An Atlanta-area hospital system could take over the hospitals affiliated with Georgia’s only public medical school under a deal announced Tuesday.
Augusta University Health System said it signed a letter of intent to join the Marietta-based nonprofit Wellstar Health System.
Any deal is far from final though, and spokespersons on Tuesday said they could not answer key questions, including how much Wellstar might pay to take over the system’s hospitals.
It would be part of a series of hospital mergers in Georgia and nationwide, as standalone hospitals become large enough systems to afford massive investments in electronic record systems — and also have the market power to negotiate more lucrative payment agreements with insurers.
Atlanta-based Piedmont Healthcare took over a three-hospital system based in Augusta earlier this year, pledging to invest more than $1 billion in upgrades and expansions over the next 10 years. That nonprofit group was named University Hospital, although it wasn’t controlled by Augusta University.
Augusta University Health System runs the 478-bed Augusta University Medical Center and the 154-bed Children’s Hospital of Georgia, both in Augusta. It also has regulatory approval to build a 100-bed hospital in Grovetown, in the growing Columbia County suburbs of Augusta. The system also runs the Georgia Cancer Center in Augusta, and Roosevelt Warm Springs Rehabilitation and Specialty Hospitals in Warm Springs.
The news release announcing the letter of intent suggested the deal could help pay for the Columbia County hospital and upgrade other AU Health System facilities.
“This is good news for the Augusta region and for health care across our state,” Gov. Brian Kemp tweeted. “It means more doctors and medical service providers, more options for health care and greater innovation in this field are coming to Georgia communities.”
In the 2021 fiscal year, AU Health Systems lost $28 million on $1.06 billion in revenue — which is the most recent year for which a state audit is available. Revenue included $30 million in state appropriations. The system has lost $63 million overall since 2017, audits show. AU Health Systems has been looking for a partner since 2019.
The two sides say that the deal could also result in a further expansion of the Medical College of Georgia by creating a new regional campus at Wellstar Kennestone Hospital in Marietta. The medical school already operates a separate four-year campus in Athens, as well as three two-year campuses for upper-division medical students in Rome, Albany, Savannah, and Brunswick.
The announcement also said Augusta University and Wellstar would work together to expand online health care to “create more convenient access to care and provide more individualized care regardless of location.”
Wellstar runs nine hospitals in suburban Atlanta, mostly concentrated in the northwest suburbs. The system has faced intense criticism in recent months after it shuttered Atlanta Medical Center near downtown Atlanta and Atlanta Medical Center South in East Point this year.
Wellstar said it lost $122 million at the two hospitals in 2022. But critics said Wellstar pulled out without giving local officials a chance to save the hospitals, eliminating one of only two top-level trauma centers in the Atlanta area. This decreased available medical care for poor and mostly Black patients, and shifted burdens onto remaining hospitals, despite its obligation to provide care as a nonprofit system.
Gov. Brian Kemp sent $130 million in federal pandemic funds to Grady Memorial Hospital, Atlanta’s publicly owned hospital, to help offset the impact of the closure.
The Board of Regents, which oversees Georgia’s 26 public universities and colleges, would have to approve any final agreement between AU Health Systems and Wellstar.
“By joining forces and working together, we can leverage Wellstar’s clinical platform and leading-edge systems to support patients while providing more opportunities for students to learn, train and care for residents in local communities across Georgia,” University System Chancellor Sonny Perdue said in a statement.
A review would also be required by Georgia Attorney General Chris Carr and is subject to a public hearing. The Federal Trade Commission also reviews hospital mergers. Accrediting agencies would have to approve an expansion of the Medical College of Georgia, but it wasn’t immediately clear if they would have to approve Wellstar taking over the hospitals.
