North Carolina’s dominant health insurer is not a fan of the proposed merger between two of the state’s major nonprofit health systems.
In a letter (PDF) sent this week to the chief executives of Carolinas Healthcare System and UNC Health Care, Blue Cross Blue Shield of North Carolina CEO Patrick Conway, M.D., informed them that the insurer “cannot support your proposed combination.”
Conway—who took the helm at BCBSNC after stepping down from his post at the Centers for Medicare & Medicaid Services—said the organization reached its conclusion following a “thorough review of independent research” that showed consumer costs rise when health systems combine.
There is indeed research that supports Conway’s position. A 2016 study (PDF), which examined mergers between hospitals that operate in the same state but serve different populations, found that such transactions raise prices by in 6-10% relative to control hospitals.
Possibly of greater concern to BCBSNC, though, is the fact that the insurer will have decreased negotiating power with UNC and Carolinas if they combine. In fact, the health systems said when they announced their merger that the deal will allow them to negotiate better deals with payers.
UNC Health Care also contended that the merger will allow the health system to reduce costs, improve patient outcomes and increase access to high quality care—especially for patients in rural North Carolina.
“We believe that Blue Cross Blue Shield of North Carolina has drawn premature and unfounded conclusions about our proposed partnership with Carolinas HealthCare System,” a UNC Health Care spokesman said in a statement. “An agreement for this partnership is still being negotiated and the new organization does not yet exist.”
Both the payer and the provider, though, expressed a desire to work together to find solutions to improve care quality and lower costs for North Carolina residents.
BCBSNC’s opposition to the proposed merger comes at a time when M&A activity among the major payers has been quiet—save for CVS’ proposed purchase of Aetna. When the Aetna-Humana and Anthem-Cigna mergers were still pending, though, healthcare provider groups were vocal in their opposition.