WakeMed seeks Rex merger for a kin graft.

• Position: Triangle

As hostile takeovers go, WakeMed Health & Hospital Inc.'s $750 million bid to buy Raleigh rival Rex Healthcare Inc. wouldn't raise eyebrows on Wall Street, but it's shocking in the once genteel realm of Tar Heel health care. "Hospitals usually merge out of weakness," says Kevin Schulman, a physician and health-care economist at Duke University's Fuqua School of Business. "You'd be hard-pressed to find another example of one strong not-for-profit trying to buy another strong not-for-profit."

Buying Rex would allow his system to consolidate services that both offer, WakeMed CEO William Atkinson says. "We can make much wiser use of resources. That's hard to do when we all feel like we have to be on the same street corner." There's more to it than that. WakeMed has been slow to grow through mergers and acquisitions, leaving it vulnerable to big health insurers and surrounded by competitors. Winston-Salem-based Novant Health Inc wants to build a hospital in western Wake, Durham-based Duke University Health System Inc. is opening clinics and physician practices across the county, and state-owned Rex--UNC Health Care bought it in 2000--has the upper hand in Raleigh, Atkinson says. But the biggest threat could be in Pitt County, where East Carolina Heart Institute Inc. opened two years ago. Sixty percent of WakeMed's cardiac patients come from outside Wake County, most of them from eastern North Carolina.

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Skeptics question if buying Rex is...