Carolinas HealthCare megadeal under review, UNC Board of Governors says

The University of North Carolina system’s Board of Governors has formed a special committee to review a massive business combination proposed by Charlotte’s Carolinas HealthCare System and Chapel Hill’s UNC Health Care.

The 6-member committee, which was appointed Monday, is scheduled to hold its first public meeting at 10 a.m. Wednesday in Chapel Hill, said UNC system spokesman Josh Ellis. A UNC Board of Governors document says the committee was formed to ensure the Board of Governors will be “fully informed” about the combination of the two systems.

The committee’s members are auto parts magnate O. Temple Sloan III; health care attorney Carolyn Coward; N. Leo Daughtry, a Smithfield lawyer and longtime state lawmaker; R. 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.

Its creation comes after the two nonprofit hospital systems in late August announced plans to form a joint operating company that will be overseen by its own board of directors.

The proposed public, nonprofit corporation would run more than 50 hospitals and employ more than 90,000 people, making it one of the nation’s largest hospital chains. North Carolina Attorney General Josh Stein has already said his office is examining whether the pending deal will harm health care competition in the state.

The committee’s role will be to review UNC Health’s consideration and evaluation of the combination, the document says. The committee will also ensure UNC Health has “employed an appropriate process, informed by necessary expertise, based on relevant facts and information.” The committee is scheduled report its findings to the Board of Governors by Dec 20.

UNC Health Care is owned by North Carolina and governed as an affiliate of the UNC system, under 1998 state legislation creating the University of North Carolina Health Care System.

That legislation gives the Board of Governors oversight of UNC Health Care, as well as the power to appoint its CEO and 12 of 24 UNC Health Care board directors.

In a statement, Carolinas HealthCare System said UNC’s special committee was formed as part of the Board of Governors’ due diligence as it reviews the proposed joint operating company.

“We look forward to answering any questions from this committee, welcome their review, and are confident it will conclude that the collaboration between our two organizations is in the best interest of the people of our state as it fosters our common goal of improving the health of North Carolinians,” the statement said.

Carolinas HealthCare said it is still seeking to sign a definitive agreement with UNC Health by early 2018.

Approvals from the boards of both Carolinas HealthCare and UNC Health Care are also still needed, Carolinas HealthCare said.

The two hospital groups have said they will create one of the leading nonprofit health care systems in the U.S., allowing them to work together in myriad ways – from building new hospitals to negotiating with insurance companies. They’ve also said they will push to improve access to care in rural areas, which suffer from a shortage of doctors and services.

Critics argue similar combinations across the U.S. have reduced competition and driven up prices.

“I’m not aware where two systems combined and costs went down,” said Patrick Conway, CEO of Blue Cross and Blue Shield, the state’s largest health insurer, earlier this month. “Historically the larger systems charge a higher price per unit.”

Ellis said the special committee was created by Bissette, chairman of the Board of Governors, and that Wednesday’s meeting will be open to the public.

A notice Monday to the media announcing the meeting said it will be in the Board Room of the Spangler Center at 910 Raleigh Road in Chapel Hill.

Scheduled the day before Thanksgiving, one of the busiest travel days of the year, the meeting’s timing raises the question of whether the committee is attempting to conduct business out of the public eye, said Amanda Martin, general counsel to the North Carolina Press Association.

North Carolina open-meetings law does not have requirements that official meetings be held at times convenient to the public, Martin said.

But, “unless there is some true urgency to this meeting – that could not be accommodated by meeting earlier or later – it is simply bad public policy to schedule a meeting on an issue of extraordinary legitimate public concern at a time that is almost assured no member of the public can attend.”

This story was originally published November 21, 2017 at 4:50 PM with the headline "Carolinas HealthCare megadeal under review, UNC Board of Governors says."