(Story is updated with Atrium response in fifth and sixth paragraphs.)
N.C. State Treasurer Dale Folwell, a vocal critic of hospital consolidation, took a shot at the proposed combination of Charlotte-based Atrium Health and Winston-Salem-based Wake Forest Baptist Health during Tuesday’s monthly Local Government Commission meeting in Raleigh.
All hospital combinations that reduce health care competition are “bad for North Carolina,” Folwell said. He added that, “the situation in Winston-Salem is a very serious situation. There will be more to come out about this.” He declined to expand on his comments.
The matter emerged after the LGC staff noted that Atrium is expected to seek approval for $600 million bonds at the group’s January meeting. All debt issues by N.C.-chartered municipal institutions require review by the LGC, which has a nine-member board that is chaired by the state treasurer. Atrium’s hospital bonds are not an obligation of state or local government, however, but instead rely solely on the institution’s finances.
Atrium Health issued a statement responding to Folwell:
The proposed strategic combination of Atrium Health with Wake Forest Baptist Medical Center will revolutionize the ways people become and stay healthy in urban, as well as rural areas of our state. Our collective goal will be to continually advance access, affordability and quality of care throughout North Carolina and the surrounding region. Among the many benefits, this combination will enhance the patient-centered research and innovation taking place in the Triad and bring a state-of-the-art medical school to Charlotte. Together we will be the largest provider of rural care in North Carolina, providing seamless access to leading-edge medical innovations, convenient virtual care options, top-ranked pediatrics, life-saving cancer and heart care, as well as highly-specialized musculoskeletal programs and organ transplants.
As the healthcare landscape continues to evolve, we believe it is essential to preserve the non-profit mission that is provided at the local community level. Our patients deserve this and it is essential to fulfilling our mission of health, hope and healing – for all.
While Atrium is a not-for-profit system affiliated with Mecklenburg County, its corporate structure enables it to issue state-backed municipal bonds that offer tax advantages over private sector, corporate debt.
Atrium and Wake Forest, with boards that include many Charlotte and Winston-Salem business leaders, have said they hope to complete their combination by early next year. While the two systems will remain separate entities, they plan to combine operationally, though few details have been disclosed. They are the largest employers in their metro areas with total payroll of more than 75,000.
Wake Forest has committed to adding a second campus for its medical school in Charlotte and the combined entity will build a medical tower in Winston-Salem with operating rooms and an emergency department. The nationally renowned Wake Forest system reported an operating loss in its most recent fiscal year.
During the meeting, four LGC members said that they had been approached by Atrium to discuss improved relations with the commission. Fence-mending was needed after members in June slammed Atrium’s efforts to seek approval for bonds as part of its combination with Macon, Ga.-based Navicent Health.
During that June meeting, Atrium Chief Financial Officer Anthony DeFurio suggested that the Charlotte-based system might move operations from the state if the LGC wasn’t supportive. The comments enraged commission members, who questioned why N.C. taxpayers should support an out-of-state hospital system expansion.
DeFurio later issued a statement saying his words “could have been more thoughtful and were initially misinterpreted by Commission members,” but that he didn’t insinuate or make a threat regarding Atrium’s plans.
LGC member Scott Padgett, a former 16-year mayor of Concord, cited the controversy at Tuesday’s meeting, noting “That wasn’t a misunderstanding. It was exactly what he said. There was no misinterpretation. When it got into the Charlotte paper, it got watered down some, but it was a very plain issue.”
In Wednesday’s response to Folwell, Atrium’s statement noted it has commited $10 million for affordable housing efforts in Charlotte and is investing more than $1 billion in the Charlotte metro area in new and refurbished facilities. “These types of investments demonstrate how extremely proud Atrium Health is to be headquartered in Charlotte.”
Atrium told LGC officials that the $600 million in bonds pending in January would be strictly used for expansions in Charlotte. That didn’t impress Folwell, who noted that “there is nothing to block them from doing a refinancing in Georgia” that would be based on the North Carolina bond approval. After acquiring the Macon system, Atrium agreed last month to buy the largest health care system in Rome, Ga., a city about 75 miles northeast of Atlanta. The deal requires regulatory approval.
LGC members Padgett, Edward Munn of Gastonia, Josh Bass of Moyock and Mike Philbeck of Shelby said they had discussed Atrium’s plans with system officials. Each had received assurances from LGC officials that such discussions were permissible under state ethics rules, Padgett said in an interview.
Folwell said he had not been contacted by Atrium.
He previously was a key critic of Atrium’s failed effort to combine with Chapel Hill-based UNC Health Care in 2018. UNC system leaders including former UNC Health CEO Bill Roper had supported that combination, but it failed after Folwell and other state officials said it was too heavily weighted in Atrium’s favor. Roper is now interim president of the UNC System.
Atrium CEO Eugene Woods has emphasized that North Carolina citizens will benefit by having a large hospital system capable of competing against for-profit companies such as HCA Health Care and negotiating effectively with the heavily consolidated health insurance industry.