Wake Forest Baptist Medical Center and Atrium Health said Friday they have combined into one entity under the Atrium umbrella, effective immediately.
The announcement comes 18 months of quiet negotiations since the Winston-Salem and Charlotte health care systems announced their collaboration in April 2019. At that time, the stated main goal was opening a medical school in Charlotte.
However, speculation swirled in both cities about Atrium potentially acquiring Wake Forest Baptist after the systems left open the possibility for a much larger strategic combination.
The combined Atrium will be based in Charlotte with its president and chief executive Eugene Woods remaining in both roles.
Dr. Julie Ann Freischlag, chief executive of Wake Forest Baptist and dean of the medical school, will take on the additional duties of chief academic officer for Atrium.
Wake Forest Baptist’s physical infrastructure in Winston-Salem will remain mostly unchanged, and the combined Atrium is projected to expand in the downtown Innovation Quarter.
Winston-Salem Mayor Allen Joines said he supported Atrium acquiring Wake Forest Baptist in large part because “it appears that this will result on net new job growth for our communities and significant capital investment.”
With Charlotte being the largest city in the U.S. without a four-year medical school, the establishment of such a facility has been a long-sought goal of Charlotte civic and elected officials.
Hugh McColl, the former chairman and chief executive of Bank of America Corp. and one of the most influential Charlotte civic officials, said in a statement the medical school “will be the most transformational initiative in the history of Charlotte.”
The initial goal was to open the Charlotte medical school campus in 2021 or 2022. The systems said Friday they have not chosen a site in Charlotte, but released in August an artist rendering of the planned campus.
Freischlag said some third-year residents would begin rotations in Atrium hospitals in the Charlotte area in the spring.
The systems touted Friday forming a Silicon Valley-type innovation corridor between the two cities, with Wake Forest Baptist and the medical school becoming “the academic core of Atrium.”
The system said it will usher in "a new era of health care ... with a strategic combination built to address the biggest challenges facing health care and the populations it serves."
“We are creating a nationally leading environment for clinicians, scientists, investors and visionaries to collaborate on breakthrough technologies and cures,” Woods said in a statement.
“Everything we do will be focused on life-changing care, for all, in urban and rural communities alike.
“We will create jobs that provide inclusive opportunities to enhance the economic vitality of our entire region,” Wood said.
The Wake Forest Baptist-Atrium transaction required the approval of regulatory agencies, including the Federal Trade Commission. Woods said the final FTC approval came this week. The combined Atrium will have more than 70,000 employees and expects to serve more than 15 million patient interactions annually.
Wake Forest Baptist is Forsyth County’s largest employer with about 13,000 employees, while Atrium has about 55,000 employees overall.
The systems did not immediately respond when asked about how the combined entity would affect the local Wake Forest Baptist workforce, particularly administrative and back office jobs. They did say the integration of the two systems and their work forces would begin immediately.
Financially and operations wise, Atrium is much larger.
Atrium’s health-care system has nearly 14 million patient interactions each year across 42 hospitals and more than 900 care locations. Wake Forest Baptist has 2.2 million patient interactions each year across seven hospitals and more than 400 care locations.
Business North Carolina reported Atrium having nearly tripled the revenue of Wake Forest Baptist, which reported $55 million in excess revenue for fiscal 2019-20. Media outlets in Charlotte reported in February that Atrium’s board approved a resolution to secure a revolving line of credit that would allow the system to borrow up to $750 million to finance operations and improvements related to the pandemic.
The systems did not disclose Friday any financial commitment from Atrium to Wake Forest Baptist.
The open-ended nature of negotiations between Wake Forest University and Atrium raised concerns about the future of Wake Forest Baptist and its medical school in Winston-Salem. The local concern about the Charlotte campus is that it could eventually draw resources from the Winston-Salem campus or eventually lure the medical school itself from Winston-Salem.
“We will be one medical school with two sites,” Freischlag said in April 2019. “Medical students will have their choice to be in Charlotte or Winston-Salem.”
Freischlag has stressed that she and the majority of the existing medical school faculty would remain in Winston-Salem, and that the Charlotte medical school would hire new faculty and use providers within the Atrium hospital system.
Freischlag said the combination will “elevate North Carolina as a clear destination of choice to receive medical care for people all across the nation.”
“Through our combined, nationally recognized clinical centers of excellence in multiple specialties, we will be able to expand our research in signature areas, such as cancer, cardiovascular, regenerative medicine and aging, and target bringing research breakthroughs to the community in less than half the time of the national average.”
Nathan Hatch, president of Wake Forest University, said the collaboration will “create the future of medical education ... becoming one of the largest educators of physicians and other medical professionals in the state."
”The goal is educating more than 3,500 total students across more than 100 specialized programs each year," Hatch said.
Woods cited in August a study conducted by Pittsburgh health-care consultant Tripp Umbach that estimated the Charlotte medical school "could help generate more than 20,000 high-paying jobs and have a $2.5 billion economic impact" by 2040. Woods said the medical school could have 1,600 educators and 3,200 “learners.”
Winston-Salem businessman Don Flow, who serves on Wake Forest Baptist’s board of directors, said that “the investment and increased opportunity in research, innovation and medical education in both Winston-Salem and Charlotte will make it possible for us to improve health care on a new scale, and to better serve patients and families at Wake Forest Baptist Health and beyond with new diagnostics and treatment.”
Stan Kelly, president and chief executive of Piedmont Triad Partnership, said the combination “knits together the clinical and research assets of two powerful engines, and will raise the stature of Wake Forest University and our region across the globe.”
Mark Owens, president and chief executive of Greater Winston-Salem Inc., said that “Winston-Salem's efforts to develop leading medical institutions, research and innovation have made it an attractive partner to Atrium Health.”
“The combination announced today will elevate the entire region and generate benefits for millions of citizens.”
The Wake Forest medical school moved to Winston-Salem in the late 1930s and early 1940s, in large part because of a financial recruitment effort by the family of Bowman Gray, who served as president of R.J. Reynolds Tobacco Co.
In 1941, Bowman Gray School of Medicine opened on the campus of N.C. Baptist Hospital with 75 students.
Descendants of the Reynolds family have remained financially and otherwise supportive of the medical school.
Bowman Gray IV, a local stockbroker, said he is hopeful that the job loss will be minimal associated with the strategic combination, as well as that it will beneficial in terms of investment.
"It is hard to ignore the amount of funding that is involved here," Gray said.
"The family has been assured on multiple occasions by management at the medical school that it will not be moved away from Winston-Salem.
"No doubt having a new presence in Charlotte will improve the medical school’s visibility and by extension, greater exposure for The Bowman Gray Center for Medical Education and the Research Park here in Winston-Salem," Gray said.
Gray said that "I would find unbelievable that Wake Forest would be willing walk away from all the work they put into building the downtown campus."
"If everyone is thinking in terms of the next 80 years of the School of Medicine, it is conceivable that the intent is to create a corridor between here and Charlotte dedicated to healthcare."
Gray said he has been told that the hospital "is already seeing the benefits of the relationship as evidenced by a stronger ability to negotiate better pricing on equipment, supplies, etc.
"So, from the corporate view, these efficiencies should have a direct benefit to quality of care and costs.
"I have faith in Wake Forest’s leadership in looking to the future and their on-going dedication to Winston-Salem."