ATLANTA-Two Atlanta-area not-for-profit hospitals are awaiting the Georgia attorney general's verdict on its lease agreement, the first such pact to undergo scrutiny under a new state law.
Georgia, which has made the hospitals jump through a series of regulatory hoops, is one of 13 states requiring prior approval by the attorney general in purchase or lease deals, according to the Washington-based Volunteer Trustees of Not-For-Profit Hospitals.
Joseph Parker, president and chief executive officer of the GHA: An Association of Hospitals and Health Systems, says that while sales of community hospitals can be emotionally draining for the parties involved and for the community, the law amounts to only a delay in reorganizing healthcare delivery.
"It's been frustrating," he said. "We don't want to make it any harder for hospitals to go through this process than it has to be."
The law, which went into effect Oct. 31, 1997, requires the attorney general to approve the purchase or lease of 50% or more of a not-for-profit hospital. The two hospitals testing the Georgia statute are 228-bed Tanner Health System in Carrollton, Ga., and 39-bed Higgins General Hospital in Bremen, Ga. Tanner wants the attorney general to approve its 40-year lease deal with Higgins.
Tanner and Higgins are about 12 miles apart and have coexisted peacefully during that time, said Loy Howard, Tanner's chief executive officer. The two facilities had formed an affiliation about two years ago. About nine months ago, Higgins announced it wanted to be leased, and both Tanner and Atlanta-based Georgia Baptist Health Care System applied. Higgins chose Tanner, and the latter signed a 40-year lease agreement in May, Howard said.
But the new law requires another major step. In June, the hospitals submitted their application, along with a $50,000 fee, to the state attorney general. At an Aug. 7 public hearing, Haralson County residents were able to hear a report on the transaction commissioned by deputy Attorney General Dan Formby but completed by hospital experts at Ernst & Young, in addition to the study by KPMG Peat Marwick for Higgins.
"Obviously (the state review) takes a little more time and energy and reserves," said Higgins' Administrator Robbie Smith.
Formby is expected to deliver his opinion on the transaction in early September, the spokesman said.