BY THE NUMBERS
WellStar Health System
$2.3 billion Revenue in fiscal 2014
14,000 Number of employees
850 Providers in WellStar Medical Group
160 Medical office locations
16 Imaging centers
8 Urgent care centers
5 Number of hospitals (WellStar Kennestone Hospital, WellStar Cobb Hospital, WellStar Doulas Hospital, WellStar Paulding Hospital, WellStar Windy Hill Hospital)
2 Health parks (WellStar East Cobb Health Park and WellStar Acworth Health Park)
One of Atlanta’s biggest health systems is aiming to expand its reach across the metro area by buying up five hospitals — a move that could set off an intense battle for patients in the northern suburbs.
Marietta-based WellStar Health System said Thursday it is beginning negotiations with Tenet Healthcare to buy its metro hospitals, including Atlanta Medical Center in downtown and Roswell’s North Fulton Hospital. The latter is considered the biggest prize among the group because of its location in the affluent northern Atlanta suburbs.
Hospitals throughout Georgia and the nation have increasingly sought to forge partnerships to help weather rapid changes in the health care industry, many of which were ignited by the Affordable Care Act. The health care law is pushing hospitals to reduce unnecessary readmissions, lower numbers of hospital-acquired infections, increase patient satisfaction and improve in other areas.
WellStar and Tenet confirmed the start of “exclusive, non-binding discussions’’ about a potential sale of Tenet’s Atlanta-area hospitals in a statement Thursday. The announcement follows a recent decision by WellStar to abandon a proposed merger with Emory Healthcare.
“This is to ensure that these hospitals and facilities are best positioned to meet the needs of their communities and continue delivering high-quality health care for many years to come,’’ the statement said.
Both companies declined further comment about the potential deal.
WellStar/Tenet deal a ‘game-changer’
Last month, WellStar broke off talks to create a mega-merger with Emory Healthcare.
The merger discussions had gone on for months and were aimed at producing a giant hospital-based system – the biggest in Georgia and perhaps the Southeast.
Neither WellStar nor Emory gave a reason for the collapse of those negotiations.
A Tenet deal would be easier to complete because it would be an acquisition, and not a merger of equals, experts say.
Other hospitals, including Piedmont Healthcare and Northside Hospital, were rumored to also be interested in acquiring Tenet’s facilities.
The potential WellStar/Tenet combination is “a game-changer’’ in the metro Atlanta market, said Dave Smith, a consultant with Kearny Street Consulting. It would set up battles between WellStar and Northside Hospital for suburban patients north of Atlanta who have solid private insurance, Smith said. The two organizations have fought regulatory battles over medical facilities in the past.
Tenet, a for-profit company based in Dallas, operates 81 hospitals nationally. It has been trying for months to find a buyer for its hospitals in Georgia, where it has not reached the market power of other health systems.
The other Tenet hospitals in Georgia are Atlanta Medical Center-South Campus in East Point, Spalding Regional Hospital in Griffin, and Sylvan Grove Hospital in Jackson.
Tenet has more than 4,300 employees in Georgia. In addition to the hospitals, employed physician practices and outpatient centers are included in the acquisition talks.
Shakeups across the industry
Seeking cost savings and more clout, health insurance companies are also looking to consolidate.
Aetna recently proposed a $33 billion bid to acquire Humana. And CNBC reported that Anthem, the parent company of Blue Cross and Blue Shield of Georgia, will announce a deal Friday to buy Cigna.
Such deals give insurers more power in negotiating prices with hospitals and physicians.
In turn, “hospitals need to get bigger,’’ Smith said. “It gives them a little more leverage.”
Standalone or independent hospitals are in weaker positions when it comes to making deals with insurers to be in their networks, Smith said.
This week, Prime Healthcare Foundation announced plans to acquire the struggling Southern Regional Medical Center in Riverdale in south metro Atlanta.
Prices for consumers a question mark
It’s unclear how the proposed WellStar/Tenet deal could affect consumers.
For patients, the transaction should maintain access and most likely improve it, said Chris Kane, a consultant with DHG Healthcare. He said Tenet and WellStar both have contracts with the same major insurers.
“WellStar has a large physician network, and one would assume that Tenet’s medical staff members would be combined into WellStar’s broad system of care with independent and WellStar Medical Group doctors,’’ Kane said.
The bigger question mark is what hospital consolidation does to the price of medical services, said Craig Savage with CMBC Advisors, a North Carolina consulting firm.
This deal could “negatively impact the cost of health care,” said Beth Stephens with Georgia Watch, a consumer advocacy group. “Research shows that large hospital mergers often lead to higher prices for consumers.”
The organization raised similar concerns about the proposed WellStar/Emory merger.
Both WellStar and Tenet informed employees of the acquisition talks on Thursday. It could be several months before any additional announcements about the deal, North Fulton Hospital CEO Deborah Keel said in a letter to employees.
“In the meantime, we are doing everything we can to minimize disruption from our primary focus, which is delivering high-quality health care,” she said.
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