University Hospital to acquire Trinity Hospital

March 31, 2017|

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.”

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.”

 

 

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 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.

 

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.”

Augusta Chronicle Staff Writer Tom Corwin contributed to this report.

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