This story was done in collaboration with Kaiser Health News, an editorially independent program of the Kaiser Family Foundation.
The two players
WellStar
Annual revenue: $2 billion
Hospitals: Five, plus urgent care centers and health parks
Employees: 13,500
Physicians: 500
Emory Healthcare
Revenue: $2.7 billion
Hospitals: Six
Employees: 16,000
Physicians: 1,800
In the turbulent business of health care, bigger is often better.
Nowhere is that more evident than in the announcement Monday that Emory University and WellStar Health System are talking about merging their medical assets in metro Atlanta.
If a deal happens, the resulting nonprofit health system would be Georgia’s biggest and one of the largest such organizations in the nation.
It’s too soon to say how a merger might affect prices and services for the thousands of patients the two organizations serve across Atlanta and its northern suburbs.
However, it marks the latest move in a push toward consolidating physician offices, hospitals and other medical providers into massive health systems.
Experts say the result can be better coordinated care for patients, but the trend may also spark worries of higher prices because there is less competition.
Talks between Emory and WellStar come at a time of revolutionary changes in health care, many ignited by the Affordable Care Act.
Changes in hospital and physician payments have helped drive a push to consolidate, WellStar CEO Reynold Jennings said.
Health insurers and Medicare are moving more toward paying for a bundling of medical services, rather than paying for individual procedures separately.
Large health systems have the manpower and money to provide better-coordinated, more cost effective care, which requires communication among specialists, primary care doctors, therapists and other types of providers. They also have the ability to spend tens of millions of dollars on electronic health records.
“If you’re not in an offensive strategy, the emerging health care [changes] will put you on a defensive strategy,’’ Jennings said
That upheaval is having a profound effect in the Georgia hospital industry. Texas-based chain Tenet Health is reportedly seeking a partner or buyer for its Georgia hospitals.
And Piedmont Healthcare, based in Atlanta, has begun talking about a partnership with St. Francis Hospital in Columbus, which is reeling from a $30 million accounting inaccuracy.
A merger, if completed, would combine Emory’s academic health system with WellStar’s expertise in running community hospitals.
“We want to end up with the best of community health care and the best of academic health care,’’ Emory University President James Wagner said Monday. “We hope to be a model for the Southeast and the rest of the country.”
Initial talks between the two systems will continue for 45 days, under a resolution passed by each organization’s board. Completing a merger would take a year or more, leaders of each organization said.
Jennings said he envisions “a true 50/50 partnership of equals.’’ Emory Healthcare and WellStar staffers would become employees of the new entity, he said.
A merger would represent the first such combination of a leading academic health organization and large community health system in the Southeast, Jennings said. The combination would foster savings in economies of scale, he added.
Jennings said he will delay his retirement to work on planning for the new company if talks lead to a deal.
Health systems are looking to gain more leverage in their dealings with insurers, who are ratcheting down payments, said Craig Savage, of Durham, N.C.-based CMBC Advisors, a consulting firm.
“A lot of provider systems are trying to do the same thing, to stay one step ahead,” he said.
An Emory/WellStar combination “makes a lot of sense,’’ Savage said. It could provide Emory “with more support for its teaching and research activities.”
Some Georgia hospitals have banded together in partnerships or alliances to protect their common interests. But an outright merger – such as the one Emory and WellStar are considering — is more solid and permanent. “There’s always an opportunity to walk away’’ from a partnership, Savage noted.
Emory Healthcare’s flagship, Emory University Hospital, has gained national attention in recent months for being the first U.S. facility ever to treat an Ebola patient, and it has successfully treated all four Ebola patients admitted there.
WellStar includes WellStar Kennestone Regional Medical Center (anchored by WellStar Kennestone Hospital in Marietta) and WellStar Cobb, Douglas, Paulding and Windy Hill hospitals, along with its physicians, urgent care centers and health parks.
A merger would overshadow the remaining systems in the Atlanta area, including Piedmont and Northside Hospital.
Jennings said he intends to continue WellStar’s role in the health plan that it currently operates with Piedmont.
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