreement that created WakeMed. If the new arrangement fails, WakeMed facilities would revert back to the county.
WakeMed is one of the biggest healthcare systems in the county, said State Rep. Steve Schietzelt, a Wake County Republican who is concerned about the lack of transparency and due diligence surrounding the process.
“In the past when we’ve seen hospital consolidation we’ve seen a consistent pattern of it leading to higher prices, lower quality, and generally less access for patients,” he said. “So we want to make sure that this deal makes sense for Wake County.”
The agreement took a purported two years to hammer out, but wasn’t revealed publicly until Friday afternoon. “We definitely need more than three days to understand the implications,” Schietzelt said.
This would not be WakeMed’s first major transition. In 1965, the Wake County Hospital System, Inc., was incorporated into what is now WakeMed, and mandated to establish and run a community general hospital, clinics, nursing homes, and other medical facilities. The Wake County Board of Commissioners approved a transfer of health care assets owned by the county in 1996, including the hospital in southeastern Raleigh, for no monetary compensation, just the promise that WakeMed would continue to care for indigent patients who cannot pay. If they failed on that promise, the facilities would revert to the county.
The transfer agreement was amended in 2008 to quantify how much indigent care WakeMed had to provide—currently set at 4.8% of the hospital’s revenue. That is expected to remain the same if the proposed merger takes effect.
Atrium also promises to invest $2 billion in facilities, equipment, and services in the county, and create more than 3,300 new healthcare jobs in the next five years, although that job growth likely would happen anyway, given WakeMed’s current trajectory, said State Treasurer Brad Briner, who is also chair of the state’s health plan, which insures 750,000 state employees, retirees, and their dependents.
“These mergers always follow the same pattern,” Briner said. “They’re the same dialogue up front about how it’s necessary and how these systems won’t survive without it. And they all end up in the same place, with higher prices for the State Health Plan.”
“It’s theoretically possible” that the deal could lead to lower cost for supplies, Briner said, as Atrium has promised. “But what you observe actually is that any savings from cost don’t yield lower prices for patients; they just yield higher profitability for the system.”
WakeMed runs at about a 4% profit margin. Atrium’s is at 11%, and HCA Healthcare, which took over Mission Hospital in Asheville in 2019, runs at a 10% margin. “So what you see is just margin expansion,” Briner said. “You don’t see relief for the patients.”
WakeMed spokesperson Kristin Kelly pointed out that fewer than 19% of hospitals in America—and less than 10% in North Carolina—are independent.
“The work ahead for health systems requires scale, resources, and partnership that no single organization can build alone,” she wrote in an email. “WakeMed is in a strong operating and financial position, but we recognize there is much more opportunity and need. Bringing together WakeMed’s deep community roots and clinical excellence with Atrium Health’s scale and resources, we can invest in critical infrastructure and bring even more advanced treatments closer to our local community’s residents.”
The new agreement would not only continue WakeMed’s current commitment to charity care, it would expand the patient pool that qualifies for financial assistance from 300% to 400% of the federal poverty level. Atrium plans to add at least 100,000 virtual visits a year and increase Wake County patients’ access to specialties like oncology, neurosciences, and pediatric specialties.
Wake County commissioners will continue to appoint eight county residents to the new entity’s 14-member board of directors, but Atrium would technically gain veto power over those appointments. Atrium would also get to appoint the remaining six seats, which are currently chosen by the county appointees. The proposed merger is being reviewed by the Federal Trade Commission and state Attorney General Jeff Jackson.
Jackson’s office said via email that it is reviewing the transaction. “Our focus is on ensuring patients can continue to get high-quality healthcare they can afford, no matter where in the state they seek care,” wrote press secretary Bailey Aldridge.
Wake County Commission Chair Don Mial is in favor of the proposed merger. He remembers when the hospital was first built, and he’s been around for the rapid growth in the county.
“If I didn’t think it was a good move, I wouldn’t have supported it,” he said. But he said it’s important for WakeMed and Atrium leaders to sell it to the community: “We don’t have anything to hide on this, and we want full transparency.”
Raleigh City Councilman Corey Branch, who represents southeastern Raleigh, where the main WakeMed hospital is based, said he has reached out to the hospital CEO to make sure his constituents continue to receive “world class medical care and support.”
Branch, who was born at WakeMed Hospital, considers it a plus that Atrium combined with Advocate Aurora Health in 2022, to form Advocate Health, now the third-largest nonprofit health system in the U.S., which operates 67 hospitals and over 1,000 locations in the Southeast and Midwest.
In Cary, WakeMed runs the only hospital in town.
“Before we hand over control of WakeMed Cary, we need clear protections for local patients and a lot more transparency than we’ve seen so far,” Cary Town Councilmember Lori Bush said in an email. “The pattern we see nationally, and in N.C., is that when large systems like this acquire local hospitals, competition shrinks and prices rise. That’s not what our neighbors need, especially now.”
And state Rep. Monika Johnson Hostler wants assurances that WakeMed will remain committed to the preventative care they currently provide.
“If we’re going to create healthy and safe communities, prevention is our priority, and that’s not necessarily always built into a hospital model, but it’s built into [WakeMed’s] healthcare model,” she said. “I want to make sure that the preventative healthcare and community focus remains a strategic priority for the next iteration of what will happen.”
Overall, leaders are not so much opposed to the merger as concerned about the speed and secrecy of the decision.
“I see a process that has not been transparent at all,” Schietzelt said. “The official line that we’re receiving is that there has to be confidentiality in these negotiations, and we’re all sorry that we couldn’t talk about this sooner. My understanding is that there were threats of litigation, if any information got out about that. So, they kept this locked down very tightly. And decided to release this on Friday for a vote on the consent agenda on Monday with little or no discussion.”
“This is not a process that gives people confidence,” he continued. “This isn’t your standard corporate merger. This is the largest hospital system in the state, and one of the key hospital systems in Wake County merging, with hundreds of thousands of people that depend on WakeMed for care. We owe transparency and accountability to the people that depend on this hospital system.”
On Monday, the county tabled taking action on the legal changes for 90 days to allow for further discussion.