Metro Augusta’s largest acute care hospital would acquire its smallest over the summer if a deal announced Thursday comes to fruition.
Quorum Health Corp., the majority owner and operator of Trinity Hospital of Augusta, said it is negotiating the sale of the 231-bed facility to University Hospital in a transaction expected to close June 30.
The hospital is one of six underperforming facilities the Brentwood, Tenn.-based company seeks to divest this year, according to filings with the Securities and Exchange Commission. Financial terms of the sale were not disclosed. A phone message left with Quorum Executive Vice President Michael J. Culotta was not returned Thursday.
University Hospital CEO James R. Davis said the 581-bed hospital intends to run the 300,000-square-foot Trinity facility as a unit in its overall system, similar to how it operates the former McDuffie Regional Medical Center in Thomson, which it acquired in 2012 and now calls University Hospital McDuffie.
He said the Trinity facility off Wrightsboro Road was attractive because University Health Care System’s business, which has 10 facilities in Georgia and South Carolina, has increased 25 percent during the past three years and needs room to grow.
“We want it to be full,” Davis said of the more than 30-acre Trinity campus. “If we end up at the end of the day owning just a bunch of empty buildings, it won’t work financially for us. We want to make it a success.”
Davis declined to divulge financial terms of the deal, but said the details will likely be made public when the Richmond County Hospital Authority – the government entity that oversees the community-based nonprofit – meets in May to approve the transaction. He said the authority approved negotiating with Quorum in November following a closed-door session to discuss the future real estate transaction.
The acquisition would include the main hospital, all equipment and about 80,000-square-feet of physician office space. Davis said some layoffs are likely to occur during the merger, but said it was too early to determine an exact figure. Trinity has 400 employees.
“We have 200 open nursing positions,” Davis said. “I could pick up their entire nursing staff today and find a job for them.”
A Trinity spokeswoman said hospital management had no comment other than those made in a jointly issued statement on Thursday, in which Trinity CEO Jason Studley was looking forward to joining a “progressive system with a nearly 200-year tradition and history” of care.
“I want to sincerely thank our staff and physicians for their commitment to our patients, their families, our community and our hospital,” Studley said. “We look forward to the weeks and months ahead as we enter this new chapter in our hospital’s history.”
The former Trinity business units would begin billing under University’s Medicare/Medicaid provider numbers beginning July 1. Davis said most Trinity physicians already are on staff at University; those that aren’t would have to apply for privileges. He also said University has relationships with most of Trinity’s managed care partners, with the exception of the Defense Department’s TRICARE program, which covers labor and delivery services for soldiers at Fort Gordon.
Davis said it is very likely University would not renew that contract, which includes an education component for physicians in training at the post.
“Some of that doesn’t fit our particular care continuum,” he said.
Davis said most decisions regarding service lines will be made in the coming weeks, but added that University has no intention of closing down Trinity’s emergency department, which operates a Level III trauma center, or high-quality services such as its bariatric surgery program. University also would preserve one-of-a-kind programs such as Trinity’s geropsychiatric service.
Davis said University envisions the Trinity campus serving more of an ambulatory care role so the main hospital can focus on providing more efficient inpatient care.
“Right now, if you get admitted, you might wait a while before you get up to your room,” he said. “We’re trying to free up space so the business that we have today can get upstairs and be treated more efficiently and effectively.”
Davis said the acquisition is being funded out of the health system’s unrestricted reserve fund, which currently exceeds $400 million. Major expenses will be putting a new roof on the hospital and converting Trinity’s IT system to University’s Epic electronic medical record system.
University’s roots date back to the founding of the city’s first hospital in 1818. Trinity opened in 1952 as the Catholic-affiliated St. Joseph Hospital.
The facility, ranked fifth in market share behind Aiken Regional Medical Center, according to the latest Georgia Hospital Association figures released by University, has struggled financially for years. It nearly closed more than a decade ago after Health Management Associates Inc. withdrew its offer to purchase the facility from then-owner Ascension Health.
It was renamed Trinity Hospital in 2007 following its acquisition by Texas-based Triad Hospitals Inc., which later merged with Tennessee-based Community Health Systems. That company spun off Trinity and three dozen other hospitals to Quorum Health in 2015.
On Wednesday, Quorum announced net operating revenues for the three-month period ending Dec. 31 declined to $515.2 million, a 7.7 percent decrease from the $558.2 million reported during the same period in 2015. Quorum owns about 90 percent of Trinity, with the rest held by an investment group of physicians and administrators.
The news of the sale was “very surprising” to Dr. Donnie Dunagan, president and chairman of the Richmond County Medical Society, particularly in light of the fact that the society met Wednesday night.
“We have doctors from University Hospital, from every hospital here in Augusta,” he said. “Usually that kind of stuff gets brought up and it was not mentioned at all. Like most things in medicine, doctors are the last ones to find out anyway.”
University and the facility then known as St. Joseph began negotiating a merger in 1990, when the shift to managed care began forcing health care providers to contain costs, operate more efficiently and reduce duplication of services.
The deal was challenged in the courts and fell apart in 1991 after the Federal Trade Commission said the transaction would have given University Hospital an acute-care monopoly and would hurt consumers through higher prices. Davis said he doesn’t expect any regulatory issues to affect the deal, given the changes in the health care landscape during the past 25 years and the erosion of Trinity’s market share.
“This is a very different animal than it was in the 1990s,” he said.
If the deal were to be protested, it would likely come from Augusta University Medical Center and Doctors Hospital, the hospitals with the second and third largest market shares, respectively.
Officials from both hospitals on Thursday declined to comment on the proposed acquisition.
Unlike the last time the hospital was sold, this time the sale will not have to be reviewed by the Georgia Attorney General’s office because the office does not review the sale of for-profit hospitals, a spokeswoman said.
Davis noted Quorum had Trinity on the market for months, and that competing hospitals had the same opportunity to acquire the property that it did.
“We were the only ones to engage, which, quite frankly, helps our FTC argument,” Davis said. “Nothing says ‘ugly’ in a community like a shuttered hospital. It’s just not something we want in Augusta, and this is an opportunity for us to solve our space problem while at the same time keeping that place alive and well over there.”
Staff Writer Tom Corwin contributed to this report.
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