Northside, Gwinnett hospitals to merge

Questions are whether health care giant raises prices, maintains quality.

Northside Hospital System and Gwinnett Health System received federal approval to merge after years of trying, clearing the path for a health care giant dominating much of north metro Atlanta.

Intensifying the region’s health care consolidation blitz, the merger announced Tuesday will leave four adult hospital groups in metro Atlanta: Emory, Piedmont, WellStar and this new nonprofit entity, which has not yet been named.

“It’s a long time coming,” said Chris Kane, a hospital finance consultant based in metro Atlanta.

The merger received approval from the state attorney general in 2017 and then waited for the Fed-

eral Trade Commission’s OK. The federal agency has been taking a hard look at hospital mergers recently, trying to determine whether the diminished competition will hurt consumers too much to be worth it.

The big question for Georgia patients of these hospitals, doctors and clinics now is whether prices will rise, and whether Northside and Gwinnett will keep the same level of quality service now that they don’t have to compete against each other. A lot of research shows that after consolidation hospital prices tend to go up, though it’s not conclusive.

Gwinnett Medical Center officials told the state when requesting the merger that, in fact, their goal was to lower costs by taking advantage of economies of scale.

Northside and Gwinnett expect to have the merger operational this summer and complete integration within a couple of years. The combined system will employ 21,000 people, including 3,500 staff physicians, and dominate northern and northeastern metro Atlanta. Its outpatient locations will number more than 250.

Hospital officials said they expect no jobs to be cut at either system and that the level of charity care will remain the same.

Although the deal is legally a merger, it’s more like Northside is acquiring the smaller Gwinnett. At hearings prior to the Georgia attorney general giving his approval in 2017, Gwinnett system officials said that Northside had agreed to invest $500 million into the Gwinnett system over 10 years and to satisfy its debts, then about $275 million.

In order to best steward the Gwinnett system’s resources and grow with the county, the system could not remain independent, its board chairman, Michael Levengood, testified.

“We realized that a partnership path was really not a question of if, but a question of when,” Levengood said. The merger offered not only untold new training and professional resources for the staff and medical resources for its patients, he said, but access to capital and better ability to recruit top-notch doctors in that part of the Atlanta region.

Northside’s specialties also are complementary to Gwinnett’s, with one possessing the biggest baby delivery system in the U.S. and the other known for orthopedic and cardiovascular programs.

Metro Atlanta lost its last independent hospital last year when Emory Health System took over management of DeKalb Medical Center. The region is now dominated by the adult hospital systems and Children’s Healthcare of Atlanta. Negotiations over money and services are increasingly tough between insurance companies on one side and hospitals and doctors on the other, and the bigger a system, the greater its advantage.

The final piece of the equation is the patient with an individual insurance plan, who doesn’t have negotiating power against either the insurance company or the hospital.

Hospital representatives, though, said the consumer will be a winner. “Our goal is not to become a bigger health care system, but to become an even better health care system,” the announcement said.

But they’re not talking small. They’re stressing profitable initiatives, noting that the system “will also operate additional sites of care including cancer treatment, imaging, surgical, urgent care and other outpatient centers throughout the state.”

What it means for the rest of the state may be one of the bigger implications of the merger. The combination doesn’t just leave Gwinnett moving westward, but Northside marching eastward, with a platform to keep growing, Kane said.