By Michelle Crouch and Rose Hoban
Update: On Monday evening, May 4, the Wake County Board of Commissioners voted to delay a decision on the deal for 90 days, saying they wanted to give WakeMed Health & Hospitals time to share more details and engage with the community.
State and local leaders are raising red flags over a proposed combination of WakeMed Health & Hospitals with Charlotte-based Atrium Health. They want more time to scrutinize the deal, citing concerns about costs and competition.
The proposal, which became public on Friday, May 1, would bring the Raleigh-based system under the control of one of the nation’s largest hospital networks.
According to multiple state and local leaders reached by NC Health News, rumors had been floating about the proposed union for several months. But most state lawmakers — as well as the Raleigh mayor — said they heard about it for the first time on Friday afternoon after the Wake County Board of Commissioners published its agenda for its meeting scheduled for May 4.
Details of the agreement, which the commissioners must approve, were included on the board’s consent agenda, where multiple — usually noncontroversial — business items are voted on as a group without public input.
As word of the deal — and the proposed vote — spread over the weekend, local and state officials and statewide organizations began raising concerns and calling for more time.
“You do not need to rush,” State Treasurer Brad Briner wrote in a letter posted online.
“We need to slow down until we have all the information,” state Rep. Mike Schietzelt, a Republican who represents northeastern Wake County, posted on X.
“The rollout of the proposed hospital takeover raises questions,” State Auditor Dave Boliek wrote in a news release issued Sunday afternoon. “At this point in time, it’s highly doubtful that the average Wake County citizen is even aware of the pending takeover.”
“The lack of transparency does not instill confidence, in fact, it calls for greater scrutiny and explanation,” he continued. “The people of Wake County and stakeholders who are affected by this move deserve to have more than a weekend to voice their opinions on a hospital takeover of this scale.”
By Sunday, several elected officials told NC Health News that the county commissioners were planning to delay the vote. Nonetheless, the item was still on the board’s agenda as of Sunday evening. A public information officer told NC Health News that the board of commissioners “has taken no formal action on the May 4 meeting agenda” and that “the Board can make formal motions to change the agenda during any board meeting.”
How to weigh in with the Wake County Board of Commissioners
In person: Meeting: Monday evening, 5 p.m., May 4
Wake County Justice Center, 300 S. Salisbury St. | Second Floor, Room 2700
Livestream: You can watch the meeting: at this link.
Sign up to make a comment at the meeting (after 9 a.m. Monday, May 4): https://boccomment.wake.gov
What the deal would do
Atrium has been on a growth spree in recent years, joining with Navicent Health in Georgia, Wake Forest Baptist Health in Winston-Salem and midwest-based Advocate Aurora Health to create a $32 billion parent system with 167,000 employees that operates under the name Advocate Health.
WakeMed, founded in 1961 as Memorial Hospital of Wake County, now includes five hospitals, four standalone emergency departments and more than 350 physicians in the Raleigh area.
The combination “will accelerate facility and services investments and launch transformative programs that expand access, deepen community partnerships, and drive health care transformation — while upholding their shared commitment to provide care for all,” the hospitals wrote in a news release on Friday.
Under the terms of the deal, WakeMed would stay a nonprofit but become part of the larger Atrium Health system. Atrium would serve as the system’s “sole member,” meaning it would be the primary decision-maker for the hospital. Here are several other aspects of the deal outlined in the proposed articles of incorporation:
- The deal calls for WakeMed to spend at least 4.8 percent of its revenue each year on care for low-income patients. However, if it falls short, it can make up the difference by putting money into a reserve fund for future indigent care. The hospital could also reduce the cash amount put toward indigent care “arising to improved performance or increased efficiencies.”
- The hospital would be governed by a board of directors made up of 14 members — six nominated by Atrium and eight “community directors” appointed by the Wake County board of commissioners in consultation with Atrium and the current board. Atrium could remove directors at any time for a list of reasons, including being “disruptive,” failing to “work reasonably, respectfully or collegially,” or for conduct that could reasonably be expected to be “detrimental to the reputation, mission or operations of, or cause economic harm to, the corporation.”
- Atrium could change the articles of incorporation on its own at any time, unless the change would significantly affect the role or powers of the board members or alter Wake County’s role in appointing or approving board members.
After reviewing the terms of the deal on Sunday, Schietzelt, an attorney, noted that the agreement gives Atrium “significant control” over WakeMed, including 100 percent oversight of its daily operations. He said would like to see more parity between Atrium and Wake County, in overall control and in how board members are appointed and removed.
“I think that the control that Wake County and the Wake County commissioners retain is certainly much smaller than we’d like,” he said. “There needs to be a much more deliberative process for something that could have dire consequences for Wake County.”
Other officials said that given WakeMed’s history as a public hospital, Wake County residents should have more say.
“Wake County taxpayers built the hospital’s original physical plant and retained through the Board of County Commissioners ultimate say over any change in organizational structure,” Boliek wrote in his letter. “The stated benefits published by way of a Friday afternoon press release should be subject to stakeholder input.”
That Friday afternoon news release about the deal from WakeMed said Atrium would bring more than $2 billion in investment to Wake County and create 3,300 new health care jobs. The agreement, however, does not commit Atrium to those numbers, saying only that it “intends” to make that level of investment.
“I’ve looked at the numbers of Atrium’s margins and WakeMed’s margins,” said Raleigh Mayor Janet Cowell, who only learned of the deal when she saw an article about it on Friday afternoon.
When Cowell was state treasurer, she ran the State Health Plan, and she is familiar with the implications of such deals. “WakeMed has a 10 percent margin, a much lower rate of profit, and Atrium’s is like 40 percent, which makes me think that prices are going to go up here locally for care.”
