Broader strategy: From local hospitals to regional players Broader strategy: From local hospitals to regional players
The big metro Atlanta health systems are looking to get bigger – and are targeting potential partners that are farther away from their home... Broader strategy: From local hospitals to regional players

The big metro Atlanta health systems are looking to get bigger – and are targeting potential partners that are farther away from their home bases.

Atlanta-based Piedmont Healthcare’s entering partnership talks with Athens Regional Health System, announced this week, is another sign of hospital consolidation reshaping the health care landscape in Georgia.

Piedmont, which in October finalized a partnership with Newton Medical Center, has been reaching out beyond its flagship Atlanta hospital for years. This year it explored a deal with St. Francis Hospital in Columbus before the talks collapsed, and was rumored to be interested in an affiliation with Memorial Health in Savannah.

Athens Regional Medical Center

Athens Regional Medical Center

Meanwhile, WellStar Health System, based in Marietta northwest of Atlanta, has moved to add West Georgia Health in LaGrange, and its proposed takeover of Tenet hospitals in Jackson and Griffin shows that large hospital systems are willing to make deals outside of their home territory.

Memorial in Savannah, in fact, ended up in talks to connect with Novant Health System, based in North Carolina.

“Geography is becoming less of a factor as providers try to get leverage’’ with insurers and government programs, Craig Savage, a consultant with CMBC advisors, told GHN on Thursday. “Everyone truly is fighting for the same dollar. They bigger I am, the more likely I’m going to have access to it.”

Economic factors have driven many hospitals to rethink their strategy. Over the past two years, hospitals in Georgia and around the nation have sought alliances or mergers to help weather the sweeping changes in health care payments.

Government and private insurers are increasingly emphasizing quality of care in reimbursements, instead of just paying for the quantity of services delivered. Medicare is paying bonuses and imposing penalties under the Affordable Care Act based on quality-of-care measurements.

Healthcare CostGetting bigger may help hospital systems cut costs and meet these new demands on quality, experts say. And partnering with a large system may help smaller, independent hospitals escape financial trouble.

Consultant Savage said that hospitals, by gaining more size, are better able to take on the actuarial risk that insurers want them to absorb.

Such hospital consolidation can lead to economies of scale in buying medical supplies, said Dave Smith of Kearny Street Consulting.

For Athens Regional, a partnership “is a necessary move’’ due to financial pressures, Smith said.

The independent hospitals that remain, Smith added, will have trouble surviving in this new world. He pointed to smaller, rural hospitals as the next frontier in consolidation.

A decision Tuesday night by Athens Regional’s board approved the finalization of a nonbinding “Letter of Intent” with Piedmont and the start of an exclusive negotiation period between the two organizations.

Piedmont Atlanta Hospital

Piedmont Atlanta Hospital

“Our organizations share a common vision and culture of high quality patient and family-centered care,” Kevin Brown, president and CEO of Piedmont Healthcare, said in statement. “Working together, there’s a clear opportunity for Athens Regional to be a larger, regional hub for health care, expanding our collective reach across the state.”

Last year, a rocky implementation of an electronic health records system arguably cost former Athens Regional CEO James Thaw his job, the Athens Banner-Herald reported.

Thaw resigned in May, just days after more than a dozen Athens Regional physicians published a letter expressing their concerns that the new computer system might endanger patients. Former Athens Regional Chief Information Officer Gretchen Tegethoff resigned about a week after Thaw, the newspaper reported.

Recently Athens Regional began a quest for a strategic partner. The system’s leaders said this week that Piedmont represents the right fit among possible suitors.

“Piedmont demonstrated to us that they have a culture and history of putting people first,” Dr. Charles Peck, president and CEO of Athens Regional, said in a statement. “Just like at Athens Regional, Piedmont places the patient at the center of everything they do.”

Athens Regional, with 2,800 employees, more than 250 physicians and 350 beds, would become the second-largest hospital in Piedmont’s system, and helps Piedmont secure the goal of finding hospitals serving as the sole provider for their area, the Banner-Herald reported.

Peck told the newspaper, “We still have local control in Athens, we have board representation at Piedmont and we have physician representation in the physician council at Piedmont.”

Athens Regional also said Thursday that it’s closing its health plan affiliate, the Athens Area Health Plan. “We are closing the business methodically and thoughtfully for our members — many of whom are our own employees,” said Elaine Cook, an Athens Regional spokeswoman.

 


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Andy Miller

Andy Miller is editor and CEO of Georgia Health News

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