Just two days after WellStar announced plans to add another hospital, a second metro Atlanta health system says it’s making a similar deal.
Atlanta-based Piedmont Healthcare said Thursday that it plans to bring Newton Medical Center in Covington into its group of hospitals.
The deal will involve a long-term lease of assets from the Newton County Hospital Authority, and when the agreement takes effect, Newton Medical will become a subsidiary of Piedmont, officials said.
The announcement follows Tuesday’s news that Marietta-based WellStar Health System aims to take West Georgia Health in LaGrange into its fold. West Georgia Medical Center would become the sixth hospital in the nonprofit WellStar system, though it’s the first one not in Atlanta’s suburbs.
The moves continue the rapid consolidation among hospitals in Georgia and nationally, as they face dramatic changes in the way they’re paid for services. Part of that stems from provisions in the Affordable Care Act.
Government and private insurers are increasingly stressing quality of care in reimbursements, instead of just paying for the quantity of services delivered. Medicare is paying bonuses and imposing penalties under the ACA based on quality-of-care measurements.
Getting 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 to escape financial trouble.
Newton Medical, with 97 beds, had been seeking a partner since September. Earlier last year, hospital representatives had asked Newton County to increase its contributions to indigent care. The hospital had some job cuts in December.
Piedmont currently operates five hospitals, including its flagship facility in the affluent Atlanta district of Buckhead. Newton would represent its farthest venture east of Atlanta. It also runs hospitals in Henry County, Newnan, Fayetteville and the mountain town of Jasper, and has a clinical affiliation agreement with Rockdale Medical Center in Conyers.
Piedmont and Newton will pursue regulatory approvals over the next few months, and Piedmont Newton Hospital is expected to formally join the nonprofit Piedmont system Oct. 1, officials said.
Large base of insured residents
Chris Kane, a consultant with DHG Healthcare, said Thursday that large health systems are not looking to simply add more inpatient beds. “Rather, the objective is the creation of clinical networks: physicians, hospitals and related offerings,’’ he said.
Broad geographic coverage is important, Kane said.
“Adding Newton to Piedmont is consistent with its prior strategies related to Rockdale, Henry, Fayette and Newnan,” Kane said. “The southern crescent of metro Atlanta has a large base of insured people,’’ and private coverage pays at a higher rate, he added.
With the recent hospital transactions statewide, Kane said, “this is one more chess move in a game that will be fascinating.”
James Weadick, CEO of Newton Medical Center, said in a statement Thursday, “Because of Piedmont’s reputation, we have been anticipating this affiliation for months.”
“We’re excited about what this means for our employees and patients,’’ he added.
“Newton has demonstrated a dedication to high-quality, patient-centered care,” Kevin Brown, president and CEO of Piedmont Healthcare, said in a statement. “They will be a great partner, and we look forward to this collaborative journey to expand serving our local communities.”