She called the move a “raw deal” for Wake County and said she spent “a lot” of Saturday talking to county commissioners, urging a delay to the vote.
Several officials pointed out that the deal does not call for Atrium to purchase WakeMed outright.
“The effective sales price for WakeMed is ZERO,” Briner wrote in his letter. “A promise of new capital investments and jobs that almost certainly will be created anyway means authorizing this consolidation is selling WakeMed for no real upside.”
As an entity originally chartered as a county-based hospital authority, Atrium is restricted by state law from purchasing or formally merging with the Raleigh-based system because of its distance from Mecklenburg County.
That’s why Atrium has structured many of its deals as “combinations,” rather than traditional mergers, creating new legal entities in the process.
What scrutiny will come?
Any deal between WakeMed and Atrium would require review at several levels of government: The North Carolina Attorney General would have a say, as well as the Federal Trade Commission, which has traditionally waved through mergers that involved different markets. More recently, the FTC has given such deals more scrutiny, and the North Carolina market has become so consolidated that there’s potentially a lot of overlap.
“The tentacles of these large hospital systems have gotten so intertwined that I’m not even sure this really is a cross market merger in the antitrust sense,” said Barak Richman, a former Duke University law professor who studies health care financing.
“When hospitals in different markets combine and they’re in the same state, there’s a lot of evidence that prices go up, which means that patients will be paying higher premiums,” Richman said. “There’s no meaningful change in the quality or substance of the health care that they get.”
State Rep. Donny Lambeth (R-Winston-Salem), has observed the effects of the Atrium combination with Wake Forest Baptist Health in his district.
“It gives them much more leverage as they’ve gotten bigger,” he said. “It gives them much more leverage with managed care companies. It gives them more leverage with vendors to get a better price for products. And it makes it much more difficult for programs like Medicaid to have any leverage over providers, because they can now control such a large base of patients, and, you know, if you try to squeeze down rates from a Medicaid standpoint or eliminate some services, it’s much harder to do that.”
State Sen. Julie Mayfield, a Buncombe County Democrat, said she’s seen something similar in her county. She has been involved in efforts to hold HCA Healthcare to account for its actions since purchasing the Mission Health system in 2019. She had advice for Wake County.
“Whatever agreement is being drafted needs to include strong assurances about the services that will stay, the level of staffing that will be maintained,” she said. She also urged agreements around the “availability and accessibility of these services.”
She’s co-sponsor of a bill, Senate Bill 532, which would allow legislative scrutiny of hospital mergers.
“It has a whole host of protections for the public,” Mayfield said. “Opportunities for public hearings and public meetings, including disclosure requirements, including, you know, the requirement to consult with impacted local governments. A whole host of things that ensure that the public is informed, has the information they need, has an opportunity to weigh in.”
That bill has not moved since being filed last March, but if it were to pass after WakeMed and Atrium finalized the deal, it wouldn’t apply.
In other instances of hospital takeovers and mergers, such as in Buncombe County and New Hanover County, the purchasers have been required to establish community trusts to benefit the health of those communities. The Dogwood Health Trust in Buncombe County was created after the Mission sale, and the New Hanover Community Endowment was established after Novant Health took over the county hospital in 2020. Both entities were designed to support health efforts in those communities. Mayfield noted that the Dogwood Health Trust also monitors HCA’s management of Mission.
Cowell expressed frustration that there was no similar upside for Wake County in the proposed WakeMed deal.
“There is a benefit given for all those years of investment into this hospital,” Cowell said. “And so the fact that there would be no trust, I mean, it just raises a lot of questions.”
Changes at Wake Forest Baptist after combination
Two nurses at Wake Forest Baptist told the Ledger/North Carolina Health News that the hospital’s culture and operations have shifted significantly since it combined with Atrium Health in 2020. The nurses asked not to be named because Atrium prohibits employees from talking to the media.
“When I started, Baptist was the premier place to go if you needed medical care,” said a nurse who has been at Baptist for more than two decades.
She said the period immediately after Baptist’s combination with Atrium was like a “honeymoon phase.” Staff were told Atrium would be investing millions into Baptist and making changes to improve care, she said.
“It was all good at first. Atrium said, ‘We’re going to help you guys out,’” she said. “But it felt like a bait-and-switch. All of a sudden, it was, ‘You need to start using this system, doing things this way, because this is how we do it.’”
Both nurses said cost-cutting and centralization are affecting care. The hospital keeps fewer supplies on hand, they said, and it has cut support services and staffing, especially on weekends.
“Everyone is unhappy,” the second nurse said. “This is the worst I’ve ever seen it.”
Lambeth also expressed concerns about the restructuring and consolidation at Wake Forest Baptist, where he was once president.
“Centralizing and moving laundries into a centralized location, you don’t need multiple payroll departments, multiple accounting departments,” he said. “All that overhead gets squeezed into a more of a home office operation, where locally, the people that were in those jobs get eliminated or shifted to other positions.”
Atrium Health did not immediately respond to questions to questions about the changes at Wake Forest Baptist.
Lambeth said the compensation of Atrium’s top executives — a system that operates as a nonprofit — is particularly contentious, “a real rub in Raleigh.”
The system’s leaders received raises last year that averaged 41 percent — including a 49 percent boost for Advocate CEO Gene Woods to $25.8 million. The nurses, who said they received modest cost-of-living adjustments this year, said they were stunned when they heard the amounts.
“The salaries of these administrators who do absolutely nothing to promote and take care of the patients, it’s obscene,” the longtime nurse said. “Even if you aren’t going to give us more money, I want to see more money put back into these hospitals, for research and to help these patients.”
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