Atrium Health plans to merge with Advocate Aurora Health

READ MORE


Atrium Health to double its size in a major deal

Charlotte’s largest hospital system said it will merge with Wisconsin-based Advocate Aurora Health in another national expansion. Here’s everything you need to know.


Targeting national growth, Charlotte-based health care giant Atrium Health announced on Wednesday major plans to double its size with a deal with the Midwest hospital system.

This is Atrium Health’s largest business transaction to date, a strategic merger with Illinois and Wisconsin-based hospital system Advocate Aurora Health.

The move will see the healthcare system become the fifth largest in the country, Atrium CEO Gene Woods said in an interview with The Charlotte Observer on the Tuesday ahead of the announcement.

The system will be headquartered in Charlotte and generate more than $27 billion in total revenue. It will operate under the Advocate Health brand, while the Advocate, Aurora and Atrium Health brands will be used locally.

The goal, Woods says, is not about size, but about what that size allows: more investment in employees and communities, and in addressing inequality. “The size will allow us to serve our communities,” he said. “We’re just looking to do it bigger, better and faster.”

Still, it’s a huge leap for a hospital system that was once solely focused on the Carolinas.

The new system will serve more than 5.5 million patients at 67 hospitals and more than 1,000 healthcare facilities in Illinois, Wisconsin, North Carolina, South Carolina, Georgia and Alabama.

Woods and Advocate Aurora Health CEO Jim Skogsberg will be co-CEOs of the combined organization for the first 18 months. After that, Skogsberg will retire and Woods will become sole CEO.

CLT_atrium_01.JPG
Alex Slitz alslitz@charlotteobserver.com

“The desire to create a national system”

Atrium’s series of combo deals follows the trend of merging hospitals across the country. But critics of the consolidation warn that it could mean patients face higher prices.

According to hospital consolidation critic and Duke law school professor Barack Richman, the deal is staggering in scope and scope.

“This does not indicate a new frontier of competition,” Richman told the Observer on Wednesday. “It points to a new scale of lack of competition. A new scale of monopoly power.

A consolidation deal this size could mean higher prices, lower wages for nurses and doctors, and more expensive national insurance plans, Richman said, calling the combination “very, very worrisome.”

“I don’t understand how you can say that by owning a bunch of hospitals (all over the country) how can you better serve people in North Carolina,” he said.

But Atrium said the new combination will create more jobs and opportunities for innovation.

Aurora St. Luke - Milwaukee and Christ's Advocate - Oak Lawn, Illinois.jpeg
St. Luke’s Aurora in Milwaukee, left, and Christ’s Advocate in Oak Lawn, Illinois. Advocate Aurora teams up with Atrium Health. Lawyer Aurora Health

About 150,000 employees work in the combined system, according to Atrium. The organizations have pledged to create more than 20,000 jobs in the communities they serve, but did not specify how to achieve this.

In response to concerns about hospital consolidation, Woods said he believes Atrium and Advocate Aurora have a track record of saving money by making systems more efficient. And he wants to work on strengthening partnerships with insurance companies to better serve patients.

“The argument some people make about size is ‘big is bad’,” Skogsberg told the Observer on Tuesday. “Frankly, we don’t believe it. We think bad is bad. We think inefficiency is bad. We think inefficiency is bad. But we think that if we do it right, we will become stronger and patients will benefit from it.”

The strategic alliance with Advocate Aurora Health is Atrium Health’s first step in the Midwest.

“One of the things we’ve learned through COVID is that the digital world and telemedicine have no state borders,” Woods said on Tuesday. “We are committed to building a national system so we can better serve communities.”

The Unified System also announced a $2 billion commitment to address health inequities, as well as a commitment to achieve carbon neutrality by 2030.

Jim Skogsberg_Eugene A Woods.jpg
Advocate Aurora Health CEO Jim Skogsberg (left) and Atrium Health CEO Gene Woods. Both men will be co-heads of the joint health system for the first 18 months. Skogsberg would then retire and Woods would become sole CEO. John Martin-Itinger

Long way from Carolinas HealthCare

The Advocate Aurora Health merger is the latest and biggest step taken by Atrium Health for nationwide expansion since changing its name from “Carolinas HealthCare System” in 2018.

This change was seen by experts as a sign of the hospital system’s desire to expand beyond the Carolinas, as the Observer reported at the time.

And a day after the name change was announced, the hospital system announced a plan to merge with Georgia-based Navicent Health.

Atrium has since merged with two other hospital systems: Wake Forest Baptist Health in North Carolina and Floyd Health System in Georgia.

In early 2019, a partnership was announced with Wake Forest Baptist Health, including the Wake Forest School of Medicine. This combination allowed Atrium to open a medical school in Charlotte, the largest US city without a four-year medical school, according to Atrium.

Woods said the Advocate Aurora Health merger will not affect the timing of the reopening of Charlotte Medical School.

The school, the second campus of Wake Forest School of Medicine, will be built on a 20-acre site at the intersection of Baxter Street and South McDowell Street, Atrium announced last year. In 2024, the school will accept the first enrollment of students.

What’s Next for the Atrium Deal

The latest deal with Atrium still needs regulatory approval from the Federal Trade Commission.

Richman said he expects some concerns about the consolidation to be raised at the regulatory level, although Atrium spokesman Dan Fogleman said the organization hopes to get regulatory approval this year.

“It certainly won’t go through regulatory cracks,” Richman said.

And North Carolina Attorney General Josh Stein has previously expressed concern about the trend of hospital mergers.

“Too often when one hospital takes over another, patients end up paying more and getting worse care,” Stein said in a February statement.

But in early 2021, Stein told Atrium Health and Wake Forest Baptist Health that he wouldn’t mind the merger.

“This transaction marks an important step forward in the education and training of the next generation of physicians, many of whom will remain and practice in our state,” Stein said at the time. “If the COVID-19 pandemic has taught us anything, it’s that we need smart, dedicated, and well-trained healthcare workers to deliver healthcare.”

NC State Treasurer Dale Falwell opposed the merger in a statement Wednesday, calling the proposed new system a “six-state medical giant.”

He urged the state attorney general’s office, the Federal Trade Commission and the US Department of Justice to conduct a “thorough review” of the combination. “More mega-mergers are the wrong prescription for the healthcare industry,” Fowell said in a statement.

This story was originally published May 11, 2022 at 11:00 am.

Similar stories from Charlotte Observer

Hannah Smoot profile picture

Hannah Smoot does business in Charlotte, focusing on healthcare and transportation. She has covered COVID-19 in North Carolina since March 2020. She previously covered money and power at The Rock Hill Herald in South Carolina and is an alumnus of the University of North Carolina at Chapel Hill.

.

Leave a Comment

Your email address will not be published.