Top WakeMed officials touted their proposed agreement to join Atrium Health, saying it is necessary to keep up with local competitors that have significantly more financial heft and to more quickly complete much-needed facility upgrades.
WakeMed President and CEO Donald Gintzig acknowledged the system's financial position is strong. But, he said, that is the right time for WakeMed officials to pick a partner with more financial heft and shared values instead of being the target of an acquisition some time down the line.
"It really is not about today, not even about tomorrow, not even about next year but where we are five, 10, 15, 20 years down the line," Gintzig said.
Officials from Charlotte-based Atrium Health have said they plan to invest at least $2 billion into WakeMed over the next decade as part of the merger, plans they say will create at least 3,300 new jobs in Wake County.
"Atrium Health brings the resources and track record to accelerate progress and expand what's possible for this region. That's what this next chapter is about," Steve Smoot, the president of Atrium parent company Advocate Health's North Carolina and Georgia division, said Tuesday.
The public first learned of WakeMed's intention to be taken over by Atrium Health on Friday afternoon, on a Wake County Board of Commissioners agenda item for Monday evening's meeting. The commissioners must agree to update the system's articles of incorporation and a land transfer agreement to reflect Atrium's new role.
In the face of significant pushback from elected officials and some members of the public, commissioners voted to delay a vote for at least 90 days in order to give the public a chance to participate in the process.
Criticism of the deal
Officials like State Treasurer Brad Briner have criticized the deal, arguing that research shows hospital consolidation drives prices of healthcare up. As treasurer, Briner oversees the State Health Plan, which offers insurance to about 750,000 state employees and retirees.
"WakeMed's really well managed and can finance all of these things on their own. They're going to tell you they can't. But as chair of the local government Commission, an entity that runs the Medical Care Commission that issues bonds for people just like this, I can tell you that's not true. WakeMed is very capable of funding all of these capital investments," Briner said in a Tuesday afternoon video message.
Briner also expressed dismay that his office, like the public, only learned about the deal on Friday.
Asked about Briner's criticism during Tuesday's press conference, Gintzig said he looks forward to meeting with Briner.
"I would welcome a $2 billion investment from the Treasurer. I would welcome a $2 billion investment from the county and the state to make that happen. But I don't see that happening without this combination, and I don't see us finding a partner that would be willing to come in and join us and make that kind of investment without expecting a very different long-term impact on what we do for the community," Gintzig said.
Plans to revitalize the system's flagship campus on New Bern Avenue would be particularly imperiled without the new investment, Gintzig said, noting that WakeMed's financial staff has said that is unlikely to be possible within the next decade or two without significant outside investment.
"If we add a tower at (WakeMed) North, it’s new patients and new revenue. When we move forward with the Garner campus, it’s new patients and new revenue. When you spend close to a billion dollars redoing the Raleigh campus it’s to care for the same number of people and maybe a few more without a big increase in revenue," Gintzig said.
How did we get here?
WakeMed and Atrium first partnered on a Covid-era application for a linear accelerator, which is used in oncology treatment. Then, Gintzig said, the two hospital systems started to learn more about each other.
"Then the discussion was, you know, you sound a lot like us. We sound a lot like you. What could something bigger look like? And that's really how it started," Gintzig said.
Dr. Thad McDonald, the chairman of the WakeMed Board of Directors, said the hospital system first started to consider whether it needed to find a partner about two years ago. That was the result, he said, of looking at headwinds like the threat to North Carolina's certificate of need process and to Medicaid funding.
Those conversations then turned to what a partnership with Atrium, specifically, would look like, said McDonald, a retired WakeMed obstetrician-gynecologist.
"I am acutely aware of the angst this announcement has caused with staff, with community leaders and patients and will say at the outset, I completely understand, when first presented with a possibility, our executive committee felt the same, but after two years of due diligence, we came to see the pure beauty of it," McDonald said.
Gintzig said that a different agreement, like a sale, wouldn't guarantee the same charity care guarantee or give county commissioners the power to approve board appointments.
"In my opinion, if we fail to do this we may not have that choice in five or 10 years, and then you lose that opportunity to maintain what you are and keep what you need going forward," Gintzig said.
Why no endowment?
In his letter to Wake County commissioners, Briner pointed to health system sales in Asheville and Wilmington as potential models, if this must move forward. Both sales resulted in endowments worth more than $1 billion that are used to fund millions in local projects each year.
Asked whether such an agreement was ever considered for WakeMed, Gintzig was quick to say no, pointing to a key difference in these deal compared to the other two.
"We're not for sale," Gintzig said.
By folding into Atrium instead of selling the system, Gintzig said, WakeMed officials will retain more ability to control what health facilities are funded and, just as importantly, where they are funded.
A significant portion of the $2 billion investment Atrium is promising will occur in southeast Raleigh, at and around the system's flagship New Bern Avenue campus.
"If somebody buys us, and they pay good money and it goes into a foundation, do you really think there might be more interest in investing in southeast Raleigh, or do you think they may want to invest in a more affluent area?" Gintzig said.
He continued, "This gives us, WakeMed, the ability to influence that. If we're sold, they make that decision."
