HEALTH CONCERNS.

• Author: Otterbourg, Ken
• Position: POINTTAKEN

COMBINING THE STATE'S TWO BIGGEST HEALTH CARE SYSTEMS PROMISES A HUGE IMPACT. WITHOUT MUCH SAY FROM THOSE OUTSIDE HOSPITAL BOARDROOMS.

It's easy to think that the merger between Carolinas HealthCare System and UNC Health Care is all about Charlotte and the Triangle, the popular girls at the dysfunctional high school we call North Carolina. A lot of it is. But it's also about places such as Guilford County. There, CHS has a management-services agreement with Cone Health, which essentially controls health care in the northern half of the county. On the southern end, UNC owns and operates High Point Regional.

They have been fierce competitors. Now, they plan to be something different. Hopefully, they will be collaborators, and by that I mean they will use their collective clout, scale and brainpower to drive efficiencies and improve access to health care while keeping costs in check. That's the first possibility. I worry they could also be co-conspirators. When it's over, they will have a near monopoly on hospital care in Guilford County and concentrated power in many other markets. Monopolies are often like dictatorships. They can appear to be very good until they become very bad.

I want the first. We need the first. But I am troubled by the lack of clarity and transparency to date in the merger between CHS and UNC. So I worry about the second.

It's important to understand a little bit about these two organizations, so let's take them one at a time. CHS is still, legally, the Charlotte-Mecklenburg Hospital Authority, but it has grown into something altogether different, sprawling across the Carolinas like the shadow of the Fury 325 roller coaster at Carowinds. CHS is not a traditional nonprofit, and it's also not a pure government agency. It refers to itself as a "not-for-profit self-supporting public organization," and this middle ground allows it to zig and zag.

For example, CHS produces several sets of annual results. The one that is proudly displayed in its public report treats CHS like the water department. Revenues equal expenses, and there's nothing left over. The second, reported to ratings agencies, only includes about 60% of the entire $9.8 billion enterprise and reports operating income of $216 million.

UNC is equally complex. What started as the UNC Hospitals in Chapel Hill now controls medical centers from Hendersonville to Kinston and has revenue of about $3.6 billion (with operating income of $197 million). It is...