Atrium’s WakeMed acquisition faces new hurdle after State Health Plan decision

The State Health Plan's decision not to choose Atrium Health as a preferred provider healthcare system could derail Atrium's plan to acquire WakeMed.

The Wake County Board of Commissioners will have the final say on Atrium's bid to acquire WakeMed, the N.C. Justice Center said on Wednesday.

Although Atrium and WakeMed had been in talks for at least two years, the announcement of the proposed deal on May 1 surprised WakeMed's workforce, Raleigh Mayor Janet Cowell, much of the state's healthcare sector, Gov. Josh Stein, state Treasurer Brad Briner and state Auditor Dave Boliek.

Briner, in his role as treasurer, oversees the State Health Plan, which has more than 750,000 members.

"The recent decision by the State Health Plan to declare Atrium a non-preferred provider due to its high costs raises further doubt about the value of this deal to Wake County residents, more than 45,000 of whom work for the state government or a public university covered by the State Health Plan," the N.C. Justice Center said.

Wake commissioners voted on May 4 to delay consideration of the Atrium offer for at least 90 days. Because WakeMed originated as a county hospital, county approval is necessary for any takeover.

On July 10, the State Health Plan's Board of Trustees approved preferred-provider contracts for Novant Health and UNC Health that begin Jan. 1.

As part of being selected as Tier 1 providers, Novant and UNC Health agreed to provide discounted rates and collaborate with the state "to improve the health of our members and lower the total cost of care" for members.

Novant and UNC Health were chosen, according to the board, because they "provide broad statewide reach through extensive networks of hospitals, physician practices, specialty providers and outpatient facilities."

Meanwhile, the SHP said in a statement that "all health systems were given the opportunity to work with the State Health Plan as a preferred provider."

"The pending merger (between Atrium and WakeMed) was not related to or part of the process."

Tom Friedman, the State Health Plan's executive administrator, told the board in June that Atrium charges between 15% and 40% more than WakeMed for the same services. He warned the WakeMed-Atrium deal could raise state employee healthcare premiums by $7 to $11 per month.

On Wednesday, the state board selected Duke Health as a Tier 2 access provider, also starting Jan. 1. A Tier 2 provider "maintains the same level of service next year, at the same cost as members are currently paying."

WakeMed is likely to be eligible for consideration as an access provider, which the N.C. Justice Center said is "significantly more affordable to state employees and their families than non-preferred providers like Atrium."

Preferred provider hospitals

Novant has a major presence in the Triad, primarily in Forsyth County, as well as Charlotte and Wilmington. It has received state health regulatory approval to open a community hospital in the Asheville area.

UNC Health has a major presence in the Triangle, as well as in Boone, Clayton, Eden, Goldsboro, Hendersonville, Hillsborough, Kinston, Lenoir, Linville, Lumberton, Morganton, Rocky Mount, Siler City, Smithfield and Valdese.

About 70% of care for State Health Plan participants occurs at facilities in 10 counties, with Forsyth and Guilford ranking fifth and seventh, respectively.

Novant and UNC Health "ensure members across North Carolina have access to high-quality, lower-cost care options," the SHP board said.

Carl Armato, Novant's chief executive, said the system chose to participate in part because of the State Health Plan's and Briner's affordability focus.

Armato said Novant "believes that the uncertainty of cost is also getting in the way of patients being able to access the healthcare they need and deserve."

"That's why we're proud to be one of the Tier 1 providers for the State Health Plan members. They've got access to new price points through a more affordable benefit network."