Wellstar agrees to takeover of Augusta University hospitals

Georgia officials have approved the takeover of the Augusta University hospitals associated with the state's only public medical school.

The state Board of Regents on Friday approved agreements to transfer control of the hospitals to Marietta-based Wellstar Health System, saying the deal may take effect in late summer.

Augusta University President Brooks Keel said in an online press conference that Wellstar would take over as the controlling legal entity of the health system, which will now be known as Wellstar MCG Health. The exact details of the transfer, first announced in December, remained unclear. Neither side immediately provided a copy of the associated contracts.

The partnership, announced in December, has become a political football in recent months because Wellstar earlier closed Atlanta Medical Center and Atlanta Medical Center South in East Point, and because Wellstar opposed a push by Lt. Gov. Burt Jones to allow hospitals to be built in rural counties without getting a required state permit.

But Gov. Brian Kemp and University System Chancellor Sonny Perdue pushed hard to conclude the deal, driven by concerns over the financial struggles of the Augusta University Health System, which runs the 478-bed Augusta University Medical Center and the 154-bed Children's Hospital of Georgia, both in Augusta.

"There's no doubt in my mind that this new partnership is a win for our state, and a win for countless families across our state," Kemp said Friday in an online news conference.

The Augusta University Health System also has regulatory approval to build a 100-bed hospital in Grovetown, in the growing Columbia County suburbs of Augusta. The system also runs the Georgia Cancer Center in Augusta, and Roosevelt Warm Springs Rehabilitation and Specialty Hospitals in Warm Springs and owns physician practices.

Wellstar runs nine hospitals in suburban Atlanta, mostly concentrated in the northwest suburbs. It said it has pledged to invest nearly $800 million in AUHS facilities, including more than $200 million for the main Augusta University Medical Center, plus building the new hospital in Columbia County and associated facilities.

Wellstar also said that it would spend additional money on the implementation of a new medical records system that the state is spending $105 million on. Jones derided that money as a "giveaway" to Wellstar.

The move is one of many hospital mergers in Georgia and nationwide, as standalone hospitals combine into large systems. That helps them afford massive investments but also gives them the market power to negotiate more lucrative payment agreements with insurers.

Atlanta-based Piedmont Healthcare took over a three-hospital system based in Augusta last year, pledging to invest more than $1 billion in upgrades and expansions over the next 10 years. That nonprofit group was named University Hospital, although it wasn't controlled by Augusta University.

In the 2021 budget year, AU Health Systems lost $28 million on $1.06 billion in revenue — which is the most recent year for which a state audit is available. Revenue included $30 million in state appropriations. The system has lost $63 million overall since 2017, audits show. AU Health Systems has been looking for a partner since 2019.

The two sides said in December that the deal could also result in a further expansion of the Medical College of Georgia by creating a new regional campus at Wellstar Kennestone Hospital in Marietta. No specifics of that possible expansion were mentioned Friday, although Wellstar CEO Candace Saunders and others talked about expansion generally.

"This partnership will train more physicians at Medical College of Georgia to help address a significant shortage of clinicians in our state," Saunders said. "These physicians will learn at the MCG, many of them will train at WellStar."

The state and Wellstar again touted opportunities to use telemedicine to extend medical care and clinical teaching to rural parts of the state. How that would work is unclear.

Keel said that Augusta University sought in the process to "ensure that our employees are going to be protected to the very best that we possibly can. Wellstar has made that commitment."

Perdue said the agreements would be filed next week with Georgia Attorney General Chris Carr for review, subject to a possible public hearing. The Federal Trade Commission also reviews hospital mergers.