Northside, Gwinnett health systems propose massive merger

WellStar Health System

(WellStar is negotiating to acquire five more hospitals in metro Atlanta and another in LaGrange.)

Northside-Gwinnett Medical

(Assumes a proposed merger of the two goes through.)

Northside Hospital and Gwinnett Medical Center announced Wednesday that they will begin merger discussions, joining in the almost frantic rush among metro hospital systems to consolidate.

If the two reach an agreement, the resulting system would employ 16,000 people, making it one of the biggest employers in the region. The two also would create a powerful health-care alliance stretching from the northern suburbs eastward into populous Gwinnett.

“A Northside Hospital and Gwinnett Medical Center combination is a strong and strategic fit on many levels,” Bob Quattrocchi, Northside CEO, said in a statement. “We come to the table with very similar organizational cultures and unsurpassed commitments to patient safety and quality care.”

Hospitals in Georgia and around the nation have sought alliances or mergers to help weather the rapid changes in health care, many of which were sparked by the Affordable Care Act.

The Northside-Gwinnett talks follow recent moves by Marietta-based WellStar Health System. After abandoning a proposed deal with Emory Healthcare, WellStar has begun talks to buy Tenet Healthcare’s five hospitals in Atlanta. (WellStar also has a proposed deal in place to acquire West Georgia Health in LaGrange.)

And in May, Atlanta-based Piedmont Healthcare said it plans to bring Newton Medical Center in Covington into its group of hospitals. Meanwhile, many other Georgia hospitals, including Athens Regional, are seeking partners as well.

Northside operates hospitals in Canton and Cumming as well as its flagship in Sandy Springs, which it says delivers more babies than any other U.S. hospital and performs the most surgeries in Georgia. Gwinnett Medical has hospitals in Lawrenceville and Duluth. Gwinnett County is the second most populous in the state.

Getting bigger may help hospital systems cut costs and meet new demands on quality, experts say. And joining with a large system may help smaller, independent hospitals escape financial trouble.

Government and private insurers are increasingly stressing quality of care in reimbursements, instead of just paying for the quantity of services delivered. Medicare is paying bonuses and imposing penalties based on quality-of-care measurements.

The wave of consolidation in the health care business has also been evident among insurers, with Aetna’s proposed acquisition of Humana, and Anthem’s planned deal to buy Cigna.

The leaders of Northside and Gwinnett Medical said Wednesday they’re targeting early 2016 as a completion date for a deal. Any deal must be approved by the state attorney general, a process including at least one public hearing.

Philip Wolfe, CEO of Gwinnett Medical, said in a statement that the health systems’ service offerings complement each other.

“Northside Hospital is a regional and national leader in women’s health and cancer care, while Gwinnett Medical Center is a leader in cardiac care, trauma care and sports medicine,’’ Wolfe said. “Going forward, our strategy will be to leverage our respective strengths in our expanded footprint and provide the total spectrum of health care to patients not only in our market area, but throughout Georgia and the Southeast.”

Dave Smith, a consultant with Kearny Street Consulting, said Wednesday the deal “is a great move for Northside.”

“It makes sense for Northside to grab that eastern part of Atlanta,’’ Smith said. “Northside is looking for a heart program, and Gwinnett has a good heart program.”

Northside’s reputation in baby deliveries could enhance Gwinnett Medical’s obstetric program, Smith added.

Overall, he said, Northside’s brand name is stronger in metro Atlanta, and thus likely would have “top billing’’ in a resulting merger.

Northside has been active on the outpatient front, recently acquiring 22 medical imaging centers in Georgia. The purchase of MedQuest’s centers in the state brings Northside’s total of imaging centers to 56 in North and Central Georgia.

A merged health system would have nearly 1,400 beds and close to 3,500 physicians on staff, according to Northside.

Quattrocchi and Wolfe said in a statement that the merger should create many opportunities for enhanced patient care, additional growth, professional development and fiscal strength.

Christopher Press, a consultant with Morgan Healthcare Consulting, said Wednesday that the merger talks reflect how much the Atlanta health market has changed over the past 25 years. “Some of the combinations today would have been unimaginable even 10 years ago,’’ Press said.

And Greg Charleston, with the consulting firm Conway MacKenzie in Atlanta, said the north Fulton and Gwinnett markets have an ideal mix of patients — middle to upper class and privately insured.

“It seems like every health system is looking around to see who they can partner with,’’ Charleston said. “The bigger you are, the more leverage you have with insurance companies’’ on obtaining good payment rates.