Local hospital officials are portraying the pending combination of Gainesville, Ga.'s only two hospitals as a benefit to the community, not as a monopoly that could raise healthcare costs.
Last week, not-for-profit 338-bed Northeast Georgia Health System announced it would purchase for-profit, 119-bed Lanier Park Hospital from Nashville-based HCA-The Healthcare Co., for $40 million. The deal, which combines the only two hospitals in Hall County, is expected to close by Feb. 28.
"We'll be able to provide as one unified system in the area a greater array of services than as two separate and independent systems," said Henry Rigdon, Northeast Georgia's chief operating officer.
Lanier Park Chief Executive Officer Jerry Fulks said in a written statement that the deal will provide cost savings through greater economies of scale. Rigdon estimated the hospitals would save about $2 million annually by joining forces, even though there is no immediate plan to close one down or to cut jobs.
HCA opted to sell Lanier Park because it did not meet the company's objectives of either being a leader in its market or a feeder for a regional network, said Jeffrey Prescott, HCA's spokesman. Without it, HCA has 17 hospitals in Georgia and a total of 196 nationwide.
Although specific decisions about consolidation of services in Gainesville have not yet been made, the hospitals are expected to combine various services at each campus after a two-year transition period, officials said. While Lanier Park has had relatively low patient volumes, Northeast Georgia Health has been operating at full capacity and was recently granted state approval to begin offering open heart surgery next year, which will require more physical space.
Rigdon said Northeast Georgia Health will file for federal antitrust clearance for the deal within several weeks. The hospital's attorneys do not anticipate any problems, despite the fact that the purchase will leave Gainesville with only one acute-care provider, he said.
"We've had extensive discussion with our legal counsel," he said. "The metropolitan Atlanta market has continued to move northward, and we're competing in the secondary and tertiary market much more than we were 10 to 15 years ago."
The closest hospitals to Gainesville are 159-bed Habersham County Medical Center in Demorest, Ga., and Gwinnett Medical Center in Lawrenceville, Ga., both of which are roughly 30 miles away from Gainesville, said Cathy Bowers, director of public relations at Northeast Georgia Health.
Bowers said though the two hospitals have made no pledges to keep rates from rising once they've combined, their board is made up of community business leaders who would not be likely to look favorably upon rate increases.
"They are major employers, and that becomes a cost to them," she said.
Both hospitals have been profitable. Rigdon said Northeast Georgia Health reported $12 million in net income for its fiscal year ended Sept. 30, 1999, the last year for which it had audited figures. Unaudited figures for 2000 show net income of $16 million and net operating revenue of $225 million.
According to figures from HCIA-Sachs, a healthcare information firm based in Evanston, Ill., Lanier Park reported net income of $1.4 million on net patient revenue of $38.5 million for the year ended March 31.