While Duke Health System is working on incorporating its many entities, its neighbor down Tobacco Road is just beginning to grow.

Reacting to changes in the marketplace, the University of North Carolina Hospital is now a Health System, with its own significantly more independent governing board, said Chief Executive Officer of the UNC Health System Jeffrey Houpt. The UNC Board of Governors appointed him to this position in mid-November.

The UNC Health System currently includes the Hospital and the faculty practice plan, a consortium of about 500 physicians who are members of the UNC faculty. "We're not that different than the hospital was before except that we've added the practice plan," Houpt said. He added that there has been "no change in our mission, only how we're organized to do business."

The Health System retains ties to its academic roots. For example, the chancellor at UNC-Chapel Hill appoints the dean and the vice chancellor for medical affairs. "[The Hospital has] got ties to both the system and to Chapel Hill," Houpt said.

He added that an independent health system enables it to move more quickly in the marketplace, and makes it more appealing to employers and third-party payers. "We want to be large enough to carry out our mission," he said, adding that he wants to facilitate ways in which all North Carolinians receive care in the Health System.

The Duke Health System currently covers much of the Piedmont area. "We're very close to each other, we both do a lot of good work," said Mike Israel, Chief Executive Officer of Duke Hospitals. "On the other hand, we're competitors, but we're friendly competitors."

The two institutions collaborate on many academic endeavors and recently received a joint grant from the National Heart, Lung and Blood Institute to look at the mechanisms of stress in heart disease. In the future, Houpt said that the health systems would look at ways to work together. Israel added that "we always work to see how we can cooperate with other healthcare providers in the area."

For example, the two institutions currently collaborate in the use of laser technology to treat kidney stones, an expensive procedure.

Despite the threat of the other institution, "competition is fine," Israel said. "I feel more threatened by changes in the healthcare system." Israel said that all institutions must face the changes in the marketplace due to the induction of managed care.

Houpt agreed, noting, for instance, that UNC doctors have been faced to cut time spent on each patient. "Even before we were a health system, we were feeling that crunch," he added.