Setting its sights on national growth, Charlotte-based health care giant Atrium Health announced big plans Wednesday to double in size through a deal with a Midwestern hospital system.
This is Atrium Health's largest business deal to date—a strategic combination with Illinois- and Wisconsin-based hospital system Advocate Aurora Health.
The move will result in the fifth-largest health system in the country, Atrium CEO Gene Woods told The Charlotte Observer in an interview Tuesday before the announcement.
The system will be headquartered in Charlotte, with combined revenues of more than $27 billion. It will operate under the Advocate Health brand, with the Advocate, Aurora and Atrium Health brands used locally.
The goal isn't size, Woods said, but what that size enables: more investment in employees and communities and in solving inequities. “The size will allow us to serve our communities,” he said. “We're just looking at doing this more, better, faster.”
Still, it's a huge leap for a hospital system that was once expressly focused on the Carolinas.
The new system will serve more than 5.5 million patients, with 67 hospitals and more than 1,000 sites of care in Illinois, Wisconsin, North Carolina, South Carolina, Georgia and Alabama.
Woods and Advocate Aurora Health CEO Jim Skogsbergh will serve as co-CEOs of the combined organization for the first 18 months. After that, Skogsbergh will retire and Woods will become sole CEO.
“I'm trying to create a national system”
Atrium's series of combination deals follows a trend of hospital consolidation across the country. But critics of the merger have warned it could mean patients face higher prices.
The deal is shocking in its size and scope, said hospital consolidation critic and Duke Law School professor Barak Richman.
“This does not suggest a new frontier of competition,” Richman told the Observer Wednesday. “It shows a new scale of lack of competition. A new scale of monopoly power.”
A consolidation deal of this size could mean higher prices, suppressed wages for nurses and doctors and more expensive national insurance schemes, Richman said, calling the combination “very, very worrying”.
“I don't see how you can say you have a bunch of hospitals (across the country), how you can better serve the people in North Carolina,” he said.
However, Atrium said the new combination would create more jobs and opportunities for innovation.
Together, the combined system has nearly 150,000 employees, according to Atrium. The organizations pledged to create more than 20,000 jobs in all the communities they serve, but did not detail how this would be achieved.
In response to concerns about hospital consolidation, Woods said he believes Atrium and Advocate Aurora have a track record of savings based on making systems more efficient. And he wants to work to strengthen partnerships with insurance companies to better serve patients.
“One argument out there that some people make about size is: 'big is bad,'” Skogsbergh said in an interview Tuesday with the Observer. “We honestly don't believe that. We believe that evil is evil. We believe that inefficient is bad. We believe that if we do it right, we will grow stronger and patients will benefit from it.”
The strategic combination with Advocate Aurora Health is Atrium Health's first foray into the Midwest.
“One of the things we've learned through COVID is that the digital world and telehealth don't have state borders,” Woods said Tuesday. “We're trying to create a national system so we can better serve communities.”
The combined system also announced a $2 billion commitment to address health disparities as well as a commitment to achieve carbon neutrality by 2030.
A long way from Carolinas HealthCare
The Advocate Aurora Health combination is the latest — and largest — of Atrium Health's moves to expand nationally since changing its name from Carolinas HealthCare System in 2018.
That change was seen by experts as a sign of the hospital system's ambitions to expand beyond the Carolinas, the Observer reported at the time.
And a day after announcing that name change, the hospital system announced a plan to combine with Georgia-based health care organization Navicent Health.
Since then, Atrium has been combined with two other hospital systems: North Carolina's Wake Forest Baptist Health and Georgia-based Floyd Health System.
The partnership with Wake Forest Baptist Health, including the Wake Forest School of Medicine, was announced in early 2019. This combination paved the way for Atrium to bring a medical school to Charlotte, which is the largest city in the US without a four-year medical school, according to Atrium.
The Advocate Aurora Health combination will not affect the timeline for the Charlotte medical school, Woods said.
The school, a second campus for the Wake Forest School of Medicine, will be built on a 20-acre parcel at the intersection of Baxter Street and South McDowell Street, Atrium announced last year. The school will host its first class of students in 2024.
What's next for the Atrium deal
The latest deal for Atrium will still need regulatory approval from the Federal Trade Commission.
Richman said he would expect some concerns about the merger to be raised at the regulatory level, though Atrium spokesman Dan Fogleman said the agency hopes regulatory approval will come this year.
“This is certainly not going to slip through the regulatory cracks,” Richman said.
And NC Attorney General Josh Stein has previously expressed concern about the trend toward hospital consolidation.
“Too often, when one hospital swallows another, patients end up paying more and getting worse care,” Stein said in a February statement.
But in early 2021, Stein told Atrium Health and Wake Forest Baptist Health that he would not oppose the combination.
“This agreement marks an important step forward to help educate and prepare the next generation of physicians, many of whom will remain and practice in our state,” Stein said at the time. “If the COVID-19 pandemic has taught us anything, it's that we need smart, dedicated and well-trained medical professionals to deliver healthcare.”
North Carolina State Treasurer Dale Folwell opposed the combination in a statement Wednesday, calling the proposed new system a “six-state medical behemoth.”
He called for a “robust review” of the combination by the Attorney General's Office, the FTC and the US Department of Justice. “More large mergers are the wrong recipe for the health care industry,” Fowell said in the statement.
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