WellStar Health System announced Tuesday that it had agreed to buy Tenet Healthcare’s five metro Atlanta hospitals for $575 million.
The deal, if approved by regulators, would make Marietta-based WellStar easily the largest health system in the state of Georgia.
WellStar would acquire North Fulton Hospital in Roswell, Spalding Regional Hospital in Griffin, Sylvan Grove Hospital in Jackson, Atlanta Medical Center and its South Campus, as well as Tenet’s physician practices in Atlanta. In all, the Tenet facilities include 1,192 licensed hospital beds supported by about 4,300 team members and a medical staff of 1,390 physicians and advanced practice professionals, WellStar said.
In addition to the acquisition price, WellStar will assume $86 million in debt related to the lease of North Fulton Hospital. The latter is considered the biggest prize among the group due to its location in the affluent northern Atlanta suburbs.
The discussions of the purchase began in July, shortly after WellStar broke off talks with big competitor Emory Healthcare about a potential mega-merger.
WellStar said changes in government regulations and reimbursements were a major incentive in its acquisition of the Tenet hospitals. Rampant consolidation among hospitals, both in Georgia and nationally, has been driven by the pressures to lower costs and improve quality of care.
“The health care industry is changing at a rapid pace,’’ said Candice Saunders, president and CEO of WellStar. Health systems are looking to expand to boost quality and keep services affordable, she added.
Saunders said she anticipates the acquisition will be completed by the end of February.
When that occurs, Saunders said, “we will have one of the most integrated health systems in the country.”
WellStar has no plans to close or sell off any of the five hospitals, she said. “There will be some economies of scale we’ll look to accomplish.”
After the purchase, the Tenet facilities, now part of a for-profit hospital chain, will become nonprofit entities within WellStar.
Tenet, based in Dallas, Texas, said the deal was good for patients.
“Since we began exploring the sale of our Atlanta facilities, we sought an operator with the leadership and capability to continue delivering high-quality care for many years to come,” Keith Pitts, Tenet’s vice chairman, said in a statement. “We have a deep respect for WellStar’s commitment to the Atlanta community and its people. We are pleased our people and operations are joining a network with a shared vision to continuously improve health care and invest in its system’s growth.”
Christopher Press, a consultant with Morgan Healthcare Consulting, said Tuesday that the acquisition reflects the emphasis that hospital systems are putting on increasing their size.
“We are in a phase in health care where scale counts, but only if it delivers more efficient operations or better contracting. Or both,’’ he said. “It’s one thing to complete a deal; it’s another to make it work. WellStar has some very able leadership.”
Early last month, West Georgia Health’s Board of Trustees in LaGrange voted to join WellStar.
West Georgia Health operates West Georgia Medical Center, a 276-bed hospital in LaGrange, as well as two long-term care facilities, hospice and home care.
The purchase of the Tenet facilities will be submitted to the Federal Trade Commission for review. “We anticipate a smooth regulatory review process and look forward to continuing the high level of care that is available in these communities,” Saunders said.
Consumer groups such as Georgia Watch have raised questions about potential higher prices for patients when large hospital systems merge.
If the deal is completed, “WellStar would have an even greater share of the health care market here in Atlanta,’’ said Beth Stephens of Georgia Watch. “As WellStar looks to grow ever bigger, this could negatively impact the cost of health care. Research shows that large hospital mergers often lead to higher prices for consumers.’’
Tenet operates 81 hospitals nationally. In Georgia, where it has only the five metro Atlanta hospitals, it has not achieved the market power of the area’s largest health systems, and has been trying for months to find a buyer for the facilities.
Atlanta Medical Center has been serving the community for more than 100 years and has had several previous names (most recently Georgia Baptist Medical Center). It became a Level 1 trauma center in 2011.
“This will be a new geography for us,’’ Saunders said of the expansion represented by the Tenet deal. “We feel like we’ll build on both of our strengths.
“We’re very excited about this opportunity.”