In a nearly four-hour-long work session Monday afternoon, the Wake County Board of Commissioners heard from WakeMed and Atrium Health leaders about the proposed $2 billion merger between Wake County’s independent nonprofit hospital system and Charlotte-based Atrium. The presentation comes ahead of a vote commissioners are expected to take later this summer on changes to WakeMed’s articles of incorporation and property agreement.
Here are five things we learned from the presentation.
1. WakeMed approached Atrium Health about a merger and undertook a lengthy due diligence process.
According to WakeMed Board of Directors chairman Thad McDonald III, WakeMed in early 2022 issued a request for proposals (RFP) seeking partners in oncology. Atrium Health was the only respondent, and further conversations revealed that the two nonprofit hospital systems shared a similar mission and values, McDonald said. Following a “deep dive” into Atrium’s culture and commitment to the local community, at the end of 2023, WakeMed directed attorneys to look at a partnership between the two entities and in January 2024, proposed the merger to the WakeMed board’s executive committee.
“Our initial response … was much the same as some of you here and members of the community: “What, give up our autonomy? We’ve always been fiercely proud of our independence,” McDonald said. “However, looking at the future of healthcare and especially the challenges facing safety net hospitals like ours, we felt it would be irresponsible not to give it vigorous due diligence.”
Over the next two-and-a-half years, McDonald said, WakeMed took a deep look at the state of healthcare in North Carolina, the future of so-called safety net hospitals (which provide care to vulnerable people and those who can’t pay), and its capital needs.
The evaluation “revealed almost insurmountable obstacles,” McDonald said.
After engaging advisors, finalizing terms, and receiving unanimous approval from its board, WakeMed leaders presented the proposal, including a transfer agreement and updated articles of incorporation, to the Wake County Board of Commissioners in a closed session in March. The item was placed on the commissioners’ consent agenda for their May 4 meeting, but the vote was delayed following public outcry from stakeholders concerned about the speed and secrecy surrounding the deal, the potential for increased healthcare costs to residents, and Atrium’s level of investment in WakeMed.
2. Leadership says the merger would mean more support for mental health services, affordable housing, and lower-income residents in Wake County
Gene Woods, CEO of Atrium Health’s parent company, told the commissioners that one of the hospital system’s main goals is to “make a large system feel like a small community.” To that end, Atrium has invested $2.5 billion in the North Carolina communities it serves.
Atrium partners with 240 schools in Mecklenburg County to provide virtual services to diagnose and treat students while they’re at school. The program treated more than 8,000 students this school year.
Atrium also partnered with the Charlotte Housing Authority and others to invest $20 million in affordable housing via a housing impact fund and $2.6 million in expanding access to food. Atrium launched the first street medicine program in Charlotte where teams go into encampments to provide medical care for people experiencing homelessness. And it invested $1.4 million to reduce violence-driven injuries via its hospital-based violence intervention program.
“To keep a community healthy, it’s not just what happens inside the hospital walls, it’s what happens outside of the hospital walls,” Woods said.
WakeMed board member Margaret Bratton said that along with its $2 billion investment in capital projects in Wake County over the next 10 years, WakeMed’s partnership with Atrium will allow it to contribute much more than the $400 million it currently provides in unreimbursed patient care, community outreach, education, and health improvement contributions and other community benefits.
The consolidation will allow for expanded mental health services and access, partnerships with community groups on transitional and affordable housing, support for economic development in Southeast Raleigh, and an expansion of WakeMed’s financial assistance policy. WakeMed could also explore partnering with Wake County Public Schools on virtual care.
3. A Wake Forest Baptist leader says its merger with Atrium has been a success.
In a deal worth $3.4 billion made at the end of 2020, when healthcare systems across the nation were collapsing under the weight of the COVID pandemic, Wake Forest Baptist Hospital in Winston-Salem joined with Atrium Health.
“It would have been very easy for Atrium to say then, or over the next several months or years, about the challenge from the pandemic, ‘We know we promised X but things changed under COVID and we can only do Y—they never said that, and followed through with the original agreement,” said Kevin High, the past president of Atrium Health Wake Forest Baptist. “I’m here today to tell you that we are exponentially better five years later after this deal was initiated and [Atrium has] delivered in every way. It’s been a true partnership, not a takeover.”
The 2020 combination has seen the addition of 8,200 new jobs and a minimum starting wage increase to $18.85 an hour. It has greatly expanded access to care in the area, including adding a new care tower on the Winston-Salem campus, an outpatient surgery center, eye institute, and an affordable housing initiative, plus further investments in Greensboro and Guilford County.
“The combination of Wake Forest Baptist secured with Atrium Health not only preserved our stature and legacy but expanded its reach,” High said. “It allowed us not only to survive but thrive in all aspects of our mission.”
4. WakeMed leaders spoke about UNC’s $5 billion offer made on May 6, the day after the proposed merger with Atrium was made public.
WakeMed leaders said they feel strongly that a three-system competitive market consisting of Duke Health, UNC Health and WakeMed-Atrium will serve the region best.
“We’ve had a wonderful graduate medical education partnership with [UNC] for over 60 years and I hope this will continue for another 60 years,” said McDonald, the WakeMed board chair. “However, we believe a combination with UNC would decrease competition in this market. … If we partnered with them, they would have 80% of the market, and in their proposal … yes, they had a larger offer, but there was a lack of detail on the investment of this additional $2.5 billion especially in Southeast Raleigh; where it’s needed the most, choice for patients, and choice for employees would be restricted.”
Furthermore, WakeMed has a signed agreement with Atrium Health, meaning it could not, at this point, entertain UNC Health’s offer it wanted to.
“We looked for a partner, and I mentioned that criteria was the charity care mission, the mission to care for all, a culture match,” WakeMed President and CEO Donald Gintzig told the commissioners. “That’s the difference between a sale and joining a family.”
Gintzig said he believes the region will still see big investments from UNC.
“I suspect like WakeMed they’ve got plans to expand and grow services and they have asked for certificates of need to build new hospitals,” Gintzig said. “They’re going to invest here, Duke’s going to invest here, and WakeMed and Atrium, hopefully, are going to continue to invest here.”
5. WakeMed has ambitious goals with the merger.
Gintzig told commissioners WakeMed hopes to add more than 3,000 local jobs over the next five years across clinical, research, and support roles.
Other goals include updating and expanding the campus hospitals in Southeast and North Raleigh, Cary, and Garner; adding two new healthplex locations; solidifying the state’s largest virtual care network; providing broader reach with charity care; advancing specialty care, and opening the state’s largest mental health network with more than 360 beds as well as expanded mental health access statewide.
In response to a question from Commissioner Shinica Thomas about what he would like to tell people about the partnership in five years time, Gintzig said he would want to be able to say that WakeMed was brave enough to make the best decision for the community’s future at a time when it didn’t absolutely have to.
“I will get a great joy from that,” he said. “It really is about planting a tree that I’ll never sit under the shade.”
Comment on this story at [email protected].
