AU Health, Wellstar merger hailed by some, dreaded by others

AU Health, Wellstar merger hailed by some, dreaded by others

By Abraham Kenmore, The Augusta Chronicle

The merger of Augusta University Health with the Atlanta-based Wellstar Health System has drawn praise from Gov. Brian Kemp, University System of Georgia Chancellor Sonny Perdue, and leaders of both Augusta University and Wellstar.

Others, including state lawmakers and consumer advocates, are more skeptical, particularly given that Wellstar, a nonprofit health system, shuttered two facilities in Atlanta last year which they said were consistently losing revenue. The facilities, Atlanta Medical Center and Atlanta Medical Center South, served largely Black populations.

recent complaint from state legislators, local officials and the Atlanta NAACP to the IRS and the Office of Civil Rights at the U.S. Department of Health and Human Services alleged that Wellstar violated the terms of its tax-exempt status.

Wellstar declined to comment, but directed the Chronicle to a website on the hospital closures.

“Wellstar Health System is a nonprofit health system that cares for every person who needs us, regardless of race, socioeconomic status or ability to pay,” the website notes. “Our determination to deliver care to all means we provide more uncompensated healthcare services than any other health system in the state of Georgia.”

Details of the merger remain vague, but Wellstar will be taking over the operations of the AU Health System, which is the hospital for the Medical College of Georgia, the state’s only public medical school. It is not a sale, said Augusta University President Brooks Keel.

Wellstar has committed to investing $800 million in AU Health facilities, including capital for a new Columbia County hospital whose funding has been in question, noted a news release. The legal office for USG last week denied an open records request from the Chronicle for the final agreement approved by the Board of Regents, writing there were “no documents that are responsive to your request.”

Consumer advocate want greater oversight

Liz Coyle, executive director of the consumer advocacy group Georgia Watch, said Wellstar is just part of a trend of consolidating healthcare — Emory and Piedmont both have done the same in recent years. More hospitals give systems a better negotiating position with insurance companies, she said, and the systems claim it increases efficiency, although she thinks it has not lowered prices for consumers.

“Certainly having Medical College of Georgia students be able to practice in other parts of the state should have some benefits, especially if we’re able to keep those providers practicing in more rural parts of the state where there’s such a shortage of providers,” Coyle said.

But AU Health is in a similar position regarding revenue as the Atlanta Medical Center was when Wellstar acquired it. And as a nonprofit, Coyle thinks Wellstar should have kept running AMC, even if it had to make up the revenue at other facilities.

“I look at AU, and I see somewhat similar conditions,” Coyle said. “We cannot assume that Wellstar won’t decide after few years, ‘You know, this is a bad investment for us. We’re going to cut our losses.'”

Coyle said that Georgia Watch does not take a strong position on certificate of need legislation, where hospitals have to get state approval to build, but does want more oversight on the other end.

“We think there should be an equal level of attention when … a health system like Wellstar says, ‘We’re going to close this facility,'” she said.

Coyle does think the investment in the AU Health system could be positive, but she worries that absent stronger regulation the benefits could disappear.

“What I’m concerned about is that we don’t have any more protections now, for AU, than we did for AMC,” Coyle said. “While this might today seem like … kind of a savior coming, that was supposed to be the case with AMC, and look where we are now.”

Local legislatures excited about the investment

Rep. Brian Prince, D-Augusta and chair of the state House Urban Affairs committee, is enthusiastic about the merger.

“I’m feeling great about it,” he said.

Prince sees the merger as an opportunity to let the university focus on medical education and let Wellstar handle the administration of the hospital. He understands the concerns about Wellstar after the Atlanta hospitals were closed, but also why the health system had to close them.

“It’s always not a good thing when you’re closing hospitals,” Prince said. “But at the end of the day, you have to have revenue to operate.”

Prince wants to ensure that AU Health employees have a smooth transition. He said he received assurances that no jobs will be lost, but benefits like retirement packages will move from the state system to a private provider.

State Sen. Harold Jones II, D-Augusta, thinks the primary importance of the agreement is for the state itself.

“Certainly there’s going to be ancillary benefit towards Augusta, benefit towards Columbia County. We understand that. But I think that this would not have been made, the state would not kind of have pushed forward with this, if this was just something that benefitted Augusta,” he said.

One of the senators who filed the federal complaint, Sen. Nan Orrock, D-Atlanta, is skeptical of the merger. But she understands why it would move forward, given current issues with AU Health, including losing $108 million on  $1.095 billion in revenue last year and its risk of default on existing debt, according to the bond rating agency Moody’s.

“It’s understandable that public officials would welcome any solutions, any port in a storm, and I completely understand that,” she said. “I sound the cautionary note … beware what the potential is here with the kind of track record that Wellstar had in Atlanta.”

The complaint Orrock and others sent to the IRS asks the agency to remove Wellstar’s tax exempt status over its failure to survey and then meet community health needs for the two shuttered hospitals in violation of federal requirements while looking at the merger with AU Health.

“That … would create huge questions about Wellstar’s performance in Augusta if they lose their 501 (c)3 status, and they knowingly failed to comply,” Orrock said.

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