ATLANTA (AP) — A plan for an Atlanta-area hospital system to take over Augusta University’s hospitals complies with state law and may proceed, Georgia’s attorney general ruled Thursday.
Marietta-based Wellstar Health System would take over the 478-bed Augusta University Medical Center and 154-bed Children’s Hospital of Georgia, as well as the rights to build a 100-bed hospital in Grovetown, in the growing Columbia County suburbs of Augusta.
Wellstar, Augusta University and the University System of Georgia said in a joint statement that “work remains to be done before the transaction is complete” but that all parties are trying to complete the deal this summer. The Federal Trade Commission must also review the deal and agree that it doesn’t give Wellstar unfair market power.
Wellstar would also take over the Roosevelt Warm Springs Rehabilitation and Specialty Hospitals that Augusta University currently runs.
Assistant Attorney General Alkesh Patel found after a hearing last month in Augusta that the deal complies with a Georgia law requiring that a community get fair benefit and guarantees of access to care from the transfer of a nonprofit hospital.
Patel wrote that the Augusta University Health System, the nonprofit entity that currently runs the hospitals, “will receive an enforceable commitment for fair and reasonable community benefits in exchange for its assets” as required by state law.
As part of the 40-year deal, Wellstar agrees to take on $234 million in debt and to pay at least $111 million in naming rights for use of the Medical College of Georgia name. The system will now be known as Wellstar MCG Health.
Wellstar is agreeing to invest up to $797 million in the system. That includes $395 million to build a new hospital and medical office building in Grovetown. Wellstar would spend $62 million at the existing Augusta hospitals in the first two years of the deal, and another $139 million in the next eight years. If the Augusta hospitals had at least a 2% profit margin, Wellstar would invest another $201 million. Some of that investment would come from Wellstar implementing an electronic medical record system.
Wellstar could pay more if MCG Health operations are sufficiently profitable, between $5 million and $15 million a year in mission support payments. The regents agreed to spend that money to improve the Medical College of Georgia, Augusta University or the health of Georgians, in consultation with Wellstar.
University system officials have been eager to shed responsibility for the health system’s finances while maintaining access to the crucial training that students of the Medical College of Georgia get at the hospitals. Augusta University President Brooks Keel, in the June hearing, described the health system’s financial situation as “not good,” and Patel wrote that after a multiyear process of seeking merger partners, Wellstar was the only suitor willing to go forward.
But some Atlanta-area leaders have fought the deal, saying Wellstar illegally discriminated against Black people and violated its tax-exempt status when it closed hospitals in downtown Atlanta and a southern suburb.
The attorney general’s office validated the health system’s analysis that it was worth $337 million to $394 million and had secured pledges from Wellstar to invest $555 million to $613 million, using the current value of future spending.
Wellstar promised to maintain a list of core services, including an emergency room, a top-level trauma center, a top-level neonatal intensive care unit, a pediatric intensive care unit, and cancer and stroke treatment for at least 10 years.
Wellstar could cut or end medical training programs only if university regents agree, after Wellstar shows there’s no viable alternative, or government funding has significantly decreased and Wellstar tried to maintain the programs
The documents outline that the Medical College of Georgia will work with Wellstar to create a regional medical campus at Wellstar’s flagship Kennestone Regional Medical Center in Marietta by as early as mid-2025.
Wellstar can extend the deal for another 40 years at its discretion. For the first 10 years, the regents would have a right of first refusal to buy back control if Wellstar sought to give control to a for-profit entity or a nonprofit based outside Georgia. The agreement can be terminated only if both sides agree, if one side does something illegal or if one side breaks the agreement in such a way that “also creates long-term corporate or financial harm” to the other side.
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