Emory Healthcare is adding another facility to its metro Atlanta network of hospitals.
The Atlanta-based system announced Monday that it had reached an agreement to manage Southern Regional Health System in Riverdale.
Under the agreement, effective next month, Emory said it will strengthen physician partnerships and its presence in the region south of Atlanta called the Southern Crescent.
John Fox, president and CEO of Emory Healthcare, said in a statement, “Collaboration is under way to increase patient access, integrate programs and plan for future expansion, all of which will benefit those who live in the Southern Crescent area.”
The affiliation agreement extends the consolidation among hospitals in the Atlanta region and across the state.
Experts say such hospital deals nationally are partly driven by the 2010 health reform law’s incentives for hospitals and physicians to combine into ‘‘accountable care organizations’’ so reimbursements can reward quality of services, not volume of services delivered.
Hospitals are also feeling pressure from declining payments from the government insurance programs Medicare and Medicaid.
Earlier this year, Emory completed a partnership with Saint Joseph’s Hospital in Atlanta to form a joint operating company. Elsewhere in the state, hospital mergers have occurred in Albany and Valdosta.
An Emory rival, Piedmont Healthcare, already has a major market presence in the southern Atlanta suburbs, opening a new hospital in Newnan and creating an alliance with Henry Medical Center, now known as Piedmont Henry Hospital. Piedmont also operates hospitals in Fayetteville, another facility in the southern metro area, and in Jasper, in North Georgia.
Southern Regional Medical Center, a 331-bed hospital, has faced financial challenges in recent years. The health system lost $3.1 million on revenues of $264.6 million in the fiscal year ending June 30, 2011, according to GuideStar.
In May, when Emory and Southern Regional announced talks toward a possible affiliation, consultant David Smith of Kearny Street Consulting told GHN that an agreement ‘‘would be wonderful for Southern Regional.’’
The hospital ‘‘has been on the ropes’’ financially over the past few years, with a high level of Medicare and Medicaid patients, Smith said then.
For Emory, the agreement may be aimed at countering Piedmont’s strong push in the Southern Crescent.
The news release announcing the agreement said Emory will guide Southern Regional’s quality, financial and operational direction, while governance will remain with the current Southern Regional board. A spokesman said Monday that Southern Regional will pay Emory a management fee, but the amount was not disclosed.
Jim Crissey, president and CEO of Southern Regional, said in a statement, “Over the next year, we’ll undergo the greatest transformational change in the organization’s 41-year history as we strive to implement many of Emory’s quality programs and operational standards.
“Our community expects the best, and they deserve it. Adding Southern Regional into the Emory network of hospitals delivers on that expectation.”