Atrium Health is entering a new region of the country through its proposed combination with Advocate Aurora Health, positioning the Charlotte-based health system for further expansion as operations double in size.
The move follows a national trend of consolidation — and Atrium appears to be at the forefront.
Atrium, already North Carolina’s largest health-care system, now spans 40 hospitals and more than 1,400 care locations across three states. It has 70,000 employees, more than half of whom are based here.
The Atrium-Advocate Aurora deal, announced in May, creates one of the largest health systems in the nation. If approved, the combined organization, to be called Advocate Health, will serve 5.5 million patients across six states with almost 150,000 employees. Annual revenue will exceed $27 billion.
“The world of health care is changing so fast, at warp speed,” Atrium CEO Gene Woods said. “We’re looking for decades to come. That’s really what our horizon is.”
The Charlotte Business Journal sought out key leaders, analysts, academics, and financial experts in the health-care industry to answer key questions related to the mammoth combination.
Here are four factors to watch as Atrium and Advocate Aurora attempt to move ahead with the deal.
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- Multi-state expansions are a complex way to accelerate market share
- Consolidation does not necessarily translate into lower health-care costs
- Health systems prefer to hold off on executive-level cuts as long as possible
- The combination will drive growth in industries outside of health care
For an in-depth look at the four factors to watch, click here.
Atrium and Advocate Aurora have pledged to create more than 20,000 health-care jobs over the next few years. They also pledged to put $2 billion toward tackling health inequities. Further details are not yet available.
Locally, the combination is expected to boost an already rapidly growing health-care industry. Health care in Charlotte logged a 21% growth rate in the last decade, surpassing the national average at 19%. The life-sciences sector saw 62% employment growth in that same time frame. Atrium alone employs roughly 39,000 people here — this area’s largest employer.
Akofa Dossou, principal researcher at the Charlotte Regional Business Alliance®, said growth will spill over into other industries, bringing in even more people and businesses. Having the corporate headquarters here provides additional traction to surrounding businesses looking for contracts, Dossou said.
Andy Brailo, chief customer officer at Premier Inc., said there will likely be opportunities for regional businesses to grab market share in areas covered by Advocate Aurora. That could include medical-device companies, pharmaceutical operations or personal protective equipment manufacturers. It also includes purchased services, such as parking or landscaping, he said. The additional purchasing power at the corporate office will make a difference in the number of opportunities available.
The two systems will assess their supplier portfolios, for example, to look at who has what capacity and which ones make more sense for the combined organization, Brailo said.
“With Charlotte being ground zero for the corporate office, it is a really unique opportunity,” he said. “I don’t think it’s inconceivable to think that over the next 12 to 18 months you could start feeling some of that.”
Brailo said the combined institution could also focus more on access to care and quality. Atrium’s continued physical growth — the new Carolinas Rehabilitation hospital opening this fall, or the pending Wake Forest School of Medicine campus, as examples — drives innovation that makes Charlotte a destination hub for health-care talent, he said.
Copyright: Charlotte Business Journal
