Spurred by a tough economy, metro Atlanta hospitals are increasingly creating partnerships with one another, aiming to save money, expand territory and in some cases pump new blood into struggling institutions.
These joint ventures can be good for the hospitals and the surrounding communities. Ideally, people receive more medical services and more expert care.
Smaller suburban hospitals benefit from the technology of a larger facility. And both medical centers save money by buying supplies in larger bulk and negotiating on behalf of more patients with insurers, said Michael Rovinsky, a longtime health consultant in metro Atlanta.
But such partnerships also can stifle competition and run the risk of spreading a hospital’s services — and good name — a bit thin, experts say.
“Are they translating a level of care or just getting market power — spreading their name around, getting referrals and locking up a certain market?” said Patricia Ketsche, an associate professor of health administration at the Robinson College of Business at Georgia State University.
In recent months several hospitals have engaged in joint ventures.
Piedmont and St. Joseph’s announced in April their intent to create a partnership that could produce several medical centers, expanding their delivery of health care while lowering their costs.
Gwinnett Medical Center broke ground this week on its open-heart cardiac center, which will use surgeons from St. Joseph’s Hospital in Atlanta.
Emory University Hospital, pending state approval, plans to provide open-heart procedures for Southern Regional Medical Center in Clayton County.
Metro Atlanta has historically been a sprawling medical market with many independent-minded players. But more and more of these collaborations are occurring as hospitals struggle with fewer paying patients, more charity care and reductions in government aid programs such as Medicare.
“I think we’ve entered into an era of affiliations,” said Kevin Bloye, spokesman for the Georgia Hospital Association. “I think we’ll see more of them.”
In the past, these partnerships often consisted of one hospital providing another with a specialty service. Emory Healthcare, for instance, provided cardiac surgeons when WellStar Kennestone Hospital began its open heart program in 2004. But health care experts say they see signs of more expansive unions.
Piedmont and St. Joseph’s plan goes beyond any formal merger or acquisition by one party of the other. The two major metro health care players are negotiating to create a separate “joint operating company” that would provide services to benefit both health systems.
The collaborations provide an avenue for a major player to reach out into emerging markets, where these smaller hospitals can serve as satellites that feed patients to the larger facility. In May, St. Joseph’s, seeing the increasing number of older North Fulton residents, signed an agreement to provide on-site advanced cardiac care at North Fulton Regional Hospital.
The federal health care overhaul may hasten more of these unions, said several metro hospital officials.
Hospitals, especially small independent ones, are struggling with the current economic climate. Greater unemployment has resulted in more people without insurance. Many patients have gone on to Medicaid, the state and federal program that provides health insurance for the needy. Medicaid and Medicare do not pay a hospital’s full cost of providing services.
The new health care law is expected to increase vastly the number of people receiving Medicaid in 2014, which is concerning some hospitals. Hospitals are also bracing for cuts in Medicare because of the new changes.
While larger hospitals may have enough privately insured patients to make up the difference, the strain could be tougher on smaller hospitals, said Greg Hurst, CEO of Piedmont Hospital. “It’s going to be much more difficult for the small, independent hospitals to survive,” Hurst said.
These joint ventures sometimes reveal shortcomings.
Emory has partnered with two other health care companies to create three medical centers: Emory-Adventist in Cobb County, Emory Eastside Medical Center in Snellville, and Emory Johns Creek Hospital in North Fulton.
According to Medicare statistics that measure quality of care, Emory Eastside posted a high death rate among pneumonia patients admitted between 2005 and 2008. Emory-Adventist earned some of the worst marks in the state on patient satisfaction data from July 2008 to June 2009 compiled by Medicare. The numbers are the most current statistics available to the public.
“There were two different ways of doing business,” said Bill Custer, a professor of health administration at the Robinson College of Business at Georgia State University. “While the names were co-mingled, the cultures were not. It creates different expectations.”
Emory officials said the issues are being addressed.
“We have and continue to support these hospitals,” said Emory spokesman Lance Skelly, “and desire the same level of quality, safety and commitment to customer satisfaction that we strive for in all Emory Healthcare hospitals and clinics.”
Emory Johns Creek earns strong marks on patient satisfaction surveys and quality measures.
When Scottish Rite and Egleston Hospital merged to form Children’s Healthcare of Atlanta in 1998, the two medical centers integrated their health care systems and built upon their strengths, said Ketsche, the Georgia State associate professor. When Children’s entered an agreement with Grady Memorial Hospital to run Hughes Spalding Hospital, it helped save a failing medical center that serves many low-income children, she said.
Sometimes these collaborations create battles between major players trying to capture new markets. That is currently occurring as Piedmont and Emory slug it out for new ground in the counties south of Atlanta, an area known as the Southern Crescent.
When Emory announced plans to work with Southern Regional to provide open heart procedures, Piedmont filed protests to the state to stop the move. Piedmont owns two hospitals in Fayette and Newnan, and performs open heart procedures itself. The state decision on Southern Regional’s bid is expected this month.
Southern Regional, for its part, has been struggling financially and recently had its bond rating dropped to “junk” status. Open-heart surgeries, among the biggest money-makers in medicine, could help the hospital back on to its feet.
The parrying between Emory and Piedmont heated up even more when Henry County Medical Center announced in April that it had entered exclusive talks to partner with Piedmont.
Emory, which competes with Piedmont for thousands of Henry County patients, raised objections with the county board of commissioners that the selection process was not open enough. In turn, the board of commissioners, which provides about $6.5 million to the Henry hospital annually, raised those concerns with the hospital.
The Henry hospital said on Thursday it has decided to expand its discussions about potential partnerships to include other hospitals besides Piedmont, said Henry Medical spokeswoman Michelle Nunnally.
Staff writer Carrie Teegardin contributed to this report.
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