With the last legal hurdle now eliminated, the Lee County hospital project has a smooth path ahead.
The Dougherty County Commission late Monday dropped its lawsuit against the state for awarding a license, or certificate of need (CON), for the Lee County Medical Center. The suit had been the last barrier to the building of the $120 million, 60-bed hospital.
But what does that mean for the health system based in Albany in Dougherty County, just a few miles to the south?
The most obvious result is competition.
Albany’s nonprofit Phoebe Putney Health System has dominated medical care in southwest Georgia for years, especially since it bought rival Palmyra Medical Center from HCA in 2011.
The Palmyra deal was challenged on anti-competitive grounds by the Federal Trade Commission. The FTC contended that Phoebe’s acquisition of its Albany competitor violated antitrust laws, reducing competition and potentially raising prices for consumers in southwest Georgia. Phoebe eventually settled with the agency after a long court fight.
Lee County officials, in pursuing a CON for their new hospital, argued that Phoebe had enjoyed a monopoly over health care in the area.
The new hospital will come at a time of major transition for Phoebe Putney. Joel Wernick, who has led Phoebe for 30 years, announced this month that he is retiring.
Wernick is the longest-serving health system CEO in Georgia and one of the longest-tenured in the country. Phoebe officials said that two years ago, Wernick agreed to a three-year service agreement extension, which ends in May 2019, as he reaches the standard retirement age of 65.
“Wernick retiring from Phoebe could be a new day for that hospital,’’ said Dave Smith of Kearny Street Consulting. Replacing Wernick would be like replacing the legendary Bear Bryant as football coach at Alabama, Smith said.
The new hospital in Lee County should bring better pricing on medical services for area employers and patients, Smith added.
Phoebe officials fear that the new hospital will siphon off many privately insured consumers, and leave the Albany health system with a heavy load of uninsured and Medicaid patients.
Alarm in Albany
Dougherty County and Albany already have many health challenges.
In a recent report card on the health status of U.S. cities, Albany had very poor scores on several measures. Almost half of its children live in poverty. Forty percent of adults are obese. About one-fourth of adults are smokers. And its adult diabetes rate of 15 percent is much higher than the U.S. city average of 9.8 percent. Its uninsured rate is high as well.
That coverage gap has driven Phoebe Putney to vigorously support Medicaid expansion, which would help such safety-net hospitals by giving more people coverage — enabling them to pay their medical bills. Most states have expanded Medicaid under the Affordable Care Act, but Georgia officials have repeatedly rejected expansion as too expensive.
A Phoebe spokesman, Ben Roberts, said Tuesday in a statement that community hospitals like Phoebe “are now facing unprecedented challenges, particularly in Georgia and other states that did not expand Medicaid.”
He said millions of dollars that such hospitals counted on each year from the federal government to help provide a safety net for those people who cannot afford to pay their medical bills have evaporated.
“A new investor-owned hospital to be built just a few miles from our main campus on the Dougherty-Lee County line will present new challenges for the region’s health delivery system,’’ Roberts said. He added that independent studies concluded the Lee County project “will divert tens of millions of dollars a year from Phoebe by pulling away low-intensity insured patients.”
Dougherty Commission Chairman Chris Cohilas, in advocating for the county lawsuit, had argued that the new Lee County hospital would lead to higher property taxes for Dougherty citizens and a loss of jobs for the county.
But on Monday, he said it was time to give up on the suit, saying a key factor was a judge’s recent rejection of Dougherty’s request for an injunction against the Lee project.
“The Commission has done its best to protect Dougherty County’s jobs and taxpayers,’’ Cohilas said. “Though we could continue to litigate this matter for years to come, our efforts are better focused on building our community and investing in our infrastructure. We certainly wish Lee County and its citizens the best of luck and will continue to work with their leadership on regional economic development opportunities.”
Some experts say Phoebe Putney now could be looking for a buyer, or a large nonprofit partner in a consolidation. It’s difficult for an independent hospital to survive in such a market, consultant Smith said.
Roberts said Phoebe will continue offering tertiary services that won’t be offered by the Lee County facility. “While we may have to make tough choices in the coming years to operate even more efficiently while improving our quality and level of care, we are committed to doing so and finding new ways to serve southwest Georgians even better,’’ Roberts said.
CON is the state regulatory apparatus governing health care construction and services in Georgia, and similar systems operate in several other states. An individual CON is a license needed to allow, for instance, the construction of a health facility.
Certificate-of-need disputes often pit municipalities against each other, leading to legislative fights when the Georgia General Assembly is in session. Some House members are expected to debate CON reform in a meeting this fall.
Phoebe Putney itself was legally prevented from opposing the Lee County project due to the settlement it reached with the FTC in 2015 over its acquisition of Palmyra. Under the deal, Phoebe Putney got to keep Palmyra, but had to agree that neither it nor the local hospital authority would oppose a CON application for a general acute-care hospital in the Albany area for up to five years.
Consultant Smith predicted that the Lee County hospital should do well financially. But it will be a challenge to staff the new hospital with physicians, nurses and other medical professionals, he said.
Still, Lee County had plenty to celebrate Monday.
County Commissioner Billy Mathis said that officials in Lee County were pleased by Dougherty’s withdrawal of the suit.
“We know Lee County Medical Center will be a great benefit to this community, and we look forward to bringing a choice in local, quality care to all of southwest Georgia. We continue to be grateful for all of the community support and are excited to break ground for the hospital in the coming months.’’
“The people are the winners here,” Mathis said.
Editor’s note: The initial version of this article had an error in the number of beds at the new hospital.