Duke won't join bidding war for Rex

Don't expect the Duke University Health System to jump into a bidding war for Rex Healthcare.

Victor Dzau, CEO of the Duke health system, didn't dismiss the possibility outright, but said that Duke is taking a very careful approach of using resources to expand its network of facilities and providers.

"Developing the right network is very important to us," Dzau said in a phone interview. "With health-care reform, there are many moving parts. Any opportunity has to fit into a long-term plan. ... We're not going to be distracted by this or that."

WakeMed's surprise, and hostile, offer on Thursday to buy cross-Raleigh rival Rex from the UNC Health Care System for $750 million fueled speculation that other bidders could emerge. UNC officials have said Rex isn't for sale, but that they will consider WakeMed's offer carefully.

Since Rex isn't a publicly traded company with shareholders, it's hard to determine what a sale process would involve, Dzau said, adding that "we will be watching what happens."

Another major hospital system, Novant Health of Winston-Salem, also will keep close tabs on the Rex discussions. Spokeswoman Kati Everett said Thursday that Novant would "consider the opportunity" if UNC decided to sell Rex. Novant has been eager to expand in Wake County, and last month submitted another bid with state regulators to build a community hospital in Holly Springs.

UNC Health's board will consider WakeMed's offer at a meeting scheduled for Monday.

Whatever happens with Rex, the important issues are whether a sale improves patient care and creates a better environment for physicians and other providers to deliver that care, Dzau said.

"There needs to be a good reason for this transaction," he added. "If the reasons aren't good, they shouldn't forget the principle reason we're all doing this."

State leaders, including Health and Human Services secretary Lanier Cansler, "care a lot about making sure we have a healthy population," Dzau said.

Duke does have a history of expanding by buying or affiliating with smaller hospitals. In 1998, Duke paid about $200 million to buy Raleigh Community Hospital and expand its brand in Wake County's fast-growing medical market. Duke continues to add services and expand at that facility, now called Duke Raleigh Hospital.

Duke also runs Durham Regional Hospital under a long-term contract with the county.

Dzau joined Duke in 2004.

This year, Duke formed a joint venture with LifePoint Hospitals, a publicly traded company based in Brentwood, Tenn. That venture plans to buy or manage community hospitals and other facilities across North Carolina. (Read more here.)

"LifePoint is interested in looking at distressed community hospitals to save them and turn them around," Dzau said. "We're interested in bringing the medical quality and processes that will help make those places better. ... We're not really expecting these rural places to be big sources of referral, but it does help Duke expand its reach."

Read today's full report on WakeMed's offer to buy Rex here.