One day after Carolinas HealthCare System changed its name to Atrium Health to avoid ties to a specific region, the hospital announced it is exploring an expansion into Georgia. Atrium said Navicent Health, which is based in Macon, will become part of its health care system.
WFAE health reporter Alex Olgin discussed what that means on All Things Considered with Mark Rumsey.
Rumsey: What do we know about Atrium’s proposal to acquire Navicent?
Olgin: The two health systems are in talks to combine. Navicent is based in Macon and is a lot smaller than Atrium. It has about 6,500 employees, five hospitals and a couple other facilities. Atrium has 47 hospitals and more than 900 care locations in the Carolinas and it employs more than 65,000 people. In the statement announcing the partnership Atrium says Navicent will become the leader of a regional hub for Atrium Health outside the Carolinas.
A 2016 Navicent financial report shows it is facing some challenges. Between 2015 and 2016 its operating income dropped 75 percent and expenses went up.
Kevin Schulman, a professor at Duke University’s School of Medicine, said he suspects Navicent is looking to become part of Atrium because it has a reputation for commanding better reimbursement rates from insurers. Atrium’s size gives it bargaining power with insurers and they are able to get better prices from suppliers.
Blue Cross Blue Shield of North Carolina has come out against Atrium’s proposed merger with UNC Health Care. And in response to the deal with Navicent, the company said in a statement.
Rumsey: So how would such a merger affect customers and patients?
Olgin: Well when hospitals that are in the same market or same state merge, there is research to suggest prices go up. A recent paper for The National Bureau of Economic Research found prices increase between 7 and 10 percent. But that same paper said mergers across different states don’t result in a meaningful change in price because they don’t generally have common customers and insurers.
Rumsey: Carolina’s HealthCare System, or rather the newly named Atrium, now is in talks for two mergers.
Olgin: Atrium and UNC Health Care both say they are still in talks.
They announced in August that they were exploring a merger. But since then no details have been released. Atrium said the deal with Navicent is unrelated to the talks with UNC Health Care. A spokesman for UNC Health Care says Atrium’s announcement with Navicent doesn’t come as a surprise.
Rumsey: How likely is it that these mergers will happen?
Olgin: It’s unclear how much antitrust scrutiny the deals will face. If the Navicent acquisition were to face antitrust scrutiny it would come from the Federal Trade Commission.
Barak Richman, an antitrust and health care law expert at Duke University, said since these hospitals are in different markets they may not invite the same kind of regulatory scrutiny. The FTC won’t comment or even confirm the existence of any investigations. As for the UNC Health Care merger, the North Carolina Attorney General is already reviewing that merger.
Atrium and Navicent said in a joint press release announcing the deal that they look forward to strengthening healthcare for the 750,000 people in central and southern Georgia by improving access and affordability for patients.
Atrium Health is an underwriter with WFAE.