Piedmont Healthcare, an Atlanta-based nonprofit system, has signed a nonbinding letter of intent to absorb nearby University Health Care System, the two announced yesterday.
The potential deal would shore up Piedmont’s presence in eastern Georgia and western South Carolina, with Piedmont noting that University’s locations would become its clinical hub for the greater Augusta, Georgia, area.
Piedmont also signaled in the agreement that it would plan to invest more than $1 billion into University’s facilities, IT, clinical infrastructure and operational capabilities over a 10-year period, according to University’s announcement. Pending regulatory approval, University said it expects the deal to be finalized later this year.
“We are thrilled about this strategic move to advance healthcare in our community,” Hugh Hamilton, chairman of University’s board of directors and the Richmond County Hospital Authority, said in a statement. “We know the future will demand more of us, and our partnership with Piedmont will enable us to transform healthcare for the Augusta region—ensuring University Health Care System can continue to provide exceptional care and fulfill our mission of improving the health of those we serve for future generations.”
Piedmont is made up of 11 hospitals, 35 urgent care centers, 25 retail pharmacy care locations and 555 physician practice locations, all within the state of Georgia. Its integrated network hosts more than 2,600 employed and independent physicians.
Of note, the system’s latest expansion plan comes just a few weeks after it locked into a deal with HCA Healthcare to purchase four Georgia hospitals for about $950 million. That deal is expected to close by July 31 pending regulatory approval.
University, meanwhile, would be contributing its three hospital campuses, three skilled nursing facilities, nine urgent care facilities and other services reaching a total of 25 Georgia and South Carolina counties.
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In its announcement, the Augusta system alluded to increasing costs and declining reimbursements that impacted its ability to remain independent.
Although the terms are still being finalized during a period of due diligence, University said Piedmont has committed to maintaining current staff and retaining local representation on the board of directors. Alongside the $1 billion investment, Piedmont is also planning to recruit additional providers and invest at least $2 million per year to support local community benefit programs and other inequity initiatives.
“We have a great deal of respect for the work [University is] doing and the caliber of the administrative and clinical team,” Piedmont President and CEO Kevin Brown said in a statement. “We share a common culture that includes a focus on quality and safety, fiscal responsibility and service to our collective communities. These are hallmarks of a good partnership, so I’m pleased that we’re able to explore further collaboration.”
HCA sells off its last northwest Georgia hospital
Shake-ups within Georgia’s hospital landscape don’t seem to be slowing down. Just this morning, word came that HCA Healthcare would be selling off another of its hospitals located in the northwestern part of the state, Redmond Regional Medical Center, to AdventHealth for about $635 million.
The facility houses 230 beds and is the only hospital in the region with an open-heart surgery program. AdventHealth will also be picking up all of the hospital’s outpatient services, physician clinic operations and other related businesses. The systems expect the deal to close in the third quarter pending regulatory approval.
Florida-based AdventHealth is a faith-based nonprofit system operating 50 hospitals across nine states. It brings in approximately $12.5 billion in operating revenue and employs more than 80,000 staff.
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“We are excited about the opportunity to offer our unique promise of whole-person care and look forward to working with and caring for the team members, physicians and residents of northwest Georgia and the surrounding area,” Terry Shaw, president and CEO of AdventHealth, said in a statement. “By affiliating with Redmond Regional Medical Center, we will be well-positioned to continue providing excellent care in the community.”
With this and the aforementioned sale to Piedmont, HCA said in its announcement that it has fully divested itself from the Atlanta area. It also noted that Redmond Regional “was not able to fully benefit from a broader HCA Healthcare network in the area” and that the proceeds from the sale will fuel future investments in core markets.
HCA still operates four other hospitals in the rest of Georgia. The system reported year-over-year revenue and profit increases to $13.9 billion and $1.4 billion, respectively, in its first-quarter earnings call. It also raised its earnings guidance for the full year by $500 million despite patient volumes still lagging behind pre-pandemic levels.