AT A GLANCE
Southern Regional Medical Center
Location: Riverdale
Chief Executive Officer: Kim Ryan
Beds: 331
Employees: 1,366
Indigent Care: $21 million*
* 2013
A California health care firm that specializes in rescuing ailing hospitals plans to buy the largest hospital on metro Atlanta’s southside, averting a closure that could have been just weeks away.
Prime Healthcare Services “hopes to add” the 331-bed Southern Regional Medical Center in Clayton County to its non-profit foundation, spokesman Fred Ortega told The Atlanta Journal-Constitution Wednesday evening.
The company has 34 hospitals in 11 states. Seven are part of the non-profit Prime Healthcare Foundation, Ortega said. The foundation operates as a public charity.
Ortega declined to discuss financial terms of the planned purchase.
Southern Regional, which has posted yearly financial losses since 2007, stands to gain a turnaround expert as its new owner, while Prime Healthcare gains a major entry into the Southeast.
Under Prime Healthcare’s plan:
- Southern Regional will remain an acute care hospital, including emergency services for at least five years, Ortega said.
- Prime Healthcare’s foundation will invest $50 million in capital improvements and keep “substantially all employees currently at the hospital.”
- The company will spend $1 million recruiting new doctors.
Prime Healthcare also said it would maintain charity care — a big factor in the hospital’s financial ills — at or above existing levels.
Prime Healthcare sent a letter of intent to the hospital’s board and the county commissioners to acquire the assets of the 331-bed Riverdale hospital. Tuesday night, commissioners turned the hospital’s county-owned property and grounds over to the hospital authority which, in turn, will sell them to Prime Healthcare, Chairman Jeff Turner said Wednesday.
‘In a position to help’
“I’m glad Prime Healthcare intends to buy,” Turner said. “They felt the community needed a hospital and they were in a position to help. They were encouraging about the status of the hospital. They said our hospital is by far not as bad as other hospitals they’ve bought.”
Like other hospitals, Southern Regional has struggled but its operations started to spiral in recent years as more uninsured people came through the hospital’s emergency room. In 2013, the hospital provided $21 million in indigent care and turned to the county for help.
Clayton voters approved a $50 million bailout last year as part of a Special Local Option Sales Tax. Still, the county has had to kick in more money. Last month it paid a $500,000 pharmaceutical bill and agreed to give $750,000 to the hospital.
It wasn’t clear Wednesday how the transaction will work or whether the county will recoup any of the money it has put into the hospital.
The 43-year-old hospital is Clayton's third largest employer with 1,366 workers. Earlier this year, it cut 80 jobs in an effort to restructure.
Turner said he learned of Prime Healthcare’s intention to buy the hospital about a week ago. Kim Ryan, the hospital’s CEO, was unavailable for comment Wednesday.
Chris Kane, an Atlanta-based healthcare consultant with DHG Healthcare, said Clayton County would likely benefit by preserving jobs and access to care.
“A hospital turnaround is not for the faint of heart,” Kane warned. “Operating a hospital is capital intensive and labor intensive. I am not familiar with Prime’s approach, but typically a turnaround focuses on supply chain analysis, intensified labor productivity standards and other cost-cutting that does not jeopardize the quality of care.”
That said, Kane noted “a reconfigured health system is obviously better than the risk of closure.”
In the past two decades, Southern Regional has seen dramatic socioeconomic changes in the county that left it with an escalating number of patients who can’t pay. Clayton was hit harder than most metro counties by the recession and housing bust. Meanwhile, new competition and changes in the way medical care is dispensed and paid for these days squeezed revenues.
Revolving door
A revolving door of top administrators and a host of back-office and operational issues added to the hospital’s problems. Bills weren’t being sent out in a timely manner, and at times vendors weren’t getting paid, according to interviews with those who work at the hospital.
The perpetual financial crisis left Southern Regional without money to hire enough nurses, make repairs or stock enough supplies.
Officials from Prime Healthcare recently toured Southern Regional and spoke to the hospital’s officers and county officials as well as officials at Emory Healthcare, which has a partnership with Southern Regional, Turner said.
Prime Healthcare Services is a for-profit company based in Ontario, California. Dr. Prem Reddy, a cardiologist and entrepreneur, founded the company in 2001.
It has saved 34 hospitals and 35,000 jobs in 10 states and is the nation’s largest “minority-owned” hospital system, according to its website.
Critics say the fast-growing company aggressively cuts costs to turn a profit. A hospital workers’ union recently opposed a plan for Prime to buy a group of struggling Catholic hospitals in California. Prime walked away from the deal.
Prime Healthcare says it has spent nearly $800 million on capital improvements and equipment for its hospitals in the past decade.
Carrie Teegardin contributed to this article.
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