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Carolinas HealthCare megadeal under review, UNC Board of Governors says

North Carolina Memorial Hospital on the UNC campus in Chapel Hill is owned by UNC Health Care.
North Carolina Memorial Hospital on the UNC campus in Chapel Hill is owned by UNC Health Care. cseward@newsobserver.com

The University of North Carolina system’s Board of Governors has formed a special committee to review a massive business combination proposed by Chapel Hill’s UNC Health Care and Charlotte’s Carolinas HealthCare System.

The 6-member committee, which was appointed Monday, was formed to ensure that the Board of Governors will be “fully informed” about the combination of the two systems, according to a UNC system document.

The committee’s members are auto parts magnate O. Temple Sloan III; health care attorney Carolyn Coward; N. Leo Daughtry, a Smithfield lawyer and longtime state lawmaker; R. Doyle Parrish, founder of Summit Hospitality Group, a hotel management business in Raleigh; Randall Ramsey, founder and president of Jarrett Bay Boatworks in Beaufort; and corporate lawyer W. Louis Bissette Jr.

Its creation comes after the two nonprofit hospital systems in late August announced plans to form a joint operating company that will be overseen by its own board of directors.

The proposed public, nonprofit corporation would run more than 50 hospitals and employ more than 90,000 people, making it one of the nation’s largest hospital chains. N.C. Attorney General Josh Stein has already said his office is examining whether the pending deal will harm health care competition in the state.

The committee’s role will be to review UNC Health’s consideration and evaluation of the combination, the document says. The committee will also ensure UNC Health has “employed an appropriate process, informed by necessary expertise, based on relevant facts and information.” The committee is scheduled report its findings to the Board of Governors by Dec 20.

UNC Health Care is owned by North Carolina and 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.

In a statement, Carolinas HealthCare System said UNC’s special committee was formed as part of the Board of Governors’ due diligence as it reviews the proposed joint operating company.

“We look forward to answering any questions from this committee, welcome their review, and are confident it will conclude that the collaboration between our two organizations is in the best interest of the people of our state as it fosters our common goal of improving the health of North Carolinians,” the statement said.

Carolinas HealthCare said it is still seeking to sign a definitive agreement with UNC Health by early 2018.

Approvals from the boards of both Carolinas HealthCare and UNC Health Care are also still needed, Carolinas HealthCare said.

The two hospital groups have said they will create one of the leading nonprofit health care systems in the U.S., allowing them to work together in myriad ways – from building new hospitals to negotiating with insurance companies. They’ve also said they will push to improve access to care in rural areas, which suffer from a shortage of doctors and services.

Critics argue similar combinations across the U.S. have reduced competition and driven up prices.

“I’m not aware where two systems combined and costs went down,” said Patrick Conway, CEO of Blue Cross and Blue Shield, the state’s largest health insurer, earlier this month. “Historically the larger systems charge a higher price per unit.”

Ellis said the special committee was created by Bissette, chairman of the Board of Governors

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Deon Roberts: 704-358-5248, @DeonERoberts

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