Plan for Georgia rural hospital’s future has as many twists as a mountain road

The proposed purchase of a hospital in rural North Georgia is anything but simple, even though the system that wants to buy the facility is headquartered only about 20 miles away.

An unusual complication has tangled the deal.

The proposed deal for Chestatee Regional Hospital, in the historic mountain town of Dahlonega, is linked to the University System of Georgia Board of Regents. In addition, the proposed sale comes on the heels of a CBS News investigation about billing practices by Chestatee Regional’s current leadership.

Lumpkin County

Northeast Georgia Health System, based in Gainesville, announced Friday that it has agreed to buy the hospital property and some equipment from DL Investment Holdings LLC, a company based in Florida that currently owns Chestatee Regional.

But another transaction is already in the planning stages. State lawmakers have earmarked dollars in Georgia’s fiscal 2019 budget for the Board of Regents eventually to buy the current Chestatee Regional property from Northeast Georgia Health System.

The Regents, whose final approval of the deal is required, would in turn lease the property back to Northeast Georgia. And later the property is envisioned as helping the Dahlonega campus of the University of North Georgia meet educational needs.

Complicating matters, though, is the CBS News investigation, which last week raised questions about lab billing practices at the Dahlonega facility and other rural hospitals.

Insurers reimburse rural hospitals at much higher rates to keep health care functioning in small communities, CBS reported. The CBS article alleged the Dahlonega hospital has attracted high insurance reimbursements tied to drug testing services, and that some of these services were never performed at the hospital.

The Dahlonega hospital was purchased for $15 million in 2016 by Durall Capital Holdings, which is led by Aaron Durall, who owns a Florida medical lab. He is CEO of DL Investment Holdings and also CEO of Chestatee Regional.

Durall told GHN in an emailed statement that the CBS report about the hospital “was flatly wrong.”

Chestatee Regional, he said, “billed only for any services performed by hospital staff at the hospital, and the payers correctly paid the hospital for those services. The hospital expects to be successful in any dispute related to the issue.”

Media outlets recently reported that at least 18 subsidiaries of insurer Anthem, the parent company of Blue Cross and Blue Shield of Georgia, had filed a lawsuit against the hospital, its owners and their companies over billing practices.

Buying it to close it (temporarily)

Dahlonega, a picturesque tourist destination and the seat of Lumpkin County, lies just north of the end point of Georgia 400, a busy highway that stretches from Atlanta into the mountains.

Northeast Georgia Health System has been interested in the county for years. In 2015, the system bought 57 acres where 400 ends, calling it a site for a future complex. That property now may be a potential location for a new hospital.

If a purchase of Chestatee Regional is finalized, the hospital will be closed for an undetermined amount of time.

Northeast Georgia Medical Center in Gainesville

“As part of the agreement, the owner is required to close the facility’’ so that any current liabilities would not go to the acquirer, said Northeast Georgia spokesman Sean Couch.

He said that the health system, which also operates hospitals in Winder and Braselton, was not aware of the allegations involving Chestatee Regional until last week. Couch said Monday that DL Investment Holdings approached Northeast Georgia last fall to gauge its interest in buying the Dahlonega hospital.

Durall, the CEO of DL Investment Holdings and the Dahlonega hospital, said in his email statement that “we believe [Northeast Georgia Health System] is the right choice for the community in light of its presence and commitment to our part of the state.’’

“We remain the strongest of advocates for our patients and staff, and vow to work with Northeast Georgia Health System to ensure a seamless transition that prioritizes the highest standard of care,’’ Durall said.

The Board of Regents’ interest in the hospital property “helped make this a rare win-win for ensuring access to health care and educational opportunities in our region,’’ said Couch of Northeast Georgia.

He added that during the next few months, a team from Northeast Georgia Health System will work with Lumpkin County leaders and the community to gather information and analyze data, which will help shape decisions and a potential timeline.

“Chestatee Regional Hospital has been a vital resource for Lumpkin County and an integral part of health care in the region for more than 40 years,” said Carol Burrell, president and CEO of Northeast Georgia, in a statement. “We look forward to working with the community to better understand what care it needs and collaborating to create a plan to meet those needs in the future.”

A specific date will be set for the hospital closing after further study of the matter, according to the parties involved.

“Our immediate goal is to assess what is needed to re-establish high-quality health care services in Lumpkin County after the hospital closes,” said Louis Smith, president of Acute and Post-Acute Operations for Northeast Georgia, in a statement. “Given what information we’ve received about existing resources, we estimate it may take as many as 12 months to complete that assessment.”

The University of North Georgia’s president, Bonita C. Jacobs, said in an email Friday that while the university “would not occupy the space for the next couple of years, this facility could potentially house our nursing, physical therapy and counseling education programs, as well as two existing outreach clinics from the counseling and physical therapy departments that are designed to serve specialized health needs of the community.’’