Tensions rise between UNC Health Care, Vidant Health

 In August 2019

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Tensions between competitive hospitals aren’t unusual, but the tiff between UNC Health Care and Vidant Health is unusually hot — and complicated. The bigger Chapel Hill-based system is part of a “coordinated effort by outside interests and Raleigh politicians to take [a] dominant position in governance, deal terms, etc.” in eastern North Carolina health care, Vidant said in a May statement.

For evidence, Vidant officials pointed to a report commissioned by the UNC System Board of Governors that analyzed UNC Health Care’s potential merger and acquisition strategies. Cain Brothers, a New York-based consultant, noted that four major N.C. hospital systems — HCA Healthcare, Atrium Health, Novant Health and Duke Health — each have aggressive growth plans. To stay competitive, the report cited four potential merger strategies, including two that involved Vidant. The Greenville system’s statement noted the report reflects a UNC “strategy to dominate the region.”

Harry Smith, chairman of UNC’s governing board, compared the report to brainstorming and not a smoking gun suggesting an imminent consolidation. While Vidant is an independent not-for-profit authority, it is entangled with the UNC System because of its close relationship with East Carolina University’s Brody School of Medicine. Meanwhile, the Chapel Hill med school is part of UNC Health Care, which competes with Vidant.

While Vidant criticized the “attack by Raleigh politicians,” a May 2018 email from Vidant CEO Mike Waldrum surfaced in June, suggesting that he had himself broached the subject of a partnership with UNC Health Care. “I’m highly committed to navigate these complex issues in a collaborative and rigorous way, with the hopes that we can find mutually beneficial solutions,” Waldrum said in the note to Smith, adding that he favored a private meeting between the two parties. A subsequent meeting between leaders of the two groups ended inconclusively, Smith says.

Vidant said Waldrum’s email was intended only to explore ways to “improve the health and well-being of eastern North Carolina.”

The dispute also heated up when Vidant and the Pitt County Board of Commissioners, which oversees the authority, changed longstanding rules to block UNC from nominating nine of the 20 Vidant board members. UNC responded with a lawsuit to reverse the change. It was pending at press time.

Vidant has eight hospitals, anchored by Vidant Medical Center in Greenville, and is the region’s largest employer, with more than 12,000 workers. It served 1.5 million patients last year and had revenue of about $1.7 billion. Waldrum is paid $1.2 million a year under a five-year contract that was renewed in June amid the squabbling.

Officials of UNC and Vidant know mergers are sweeping health care, and both face tough decisions. Bob Greczyn, chairman of Vidant’s compensation committee, says Waldrum’s contract extension was to ensure leadership stability in “turbulent times” in the industry. UNC’s Smith leaves the door open to reconciliation. “You never say never,” he says. “Bridge burning is never healthy.”

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