News: CJ Exclusives

Partnership involving health-care giants raises concern over antitrust issues

Federal regulators are getting increasingly uneasy with proposals such as a partnership involving UNC Health Care and Carolinas HealthCare System. Such arrangements, critics say, inhibit competition and raise the potential for anti-trust violations.

Devon Herrick, a health economist and policy adviser to the Heartland Institute in Illinois, got straight to the point.

“It’s not really a good thing. It’s antitrust,”  Herrick said. “It’s all a big, grand conspiracy, in my opinion.” Moves such as this give the hospital industry power to increase its hold on the health-care market and extract more money due to dwindling competition, he said.

Herrick said hospital joint operating agreements are becoming increasingly common nationally. The Federal Trade Commission worries that trend — and big hospitals buying smaller ones — make it more difficult for smaller hospitals to exist, thus denying consumers more choice.

The FTC evaluates partnership proposals for antitrust violations, Herrick said. The Internal Revenue Service also has guidelines that must be met.

But it’s unclear whether state political leaders are wary of the proposal.

Senate leader Phil Berger, R-Rockingham, was told of the JOA partnership plan, but spokeswoman Shelly Carver said the senator hasn’t seen additional details and wouldn’t feel comfortable commenting.

House Speaker Tim Moore, R-Cleveland and Gov. Roy Cooper did not respond to requests for comment.

UNC Health Care is a state-owned entity with a statewide presence. Carolinas HealthCare is a regional government organization also known as Charlotte-Mecklenburg Hospital Authority. It operates in North and South Carolina, has the largest hospital system in the state, and is one of the largest public hospital systems in the nation.

The two organizations announced Aug. 31 their intention to create “one of the leading nonprofit healthcare systems in the nation” under a joint operating agreement.

A letter of intent was signed Aug. 30 giving the prospective partners 180 days to examine such things as organizational, financial, and legal implications, and real estate. The due diligence period can be extended if needed.

Under the proposal, a joint operating company would be created, and each hospital system would appoint board members. Dr. William Roper, CEO of UNC Health Care, would be executive chairman of the JOC. Gene Woods, CEO of Carolinas HealthCare, would be CEO of the new entity.

The hospital systems would retain their own governing boards and ownership of their real estate and assets. Staffs would remain under their current employers. But the JOC would oversee the operation of the facilities as an integrated entity “with one management team, one strategy, one budget, and one vision,” says the letter of intent.

The governing boards of UNC Health Care and Carolinas HealthCare System must approve the partnership, UNC Health Care spokesman Phil Bridges said.

“We will continue to respond to legal and regulatory questions that may arise, but we do not expect any barriers,” Bridges said.