Columbia/HCA Healthcare Corp. is bowing out of northeastern Tennessee but not before leaving a giant footprint.
It was the Nashville-based chain's aggressive grab for market share that helped bring together Holston Valley Hospital Medical Center in Kingsport and Bristol (Tenn.) Regional Medical Center, said Eddie George, president and chief executive officer of the merged system. Those hospitals now form the hub of Kingsport's 339-bed not-for-profit Wellmont Health System.
Now, with Columbia's impending exit, the northeast corner of the state, known as the TriCities area, is shaping up to be a market dominated by two not-for-profit systems.
Johnson City (Tenn.) Medical Center is one of eight not-for-profit providers that has negotiated to acquire a block of Columbia hospitals (May 25, p. 2). Johnson City will pick up six Columbia hospitals in the deal. They are Johnson City Specialty Hospital; Northside Hospital in Johnson City; Kingsport's Indian Path Medical Center and Indian Path Pavilion; Sycamore Shoals Hospital in Elizabethton; and Northeast Tennessee Rehabilitation Hospital in Johnson City.
If the acquisition clears federal antitrust hurdles, the 407-bed hospital will become the region's dominant provider. Johnson City will control five of the seven acute-care hospitals and 74% of the acute-care beds in Bristol, Elizabethton, Johnson City and Kingsport. Wellmont controls the remaining share.
How things have changed. Three years ago, Johnson City and Columbia were engaged in joint venture discussions. Those talks collapsed in early 1996 over governance issues but helped pave the way for the merger of Holston Valley and Bristol in July 1996.
With Johnson City's $280 million acquisition, for-profit healthcare loses its longtime footing in the market. The Columbia hospitals have been around for some time, going back to the days when General Care Corp. and Hospital Corporation of America controlled those hospitals.
The business community is watching the Johnson City deal very closely. "I think that the proposed merger could be very positive if it proved to really reduce duplication of services and reduce costs without of course reducing quality," said Guy Wilson, chairman of the Johnson City Chamber of Commerce's Med-Tech Initiative. But Wilson said he's worried about the "financial integrity (of the deal). If it would fail, it would have a very serious impact on our strong economy."
Twenty-five percent of the region's jobs are healthcare-related, he said.
Johnson City has a good track record on managing costs down, but more will need to be done, he said. "There's no reason to think they wouldn't be able to continue that."