WakeMed claims that its rival, the UNC Health Care System, is using its status as a taxpayer-supported institution to create "predatory" competition and disrupt the Triangle's medical market.
WakeMed submitted a formal request Monday for financial statements and other records from UNC Health, to determine whether the system is using public money to "shift services and gain an unfair competitive advantage over WakeMed, other hospitals and physician practices throughout the community."
The request escalates a battle between two of this region's health-care titans. It's a fight that could roil the region's health industry and affect medical care that thousands of people receive every year.
WakeMed, which is trying to protect its position as the largest hospital system in fast-growing Wake County, contends that recent actions by UNC and its subsidiary Rex Healthcare will drive up medical costs for consumers and hurt care in the Triangle.
Those actions include recent partnerships with local physician practices, including some associated with WakeMed, and proposed expansions at Rex's main Raleigh campus.
"We have serious questions about government funding being used to destabilize a market," WakeMed CEO Bill Atkinson said. "State-sponsored predatory behavior is just not cool. I don't know how else to say it."
WakeMed is seeking, among other documents, audited financial statements and federal tax forms for UNC Health, Rex and Triangle Physicians Network, a nonprofit subsidiary UNC and Rex set up in October to operate a network of local doctors' practices. WakeMed also wants correspondence between UNC or Rex officials and any physicians on its medical staff.
"We have received the records request and we're reviewing it," said UNC Health spokeswoman Karen McCall. "UNC is committed, as always, to complying with the obligations of the public records law."
UNC Health CEO Bill Roper has said that physician affiliations and expansions will help provide needed services to meet increasing demand. He also said that the federal health overhaul is spurring such moves to reduce medical costs and improve quality.
"All that we do has to be done in a way that meets the health needs of our fellow North Carolinians, and improves the care that they receive," Roper told the Wake County Medical Society this month. "We believe academic institutions, local health care providers and physician groups will work even more closely together in the future, as we together face pressure to serve patients better and more cost-effectively."
Roper couldn't be reached for further comment on Monday.
"The new environment is affecting all providers," said Bob Seligson, president of the N.C. Medical Society. "Hospitals and doctors are becoming very competitive, and they're doing what they can to put themselves in the best position for what's to come."
WakeMed, a private nonprofit that doesn't receive state funding, has long ties to UNC. For more than 30 years, UNC has used WakeMed as a teaching hospital, and the two institutions often refer patients to each other.
But WakeMed officials are angry about recent actions by UNC and Rex that they think threaten its business, and its home turf:
In October, UNC Health announced an affiliation with Wake Heart & Vascular Associates, a huge cardiology practice in Wake County long associated with WakeMed.
In June, Rex announced plans for a $120 million expansion at its main Raleigh campus. The project will include a new facility for heart care, a profitable speciality that has long been dominated by WakeMed.
UNC Health recently began advertising its children's hospital in Chapel Hill on a billboard on New Bern Avenue in Raleigh - just down the road from WakeMed's campus and its new children's hospital.
WakeMed officials question whether UNC Health should be given millions of dollars in taxpayers' money every year to pay for competitive steps that duplicate existing services and hurt other health providers.
UNC Health will receive $36 million directly from the state this year, as well as higher reimbursement rates to treat Medicaid patients, Atkinson said. With the tough economy and ailing state budget, he said, it doesn't make sense for UNC Health to use that taxpayers' money simply to steal a bigger share of Wake County's market.
UNC Health officials point out that the system receives state money because it provides annual charity care worth more than $280 million to patients from across North Carolina, including people from Wake County.
Another issue for WakeMed is that UNC Health doesn't disclose how much financial aid it provides Rex for expansions , or whether some of it is taxpayers' money , Atkinson said. And Rex, which is a private nonprofit hospital that UNC has owned since 2000, is expanding its services but with no plans to improve care for poor patients in Wake County, he added.
The public records request is designed to help WakeMed officials understand UNC Health's strategy, where its money is coming from and where it's going, Atkinson said.
"If they're forthcoming, it will make it easier to have a dialogue about what's next," Atkinson said. "There's just so much money moving around under the cloak of darkness. We just want to have the light of public scrutiny."
UNC officials could simply reject WakeMed's request on the grounds that it would provide rivals with competitive, proprietary information. UNC Health does not disclose specific financial results for Rex, on the grounds that it is a private subsidiary. Orage Quarles III, the president and publisher of The News & Observer, serves on Rex's board.
WakeMed's next steps could include a "wide array" of options, Atkinson said. He declined to provide specifics.
One option is for WakeMed to escalate its legal fight.
It is also increasing its lobbying efforts. On Monday, Atkinson sent an e-mail message to hundreds of local physicians affiliated with WakeMed, inviting them to attend forums at WakeMed's Cary and Raleigh hospitals on Tuesday where he'll discuss the situation.
WakeMed is also lobbying state officials, especially as the General Assembly returns in January. WakeMed's consultants include Joyce Fitzpatrick and Gary Pearce, two Raleigh public relations veterans with strong political connections.
Rex, meanwhile, is using Capstrat, another powerful Raleigh PR firm.
WakeMed won't hesitate to seek answers from state lawmakers, Gov. Bev Perdue and leaders at the larger UNC system, said Atkinson, who has a doctorate in public policy. "UNC is a great institution, but there are ramifications to what they're doing," he added.
