UNC Health Care, the Chapel Hill-based hospital system, has spent more than $5.6 million so far on its proposed combination with Charlotte-based Atrium Health.
UNC Health, a not-for-profit owned by the state, provided the information to the Observer in response to a records request. Data shows the spending has gone to a variety of consultants and law firms analyzing the two systems’ plans to come together as a massive nonprofit corporation.
The complex deal is expected to create one of the largest hospital systems in the U.S., employing 90,000 people and operating 60 hospitals. Atrium, which last week changed its name from Carolinas HealthCare System, did not immediately provide a breakdown of its costs.
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The project has also created tensions on the UNC Board of Governors, which oversees the statewide university system, including UNC-Chapel Hill’s medical school. The school would become part of the sprawling business partnership. The systems had initially hoped to have agreements signed by the end of last year, but negotiations continue.
The largest portion of the expenses, $2.17 million, has gone to Chicago-based consultant The Chartis Group. Among other spending, Womble Carlyle Sandridge & Rice, a Winston-Salem law firm that last year combined with UK-based Bond Dickinson, accounted for $157,992. The combined firm, Womble Bond Dickinson, was paid $124,949.
Josh Ellis, spokesman for the University of North Carolina System, said it has not yet made any payments for consulting or other costs. Those expenses are expected to include $500,000 to Cain Brothers, an investment banking firm that is providing financial advice and consulting services to Board of Governors legal counsel Norton Rose Fulbright.
Ellis said UNC Health Care will reimburse the UNC system for the Cain Brothers’ fee, which will be paid from non-state funds. Phil Bridges, spokesman for UNC Health Care, also said no public funds have been used.
The systems announced their plans to form a joint operating company last year, touting benefits such as improved access to care in rural areas.
But the deal has also faced criticism.
UNC Health Care is 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.
UNC board member Tom Fetzer, a health care lobbyist, last month questioned the legality of the proposed public, nonprofit corporation, and said UNC Health conducted clandestine discussions about the deal with Atrium for months without notifying the Board of Governors.
In addition, officials who represent about 800,000 state retirees and employees told the Raleigh News & Observer they are worried those workers could end up paying more for medical services if UNC Health joins forces with Atrium.
Blue Cross and Blue Shield of North Carolina has also come out against the deal, saying it would lead to higher health care costs.
News & Observer staff writer John Murawski contributed.