The hospital world in Georgia is turning into one wild ride.
The Atlanta Business Chronicle reported Friday that the Southern Regional Health System, which operates Southern Regional Medical Center in Riverdale, is contemplating options that could include a joint venture or sale.
Peach Regional Medical Center is getting a new hospital through a just-announced partnership with Macon’s Medical Center of Central Georgia and the Central Georgia Health System.
And Phoebe Putney Health System continues to pursue its proposed acquisition of Albany rival Palmyra Medical Center, with a hearing set Monday before a federal judge.
Meanwhile, on Thursday night, Piedmont Healthcare announced its latest round of job cuts, which had been rumored for weeks.
Atlanta-based Piedmont said it’s reducing its job count by 464. Of those, 171 were vacant or revised due to scheduling change. The job cuts represent about 5 percent of the total workforce across Piedmont’s health system, and Piedmont said it will save $68 million with the reductions. Here’s Misty Williams’ AJC article on the Piedmont announcement.
At the same time, Piedmont continues to pursue a possible partnership with Henry Medical Center.
Health care consolidation, in various forms, is a nationwide trend. One example is that hospitals increasingly are employing physicians, the Wall Street Journal reports, as they seek to position themselves for new methods of payment that are encouraged by the federal health reform law.
The need to cut costs is at the core of the furious hospital activity, said Atlanta-based health care consultant Charles Goldberg.
Hospitals are making strategic moves as they look at future revenues – and see the possibility of declining reimbursements from the federal Medicare program, he said.
“It seems like costs are going to go up, and revenue per [hospital] bed is going to go down,’’ Goldberg said. Hospitals are seeking integration with other providers as they look for ways to leverage and spread costs across facilities to improve their bottom lines, he said.
Other proposed or completed hospital deals in Georgia include South Georgia Medical Center in Valdosta buying Smith Northview Hospital; St. Mary’s Health Care System’s planned purchase of St. Joseph’s East Georgia Hospital in Greensboro; and Emory Healthcare’s partnership with St. Joseph’s Hospital.
A hospital can save on such costs as business administration, information technology, billing and collections, and supplies by aligning with other hospitals, Goldberg said.
Atlanta-based consultant Brad Guest of BDC Advisors noted that private insurers and Medicare are seeking ways to peg payments based on the quality of care a hospital provides.
“Hospitals are these giant organizations operating on a thin margin,’’ he said.
And with revenue challenges lurking, including those likely to come through health reform, hospitals are taking steps to guard their bottom lines, Guest said. “This industry makes big moves out of trying to protect their positions against negative changes,’’ he said.
Citing the alliance to build the new Peach Regional Medical Center in Fort Valley, Don Faulk, CEO of the Medical Center of Central Georgia, told the Macon Telegraph: “Partnerships like this are going to be essential in surviving an uncertain future in health care.’’
Getting bigger while cutting payrolls
Piedmont is making its cost-cutting moves at the same time it is continuing its expansion strategy.
Since 2004, Piedmont has grown bigger, acquiring Mountainside Medical Center in Jasper, partnering with a large Atlanta cardiology group three years later, and building a new medical center in Newnan.
Piedmont said the job cuts are part of its effort “to reset our cost structure to align with our changing revenue stream.’’
“Like every business seeking long-term viability, stability and growth, we must constantly assess our financial performance and capacity,’’ Piedmont said in a statement.
“Changes like these are extremely difficult and not without emotion since they impact friends and co-workers,” said R. Timothy Stack, Piedmont Healthcare’s CEO, in a statement.
Last year, Piedmont Hospital in Buckhead let 24 employees go, including some middle managers. The hospital also eliminated 36 vacant positions. It cited, among other factors, the hospital tax of $10 million it pays to the state.
Goldberg said it’s not contradictory for Piedmont to be cutting jobs while expanding. The aging of America is driving demand for medical services, he noted.
“There’s still a need for beds,’’ he said. “It’s just the costs associated with those beds . . . [that] hospitals need to get a handle on.’’