Piedmont Healthcare has moved to add its sixth hospital, and the Atlanta-based system may not be done yet finding new partners.
Newton Medical Center in Covington will become the latest hospital in the Piedmont fold, the two organizations announced this week.
The deal will involve a long-term lease of assets from the Newton County Hospital Authority, and when the agreement takes effect, Newton Medical will become a subsidiary of Piedmont, officials said.
“In the last 10 years, Piedmont has been interested in partnering with other systems dedicated to high-quality, patient-centered care,’’ Matt Gove, chief consumer officer for Piedmont Healthcare, said Friday. He said the 97-bed Newton hospital “meshes well with the way Piedmont delivers care.”
The Piedmont-Newton announcement came just two days after Marietta-based WellStar Health System announced plans to take West Georgia Health in LaGrange into its group. West Georgia Medical Center would become the sixth hospital in the nonprofit WellStar system, and the first one not in Atlanta’s suburbs.
The moves reflect the rapid consolidation among hospitals in Georgia and nationally, as they face dramatic changes in the way they’re paid for services. Part of that stems from provisions in the Affordable Care Act.
Government and private insurers are increasingly linking reimbursements to quality of care, instead of just paying for the quantity of services delivered. Medicare is paying bonuses and imposing penalties under the ACA based on quality-of-care measurements.
Getting bigger may help hospital systems reduce costs and meet these new demands on quality, experts say. And partnering with a large system may help smaller, independent hospitals to escape financial trouble.
Piedmont won’t shy away from other potential deals, Gove said. “Certainly we’re open to additional partnerships with like-minded systems,’’ he said.
Gove added that hospitals are having more talks about potential combinations than ever before.
WellStar’s current merger discussions with Emory Healthcare may have accelerated the pace of such discussions in the local marketplace, but “that hasn’t changed Piedmont’s approach,” Gove said.
Piedmont was already talking with Newton Medical Center when Emory and WellStar announced their prospective merger, he said.
Newton Medical had been seeking a partner since September. Earlier last year, hospital representatives had asked Newton County to increase its contributions to indigent care. The hospital had some job cuts in December.
Piedmont currently operates five hospitals, including its flagship facility in the affluent Atlanta district of Buckhead. Newton would represent its farthest venture east of Atlanta. It also runs hospitals in Henry County, Newnan, Fayetteville and the mountain town of Jasper, and has a clinical affiliation agreement with Rockdale Medical Center in Conyers.
Piedmont and Newton will pursue regulatory approvals over the next few months. Piedmont Newton Hospital is expected to formally join the nonprofit Piedmont system Oct. 1, officials said.
Chris Kane, a consultant with DHG Healthcare, said broad geographic coverage is important to large hospital systems.
“Adding Newton to Piedmont is consistent with its prior strategies related to Rockdale, Henry, Fayette and Newnan,” Kane said. “The southern crescent of metro Atlanta has a large base of insured people,’’ and private coverage pays at a higher rate, he added.
With the recent hospital transactions statewide, Kane said, “this is one more chess move in a game that will be fascinating.”
This story was done in collaboration with Kaiser Health News, an editorially independent program of the Kaiser Family Foundation. Andy Miller is the CEO and editor of Georgia Health News.
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