UNC Health, Carolinas HealthCare likely to win in deal. But who would lose?

CEOs say partnership will enhance healthcare in NC

UNC Healthcare CEO Bill Roper and Carolinas HealthCare CEO Gene Woods discuss the possible enhancements in health care for North Carolinians with the partnership between the two companies.
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UNC Healthcare CEO Bill Roper and Carolinas HealthCare CEO Gene Woods discuss the possible enhancements in health care for North Carolinians with the partnership between the two companies.

The planned partnership between Carolinas HealthCare System and UNC Health Care is likely to be a win for the two hospital systems.

Beneficiaries of promised services – including patients in rural areas – also could be winners under the new deal.

But health care industry experts warn others, like middle-income patients, might not be so lucky.

Here’s how the hospitals, employees and patients are expected to fare:


Carolinas HealthCare and UNC Health Care

Experts have said the two hospital systems would have more power to negotiate higher prices from insurance companies for the services they provide to make more money.

Carolinas HealthCare CEO Gene Woods said this week that greater power over insurance companies is not the intent of the deal, but other healthcare experts said otherwise.

The hospital systems are nonprofits and do not have shareholders, said Barak Richman a business and health care professor. As a result, they theoretically do not have profits, he said. But they still benefit from more money.

“They increase prices because they want to maximize revenue and then they spend it in other ways,” like research or higher salaries, Richman said.

Higher salaries could give the new health care giant an edge over its competitors in attracting talented employees.

Rural, specialty patients

The hospitals’ leaders have said they plan to focus on improving cancer treatment, mental health care, and substance abuse treatment.

Reinventing rural care will also be a priority, Woods said at the hospital board meeting earlier this week.

There are 80 rural counties in North Carolina and about 110 hospitals in those counties, he said.

Woods acknowledged the deal likely would not exclusively solve the problems that rural care faces, but said the new system could play a major role in partnership with the state and private enterprise.

Still, some are wary about whether the hospital systems would be able to efficiently deliver on that promise.

Rural care is not the best service for the hospitals, which specialize in complicated care, to provide, Richman said.

Rural areas need outreach and engagement from health care providers, Richman said.

“It’s a little bit like asking the U.S. Marines to provide security for a local Walmart,” Richman said.

UNC Health Care CEO Bill Roper and Carolinas HealthCare CEO Gene Woods call the new partnership between the two health care systems a "marriage" of health care in N.C..


Middle-income patients

Existing patients could face increased prices to their health insurance under the new deal.

If the new medical system negotiates higher prices for services, then health insurance companies would likely pass on those costs to patients through higher premiums.

That would be bad news for currently insured, middle-income workers who already pay a high cost for health care, Richman said.

Employer-sponsored family health care premiums were $18,142 in 2015, up 3 percent from the prior year, according to a survey by the Kaiser family foundation. Workers paid $5,277 for their coverage.

“It’s an enormous strain on working families,” he said.

Win some, lose some

Hospital system patients

Carolinas HealthCare has treated about 24,000 patients per day for the first six months of this year.

That’s about 1,200 more patients per day compared with last year, according to numbers released at the board meeting this week.

Patients of both hospital systems could face higher health insurance premiums if the hospitals increase costs for services, experts have said.

Still, there is some good news for patients. They could benefit from new services that result from the partnership.

Hospital system employees

About 65,000 employees work for Carolinas HealthCare, about half of whom live in the Charlotte region.

After the hospital leaders announced the deal, they did not rule out potential job cuts, saying bill-processing could be an area that could be more efficient.

However, efficiency may not mean simply cutting jobs.

If efficiencies are about allocation of the resources, then it might be less about cutting jobs and more about using the jobs to effectively help patients, said health care economist Christina Dalton of Wake Forest University.

Health insurance companies

When insurance companies are more organized they can force hospitals to accept low prices, Dalton said.

Hospital systems could try to merge to balance the power in the pricing.

“Insurance companies might be worried about having a new consolidated system that their ability to ask for low prices is going to be less,” she said.

But insurance companies consistently raise premiums and the new hospital system could end up being the scapegoat for higher rates.

Carolinas HealthCare System, the Charlotte region’s dominant hospital chain, will partner with UNC Health Care of Chapel Hill to form a medical giant – one that leaders of the two systems predict will expand access to care, improve quality and boo

Cassie Cope: 704-358-5926, @cassielcope

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