Hospital systems in and around Atlanta are now moving swiftly and far from their traditional territories to consolidate a market that has been slow to consolidate.
Explosive population growth has kept hospitals busy and somewhat insulated from competitive pressures felt sooner in other markets. Since 1990, the number of people living in the metropolitan area has grown more than 80% to more than 5.6 million.
But late in 2015, WellStar Health System of Marietta, Ga., ventured deep into Atlanta to buy five hospitals from Tenet Healthcare Corp. in a blockbuster deal worth $661 million.
Before that deal even closes in 2016, doubling the size of WellStar, the system expects to finalize a partnership with West Georgia Health, a hospital and system in LaGrange, Ga., that is 60 miles from Atlanta.
Piedmont Healthcare of Atlanta also is branching out far beyond the city. The six-hospital not-for-profit system is exploring a merger with Athens (Ga.) Regional Health System 70 miles from Atlanta after just completing a tie-up with community hospital Newton Medical Center in Covington.
And incoming Emory Healthcare CEO Dr. Jonathan Lewin pledges to expand the delivery system of the academic healthcare giant in Atlanta with or without a merger.
All this is because changes in the business and policy landscape are starting to catch up with Atlanta-area providers and across the Southeast, said Craig Savage, a longtime healthcare consultant in Durham, N.C., who practiced for many years in Atlanta.
New regulations, reimbursement changes that reward quality of care over quantity of services, patient safety, technology expenses and a host of other issues are prompting the pace of consolidation in Georgia, Savage said.
Hospitals are hustling to improve economies of scale in purchasing and to spread best clinical and business practices across locations.
Or, as WellStar CEO Candice Saunders put it in an interview, “It's not about getting bigger, it's about getting better.”
Savage notes that in Atlanta, as elsewhere, it remains to be seen whether putting hospitals and clinics together will result in lower prices for consumers. “I'm not sure that's been borne out,” he said.
But Piedmont and WellStar leaders say they are ranging beyond their home markets not for patients to feed their facilities but to create strong self-contained hubs with new capital and expertise.
Piedmont CEO Kevin Brown said in an interview that the system's mergers allow for patient care “close to home with the efficiencies of scale.” Piedmont had fiscal 2015 revenue of $1.86 billion.