(RALEIGH) -- The head of the University of North Carolina Health Care System told a legislative panel that selling Rex Healthcare to WakeMed Health & Hospitals isn’t in the state’s best interest.

State lawmakers heard testimony from UNC Health Care’s top administrator, who explained why board members rejected WakeMed’s unsolicited $750 million offer to buy Rex. The Raleigh-based hospital is one of several properties under review by the House Select Committee on State-Owned Assets, which held its first meeting Thursday.

UNC Health Care CEO Dr. William said selling Rex would reduce UNC’s ability to train new physicians and provide charitable care to low-income or uninsured patients. "Rex makes up a critical component of the value that we provide to the people of North Carolina," Roper added. "Rex is not an isolated entity that can be peeled off or removed from UNC Health Care without harming the entire organization."

Roper said the UNC hospital system only gets about 1 percent of its annual budget from the state. But he argued that without Rex, UNC Hospitals would need more state funding to operate.

“UNC Health Care would be less than half the size of other major health systems in North Carolina,” said Roper. “And the smaller a system is, the tougher it is to achieve economies of scale.”

WakeMed Chief Financial Officer Michael DeVaughn said in an interview that the real issue is whether a state-owned asset should be competing against a private organization. He also said business structure allows Rex to operate as a state agency without making certain information available to the public.

“On a given day, Rex is either a private not-for-profit 501(c)(3) organization or it’s a public-owned entity of part of the state of North Carolina,” DeVaughn said in an interview. “We don’t believe you can be both.”

Committee chairman Rep. Harold Brubaker, R-Randolph said the panel will revisit the Rex issue at its next meeting in October. Officials from WakeMed are expected to make their case to lawmakers at that time.