Atlanta’s Piedmont Healthcare plans to amass three extra hospitals in a second main deal introduced in as many weeks.
The not-for-profit well being system introduced Wednesday it has signed a letter of intent for College Well being to grow to be a Piedmont hub in Augusta, a bit of over two hours east of Atlanta. The information comes simply over per week since Piedmont stated it plans to purchase 4 HCA Healthcare hospitals, all inside 90 miles of Atlanta.
That is numerous development for Piedmont, which at present stands at 11 acute-care hospitals and simply shy of $4 billion in annual income. Piedmont CEO Kevin Brown stated Wednesday the system did not plan to announce the offers so shut collectively.
“I do not need to name it coincidental, nevertheless it simply is type of the way it occurred to play out,” he stated.
College Well being has been looking for a associate since 2019 and vetted virtually a dozen different organizations earlier than touchdown on Piedmont final week, Brown stated. College declined to remark. Below that deal, Piedmont would enter a member substitution settlement with the native hospital authority, successfully moving into College’s sneakers, Brown stated.
Piedmont would add providers there so sufferers can proceed to get care within the Augusta area. The exception to that is perhaps transplant providers, which can stay solely in Atlanta, Brown stated.
Along with its three hospitals, College has outpatient providers, three expert nursing services, 9 pressing care clinics, rehab care and greater than 90 employed main and specialty care suppliers. The system drew $5.6 million in working earnings on about $673 million in income in calendar 2019, an working margin under 1%. College declined to share 2020 financials.
“They’ve performed job of managing their sources in an surroundings that is robust,” Brown stated of College.
Piedmont plans to shut its College deal by the tip of the yr. Georgia’s Lawyer Common will assessment the transaction as a result of it includes not-for-profit belongings. That is not the case with the HCA deal, which Piedmont expects to shut by August 1, pending Federal Commerce Fee approval.
The 4 HCA hospitals Piedmont plans to purchase for $950 million are very worthwhile, having generated a 13.4% common working margin of their most up-to-date federal filings. One among them, Cartersville Medical Middle in Cartersville, posted a remarkably excessive 32.8% margin in 2020.
Atlanta is a extremely aggressive acute-care market, with everybody trying to increase and acquire entry to sufferers in outlying areas as Piedmont is doing, stated Matt Caine, a managing director with Solic Capital who’s based mostly in Atlanta.
“What you are seeing right here is Piedmont keen to play offense to develop its presence and attain within the Georgia market,” he stated.
It is partly a response to outdoors gamers coming into the Georgia market, like North Carolina’s Atrium Well being partnering with Navicent Well being in Macon in 2019, Caine stated. Atrium modified its title from Carolinas HealthCare System the day earlier than asserting its letter of intent to sign it wasn’t restricted to North Carolina.
Caine stated he does not foresee Piedmont encountering regulatory hurdles that might forestall it from closing both of the offers, however famous that the system must tackle further debt.
“It is going to be fascinating to see how the steadiness sheet of Piedmont Healthcare appears to be like on a post-acquisition foundation with this exercise,” he stated.
Piedmont launched a 10-year strategic plan about seven years in the past that referred to as for increasing outdoors of its better Atlanta footprint to grow to be a statewide community with the premise of holding care near house, Brown stated.
“We’re not rising only for development’s sake,” he stated. “We’re very deliberate about it and ensuring we get the efficiencies out of the expansion.”