Up until now, Northside Hospital has stayed relatively quiet in the almost frantic rush by metro Atlanta hospital systems to seek mergers or acquisitions.
But Northside is now jumping into the fray, with a Wednesday announcement that it and Gwinnett Medical Center will begin talks to merge operations.
If an agreement is reached, the resulting system would build a strong arch from the northern Atlanta suburbs eastward into populous Gwinnett County. Northside operates hospitals in Canton and Cumming as well as its flagship hospital in Sandy Springs, which it says delivers more babies than any other U.S. hospital and performs the most surgeries in Georgia.
Gwinnett Medical operates hospitals in Lawrenceville and Duluth. Gwinnett County is the second most populous in the state.
The merger talks follow the recent aggressive moves of Marietta-based WellStar Health System. WellStar has begun talks to buy Tenet Healthcare’s five hospitals in metro Atlanta after earlier abandoning a proposed deal with Emory Healthcare. WellStar also has a proposed deal in place to acquire West Georgia Health.
And in May, Atlanta-based Piedmont Healthcare said it plans to bring Newton Medical Center in Covington into its group of hospitals. Meanwhile, many other Georgia hospitals, including Athens Regional, are seeking partners as well.
Hospitals in Georgia and around the nation have sought alliances or mergers to help weather the rapid changes in health care, many of which were sparked by 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 escape financial trouble.
The wave of consolidation in the health care business has also been evident among insurers, with Aetna’s proposed acquisition of Humana, and Anthem’s planned deal to buy Cigna.
The leaders of Northside and Gwinnett Medical said Wednesday that they’re targeting early 2016 as a completion date for a deal.
“A Northside Hospital and Gwinnett Medical Center combination is a strong and strategic fit on many levels,” Bob Quattrocchi, Northside CEO, said in a statement. “We come to the table with very similar organizational cultures and unsurpassed commitments to patient safety and quality care. Northside and Gwinnett Medical Center already are geographic neighbors, and together we will serve one of the fastest-growing markets in the country.”
Philip Wolfe, CEO of Gwinnett Medical, added in a statement that the health systems’ service offerings complement each other.
“Northside Hospital is a regional and national leader in women’s health and cancer care, while Gwinnett Medical Center is a leader in cardiac care, trauma care and sports medicine,’’ Wolfe said. “Going forward, our strategy will be to leverage our respective strengths in our expanded footprint and provide the total spectrum of health care to patients not only in our market area, but throughout Georgia and the Southeast.”
Dave Smith, a consultant with Kearny Street Consulting, said Wednesday that the deal with Gwinnett Medical “is a great move for Northside.”
“It makes sense for Northside to grab that eastern part of Atlanta,’’ Smith said. “Northside is looking for a heart program, and Gwinnett has a good heart program.”
Northside’s reputation in baby deliveries could enhance Gwinnett Medical’s obstetric program, Smith added.
Overall, he said, Northside’s brand name is stronger in metro Atlanta, and thus likely would have “top billing’’ in a resulting merger.
Northside has been active on the outpatient front, recently acquiring 22 medical imaging centers in Georgia. The purchase of MedQuest’s centers in the state brings Northside’s total of imaging centers to 56 in North and Central Georgia.
Quattrocchi and Wolfe said in a statement that the merger should create many opportunities for enhanced patient care, additional growth, professional development and fiscal strength.
Christopher Press, a consultant with Morgan Healthcare Consulting, said Wednesday that the merger talks reflect how much the Atlanta health market has changed over the past 25 years. “Some of the combinations today would have been unimaginable even 10 years ago,’’ Press said.
And Greg Charleston, with the consulting firm Conway MacKenzie in Atlanta, said the north Fulton and Gwinnett markets, where the merger is centered, have an ideal mix of patients – middle to upper class and privately insured.
“It seems like every health system is looking around to see who they can partner with,’’ Charleston said. “The bigger you are, the more leverage you have with insurance companies’’ on obtaining good payment rates.