Vidant CEO and UNC Health Care officials discussed statewide hospital system in 2018
Considering eastern North Carolina pride, it was no surprise allegations that the UNC Chapel Hill-based health system was staging a hostile takeover of East Carolina University-affiliated Vidant Health sparked outrage between Interstate 95 and the coast. In a May 31 statement, Greenville-based Vidant cited “a coordinated effort by outside interests and Raleigh politicians” to muscle the system away from local control.
Now, a newly surfaced message from more than a year ago indicates Vidant CEO Michael Waldrum broached the idea of a UNC combination with Harry Smith, chairman of the UNC System Board of Governors. In the May 24, 2018 message, Waldrum suggests a private meeting involving Smith and executives of UNC Health Care and Vidant.
”I look forward to exploring potential solutions to the complex issues facing healthcare and academic medical organizations,” Waldrum told Smith. “I feel that considering our partnership with ECU, that evaluating options for creating a statewide system to enhance the value for the state is important and that we do this evaluation in partnership with UNC.”
The email prompted one meeting shortly after Waldrum’s invitation, Smith says. “We met in Greenville, he initiated the conversation and coordinated the meeting. That was it, no more, no less. No way shape or fashion was UNC Health Care trying to take over Vidant, and it’s ludicrous to think they were.”
With more than 12,000 employees and $1.7 billion in annual revenue, Vidant Health is eastern North Carolina’s largest private-sector employer. Affiliated with East Carolina University’s Brody School of Medicine and known as University Health System until 2012, its eight-hospital network is anchored by Vidant Medical Center in Greenville. Vidant also has a physicians’ practice made up of several hundred specialists and primary care doctors who compete with a separately owned business controlled by ECU.
In a statement issued Monday, Vidant said it was “up front and open to transparent conversations that will help further our mission to improve the health and well being of eastern North Carolina,” and Waldrum’s message was responding to UNC pressure to create a statewide healthcare system. The Vidant statement refers to a November 2018 report commissioned by the UNC Board of Governors in which New York-based investment bank Cain Brothers identified several systems as possible merger partners for UNC Health Care.
The report cites prospective partners including Vidant, Emory Healthcare in Atlanta, Vanderbilt Health in Nashville and Charlotte-based Atrium Health, which had a tentative plan to merge with UNC Health Care that fell apart in March 2018. The Cain Brothers report was completed six months after the meeting between Vidant and UNC officials. It is marked “for discussion purposes only” and not intended for public disclosure.
In its statement, Vidant says the UNC System “organized a committee and paid money to hire Cain Brothers to develop a strategy to dominate the region.”
That’s not true, says Smith, who is from Greenville. “Cain Brothers was engaged to canvass the market for potential opportunities, and Vidant was just one of many,” he says. “It’s difficult for me to think that people at that level would believe that a [mergers and acquisition book] put together by a third party was any way indicating a takeover.”
Smith says Waldrum’s email was the first mention of a possible partnership. “Now he’s saying UNC Health and Raleigh politicians are trying to take over Vidant and ECU and honestly that’s the furthest thing from the truth. At the time Mike told me this was no big deal. That tells me they didn’t do their homework and didn’t understand the magnitude of the decision.”
Vidant Health issued this statement in response to Business North Carolina’s questions
“The email is in response to a discussion about creating a statewide system, which has been the intent of UNC. Much has occurred since that time, but Vidant Health has always been up front about and open to transparent conversations that will help further our mission to improve the health and well-being of eastern North Carolina. As stated in the email, Vidant’s priority was to complete Project Unify and we worked for the remainder of the year to accomplish that objective.
“This was an important project to enhance care in eastern North Carolina and the right decision to help further the missions of Vidant and the Brody School of Medicine at East Carolina University. In August, the UNC System organized a committee and paid money to hire Cain Brothers to develop a strategy to dominate the region. This makes sense given UNC Health Care’s presence in Lenoir, Wayne, Onslow and Nash counties. During this time, the Treasurer refused to convert the bonds preventing Project Unify from moving forward and the UNC Board of Governors failed to honor Vidant’s recommendations for a board seat, something they were contractually obligated to do. This timeline provides context as to why Vidant has become so concerned for the communities we serve.”
(Note: the statement refers to Project Unify, an agreement that would have merged the physician practices of ECU and Vidant. N.C. Treasurer Dale Folwell blocked the deal contending it was anti-competitive and had unresolved issues involving state employee pensions and state-backed municipal bonds. The Vidant statement also refers to a dispute over UNC’s right to nominate nine of the 20 Vidant Medical Center board members. Vidant and the Pitt County Commission ended that practice recently, sparking a legal dispute with UNC that is pending.)