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Carolinas HealthCare System's flagship hospital in Charlotte, N.C. (Carolinas HealthCare)

Carolinas HealthCare System and UNC Health Care are planning to merge by the middle of next year, the two hospital systems said Thursday. The combined not-for-profit giant would own a medical school as well as numerous hospitals, clinics, outpatient centers and other facilities throughout North Carolina and South Carolina.

Why it matters: This is the biggest proposed not-for-profit hospital system merger so far this year, creating a regional behemoth with $14 billion of revenue that could exert large pricing power over health insurers. The UNC-Carolinas system would be one of the 15 largest health systems in the country by revenue — another step in the hospital industry's movement toward building up massive scale within a cluster of states.

Yes, but: There's no guarantee it will pass antitrust review.

More details: Gene Woods, CEO of Carolinas and the current chair of the American Hospital Association, would become CEO of the combined system. William Roper, UNC's CEO and the former head of Medicare and Medicaid during the Reagan administration, would be the executive chair.

This is not a merger of necessity. Both health systems have had strong bottom lines and already had dominant negotiating positions. Carolinas posted a 4.3% operating margin in 2016, and UNC had a 5.5% margin, according to audited financial statements.

Our thought bubble: There are a lot of moving parts here, and it may not be easy to merge the cultures of the UNC academic system with the public Carolinas system known for high executive pay. The Federal Trade Commission almost certainly will take an extremely close look at this deal as well, considering the Department of Justice is probing Carolinas for creating insurance contracts that steer patients toward its own system and away from lower-cost providers.

Go deeper

"Atmospheric river" swings Northern California from drought to flood

The bomb cyclone and atmospheric river seen via satellite on Sunday. The center of the storm is at the middle of the comma shape, due west of Washington State. (CIRA/RAMMB)

A series of powerful "atmospheric river" storms are delivering historic amounts of rainfall across parts of drought-stricken California and the Pacific Northwest from this weekend, forecasters warn.

Why it matters: A strong atmospheric river, packing large amounts of moisture, is predicted to whiplash Northern California from drought to flood.

Mike Allen, author of AM
5 hours ago - Politics & Policy

Fauci fires back at Rand Paul for slam on tonight's "Axios on HBO"

Responding to charges by Sen. Rand Paul on Sunday's "Axios on HBO," NIAID director Anthony Fauci told "ABC This Week" that it's "molecularly impossible" for U.S.-funded bat virus research in China to have produced COVID-19.

Why it matters: The issue 0f Wuhan research was reignited on the right last week with a National Institutes of Health letter to Congress disclosing more about the research.

Manchin, Schumer huddle with Biden in Delaware to discuss spending bill

Senate Majority Leader Chuck Schumer (left) and Sen. Joe Manchin at the U.S. Capitol in 2014. Photo: Win McNamee/Getty Images

Sen. Joe Manchin (D-W.Va.) will meet with President Biden and Senate Majority Leader Charles Schumer (D-N.Y.) on Sunday morning in Delaware as Democrats look to reach an agreement on the massive spending measure.

Driving the news: Democrats are still negotiating what to keep in the bill and how to pay for it, with Biden saying on Thursday that the party does not have the votes to raise the corporate tax rate.