A UNC special committee missed its first deadline to review whether a proposed partnership between UNC Health Care System and Carolinas HealthCare would be good for the residents of North Carolina.
The UNC system’s Board of Governors formed the special committee in November to review the mega-deal that would transform the state’s health care landscape and raise questions about the future operations of UNC Health Care System and UNC’s School of Medicine, which are owned by the state. The special committee had planned to meet as often as necessary to complete its review by Wednesday and previously conducted several meetings in closed session.
As of Wednesday, however, Chapel Hill-based UNC and Charlotte-based Carolinas had not submitted a proposed business agreement for the special committee to review. The sensitive negotiations are being conducted in utmost secrecy.
“We hope we can finalize deal terms by the end of the first quarter of 2018,” UNC Health Care spokesman Phil Bridges said by email. “This is a complicated deal, and we are taking our time to get things right for both entities.
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“We understand, however, that the Board of Governors’ special committee has adjusted its deadline to complete the review by the end of January,” he said. “We are not behind schedule.”
The hospital partnership, proposed in August, would create one of the largest health care systems and academic research centers in the country, with more than 50 hospitals and 90,000 employees. The two organizations say that legally it would not be a merger because they would not transfer assets out of the state’s control.
The joint operating company would be overseen by an independent board of directors whose members would be nominated by Carolinas HealthCare and by UNC Health Care. Bill Roper, CEO of UNC Health Care, would be the executive chairman of the new independent board; Gene Woods, CEO of Carolinas HealthCare, would be CEO of the new joint operating company.
UNC spokesman Joshua Ellis was unable to provide answers on Wednesday about the status of the negotiations.
This month, the special committee hired Texas health care attorney Jerry Bell Jr. to help vet the proposed joint operating company. Bell represents hospitals, academic medical centers, medical schools and other health care networks on a wide variety of matters, including mergers and acquisitions, business transactions, as well as federal and state regulatory issues.
It’s unclear what authority UNC’s Board of Governors has to review, or potentially to block, the formation of the proposed joint operating committee if it were to conclude that the proposed arrangement would harm the UNC Health Care System and UNC’s medical school. Roper has said the decision on whether to combine with Carolinas rests with UNC Health Care System’s board of directors, of which he is a member.
But the formation of the special committee by UNC’s Board of Governors suggests they expect to play some role. Under state law, the UNC Health Care System reports to the Board of Governors, which appoints the system’s CEO and half of the 24 members of its board of directors. But the UNC Board of Governors would not have direct control of the independent board that would oversee the UNC-Carolinas joint operating company.
The special committee’s members come from UNC’s Board of Governors: auto parts magnate O. Temple Sloan III; health care attorney Carolyn Coward; Leo Daughtry, a Smithfield lawyer and former longtime state lawmaker; Doyle Parrish, founder of Summit Hospitality Group, a hotel management business in Raleigh; Randall Ramsey, founder and president of Jarrett Bay Boatworks in Beaufort; and corporate lawyer W. Louis Bissette Jr.
Because the details of the proposal are not known, the partnership has evoked only general concerns over higher health care prices. Such worries are typical when hospitals consolidate because giant hospital networks have more leverage in negotiating higher reimbursement rates from health insurance companies. The insurers pass on those higher costs to their customers.
North Carolina’s attorney general Josh Stein has said he is examining whether the proposed deal would harm health care competition in the state, but state lawmakers have largely been silent on the issue.
After the deal was announced at the end of August, Republican state Sen. Jeff Tarte expressed concerns that the partnership was the prelude to a full merger that would one day leave UNC Health Care owned by the larger Carolinas HealthCare. But earlier this month, Tarte, a retired health care business consultant from Cornelius, said the issue is not a topic of discussion among lawmakers, unless “it’s very high up and only a few people” are involved.
When asked if the legislature will review the deal, N.C. Senate President Pro Tem Phil Berger’s press secretary, Amy Auth, emailed: “We’d prefer not to put the cart before the horse.”