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Gov. Josh Stein says he won’t oppose WakeMed’s proposed merger with Charlotte-based Atrium Health.
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The announcement from the Democratic governor came Sunday, a day before Wake County commissioners are set to vote on a deal that has been overhauled since commissioners saw a version of the plan in May.
Stein said in a statement that recent changes were key to his decision.
“The proposed transaction between Atrium and WakeMed has improved substantially in recent days,” he said. “Health care costs are too high, so I asked Atrium to cap price increases at WakeMed to not more than 1.5 times the annual increase in Medicare costs for the next five years. I am pleased that Atrium has agreed to my request. We need broader health care reform to address rising costs, and I am committed to partnering with the General Assembly to make health care cost less for North Carolinians.”
Stein stopped short of saying he supports the deal, but praised several elements of it, and said: “Because Atrium has addressed a number of concerns about the deal’s impact on North Carolinians, I do not oppose the combination.”
The new deal would nearly double WakeMed’s indigent care commitment for people who have trouble paying, would guarantee that Atrium will invest $2 billion, would grant more local control over WakeMed’s board of directors and would restrict certain tactics in medical debt collection.
The county announced a new set of terms for the deal late Thursday evening, and the Wake County Board of Commissioners will vote on the agreement during its 2 p.m. session Monday. The public will be able to weigh in during a regular public comment session at the meeting.
One opponent of the deal criticized the timing of the announcement of changes, which were negotiated between county attorneys and WakeMed and Atrium’s attorneys in meetings closed to the public.
Rob Stephens, organizing director of the Patients Union, said the county should hold a new public hearing on the significant changes and answer community questions first.
“This process sets a shameful precedent that this community will not quickly forget,” he said.
WakeMed spokesperson Kristin Kelly issued a statement saying, “Following months of discussions with county leaders, community members, community organizations, faith leaders, employees and care providers, we heard many questions about how this combination would benefit Wake County.”
She said the latest commitments as part of the deal “strongly demonstrate the spirit of this proposed combination: to bring together two mission-driven organizations with a shared dedication to clinical excellence, innovation and improving health for all.”
When the merger was initially announced, WakeMed said it included a $2 billion investment from Atrium over 10 years.
Later, WakeMed CEO Donald Gintzig, responding to a letter from Stein’s office, said not all the money would necessarily come from Atrium. WakeMed could pay some or all of it.
The new updated agreement closes that loophole, and guarantees that Atrium will make the full $2 billion investment, but over 15 years instead of 10.
Kelly characterized it as a clarification.
“We are also adjusting the definitive agreement to clarify that Atrium Health’s $2 billion capital commitment to WakeMed will come from Atrium Health’s own sources of capital over a 15-year period following closing [of the merger],” she wrote.
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“I am pleased that Atrium responded to my concerns about the source of funds for the $2 billion investment in WakeMed capital projects by agreeing that Atrium will fully fund that investment,” Stein said.
As part of the new agreement, the county will get $150 million over 10 years to fund the “Wake County Whole Health Program.”
The agreement says that money will be spent “to improve access to and affordability of care, expand mental health care and address social drivers of health through affordable housing, homelessness solutions and food security.”
Kelly said that Atrium’s money brings “transformative investments in community well-being and is a long-term investment in improving and supporting the health and vitality of Wake County — helping address identified needs that extend beyond the walls of our hospitals and clinics.”
Currently, WakeMed is required by an agreement with Wake County to spend 4.5% of its revenue on indigent care, or care for people who would have trouble paying.
The agreement would bring that requirement to 8%.
But WakeMed actually spends around 12% of its revenue on indigent care currently, more than it is required to.
Gintzig told Stein’s office that number would be hard to maintain.
The agreement also maintains WakeMed’s current commitment to maintain the minimum spending on indigent care or risk its main hospital property reverting back to county ownership.
The new agreement adds a number of provisions on how WakeMed can collect debt. It restricts WakeMed from:
Opponents of the deal have cited Atrium’s past propensity for aggressively pursuing medical debt as a reason not to agree to the deal.
Currently, Wake County appoints eight of WakeMed’s 14 governing board members.
While that has never been a point of contention in the negotiations, what has shifted is how those appointments are made and how board members can be removed.
When the deal was initially announced, the agreement said Atrium could remove WakeMed board members at any time with “cause,” and gave a broad series of reasons that constitute cause.
People also took issue with the fact that Wake County’s appointments would be chosen from a slate of pre-approved candidates chosen by vote of two-thirds of the board.
It’s unclear if the slate of nominees mechanism is changing, but Wake County’s appointments will still require the approval of two-thirds of the board.
But removal of the Wake County-appointed board members rests entirely in the hands of the board. The board must vote by two-thirds to remove such a board member. Previously Atrium could remove a board member without a vote in certain conditions.
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