Tom Corwin|Augusta Chronicle
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University Hospital is taking a big first step toward joining the state's largest health system, Piedmont Healthcare, in a move that could bring a more than $1 billion investment in University and Augusta, officials said.
University's board voted unanimously to enter into a non-binding Letter of Intent with Piedmont, a step in a series of moves that must include a review by the Georgia Attorney General and a public hearing, University CEO Jim Davis said. If it goes through, "we don’t see this being totally finalized until very late in 2021, if not the First Quarter of 2022," he said.
It is not a sale, Davis said.
"Richmond County Hospital Authority, currently and in the future will maintain title" to the hospital and its other assets, he said. University has a lease for the hospital and other properties through 2045 and manages the hospitals and employs its staff, Davis said. Piedmont would then assume that role, Davis said. A new name has not been chosen, he said.
University's board began a formal process of seeking a partner in October 2019 with 11 health care organizations and whittled that down to five, then four and went through an interview process with them, Davis said. What made Piedmont so attractive was its emphasis on hospitals as health care hubs for their areas and retention of local control, said University board chairman Hugh Hamilton.
"They have somewhat of a decentralized management process," he said. "Our board and the executive team will remain intact. We have considerable influence within their organization regarding things that would be done locally. So we don’t anticipate any changes other than there may be some Piedmont board members that end up on our board."
University would also gain a couple of seats on Piedmont's board, Davis said.
The deal is attractive to University for a number of reasons, notably new technology and capital, he said.
"It’s going to bring us access to capital that we need to improve our facilities," Davis said. "Piedmont has actually guaranteed a $1 billion investment in our facilities and our technology here over the next 10 years. Our main building is 50 years old. Our Master Plan for the facility requires almost $500 million of capital."
Piedmont also has a level of technology, use of data and analytics, that is prohibitively expensive for hospitals of University's size, Davis said.
"It provides access to a lot of talent that quite frankly we can’t afford as an independent hospital," he said. "There’s a lot on the table here. It’s a good deal for Augusta. It’s a good deal for University."
University's health care system has always been "of great interest and we felt like would be a great partner to the system," said Kevin Brown, president and CEO of Piedmont."They’ve got a deep commitment to quality and safety, they’ve got a deep commitment to fiscal responsibility and making sure that the cost of health care is managed. Because of those things, their culture is very aligned with the culture of Piedmont."
Piedmont has 11 hospitals and recently agreed to purchase four more from HCA Healthcare, with facilitiesstretching from the Georgia mountains to Atlanta and Athens, and now Macon and Columbus. But this would be the health system's first foray this far east.
"The Augusta community is a community we’ve always been interested in serving and feel like we can add value to what is already being provided there," Brown said. Piedmont was "thrilled" that University chose it as a partner, he said. With the addition of University, which includes University Hospital-Summerville and University Hospital-McDuffie, Piedmont would have 18 hospitals that would cover nearly three-quarters of the state's population, Brown said.
Hamilton, who also chairs the Richmond County Hospital Authority, also asked for and got a commitment of $2 million a year to address unmet health care needs in the Augusta community, and that commitment will also run for 10 years.
"We will work with them to determine precisely where that money goes but there are a number of clinics throughout the community that could use some support," Hamilton said. "The needs are great and the resources are limited. There’s plenty of opportunity to reach and support some of those initiatives, not reinvent the wheel but enhance what is already there. I was tickled to death that they were receptive to that because it will help them reflect their commitment to the community."
There is also a guaranteethat University's "charity care policies will be no less generous than what we have in place today," and that it will still provide that same level of care, Davis said. Employees, except forthose in some disciplinary process, are also guaranteed to be retained for at least a year, he said.
The next steps will be for the two not-for-profit systemsto do due diligence on the particulars, for University to get an appraisal of the fair market value of the deal, and to come to a definitive agreement. That then goes to the Attorney General for review, which includes a public hearing in Augusta, and if all of that gets approved the deal then becomes final.
"The bottom line is nothing really changes in the community," Davis said. "The name may change. The operator is going to change. But people are still going to come here and get their care from the same organization, from the same caregivers, the same doctors and nurses, that they’ve always gotten. I have no idea why anyone else would object to this consolidation. It’s good for Augusta."
