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Northside-Gwinnett pact continues hospital merger trend

Healthcare system would rank among largest in Georgia



ATLANTA — Northside Hospital and Gwinnett Health System, the parent of Gwinnett Medical Center, announced Aug. 17 they have reached a merger agreement that will extend the reach of both providers throughout north Metro Atlanta.

The agreement, if approved by the Georgia Attorney General’s Office, would create a system with 1,479 beds, nearly 21,000 employees and 3,500 physicians on staff.

It could be operational by 2018. The agreement consummates a two-year courtship between the two systems.

Neither side has disclosed which points of the negotiations slowed the process. But Northside is by far the larger and most financially sound of the two.

It has $1.7 billion in annual revenue through its three hospitals and various care facilities, according to Dun & Bradstreet.

Gwinnett has revenues of $735 million through its two hospitals and other care facilities.

Anchored by Northside Hospital in Sandy Springs and Gwinnett Medical Center in Lawrenceville, this latest merger will include hospitals in Canton, Cumming and Duluth, as well as cancer treatment centers, imaging centers, urgent care centers and other outpatient locations throughout the state.

Northside and Gwinnett hospital officials say the merger makes sense and will benefit patients as well as the hospitals.

“Northside Hospital is a leader in cancer care, women’s health and specialized surgical care, while Gwinnett Health System has strengths in cardiovascular care, sports medicine and post-acute care,” according to Northside spokeswoman Katherine Watson.

“The service areas are adjacent to one another – ideal for focusing investment on care expansion, overall clinical capacity and improved patient access,” she said.

The merger also makes sense for another reason.

Combining healthcare systems can save on more than costs such as supplies and IT services.

Hospitals are always looking to strengthen their negotiating position with health insurance companies, said Andy Miller, CEO and editor of Georgia Health News, a nonprofit, independent news service that tracks healthcare issues.

The bigger system, the better the bargain the system can drive in terms of reimbursements, he said. “There are only four or five major hospital systems in the state now and this clearly is a prominent one.

“So you’ve got these mega-systems, and I think insurance companies are not happy about this.

“It’s a constant tug of war between insurers and hospitals in terms of payments for medical services. The more clout you have – either side – the better deal you can strike,” Miller said.

Northside is in a much better financial position than Gwinnett.

“There’s no doubt about that,” he said. “I don’t know if you can say it was necessary for Gwinnett to make this move, but it makes sense that they did.”

The merger adds to a growing trend in Georgia and the nation where hospitals pool resources to save on costs and expand their footprints.

Last year, Marietta-based WellStar acquired Tenet Healthcare’s five Georgia-based hospitals, including Roswell’s North Fulton Hospital, and formed a new partnership with West Georgia Health in LaGrange, to make it the largest health system in the state with 11 hospitals.

In the wake of the growing trend of hospital mergers, the Northwestern Kellogg School of Management released a study last year which found such mergers tend to result in higher prices for healthcare, generally from 6 percent to 10 percent.

Neither hospital involved in the Northside-Gwinnett merger responded to questions relating to how the agreement might affect patient costs.

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