The mysterious delay in the merger between Northside Hospital and Gwinnett Health System is continuing, month after month. The mega-deal, once forecast to close in 2016, is still in the hands of the Federal Trade Commission, which must approve the transaction. But Northside hasn’t been sitting idly by, waiting for the FTC to act.
The powerful Sandy Springs-based hospital system has developed a new medical office building in Midtown Atlanta – invading prime territory long dominated by Emory Healthcare and Piedmont Healthcare.
Most of the new building is occupied by Northside medical providers. And the system has filed for state permission to build an outpatient surgery center on the top level of the new Northside Medical Midtown building.
Buckhead’s Piedmont Atlanta Hospital and WellStar Atlanta Medical Center are officially challenging Northside’s certificate-of-need application for the surgery center, Northside says.
Among other moves, Northside recently bought a 2.1-acre parking lot next to the Medical Center MARTA Station in Sandy Springs. The purchase “supports our Sandy Springs campus growth strategy, particularly in this area where development is so strong,’’ said Lee Echols, a spokesman for Northside. “At this time, we have no specific plans for the property.”
Earlier this year, Northside advanced further into Hall County, on the northeastern edge of metro Atlanta. It moved to acquire Gainesville’s Northeast Georgia Diagnostic Clinic, the Gainesville Times reported.
Northside also launched a sports medicine network in August after fighting to block – so far successfully – an Alpharetta venture for a sports medicine center. Northside said its new network offers injury prevention; athletic training; physical therapy and sports performance services; orthopedic surgery; and diagnostic imaging.
And the health system has challenged a Georgia Court of Appeals ruling in a long-running Georgia open records case. The Georgia Supreme Court last year reversed lower court decisions that barred access to Northside’s financial records, and the appeals court in October buttressed the high court’s action.
Northside operates hospitals in Canton and Cumming as well as its flagship hospital in Sandy Springs, which it says delivers more babies than any other U.S. hospital. It’s also among the state’s top providers of surgical services.
The wait for the merger with Gwinnett has mystified health industry experts.
The deal would create a mega-system across the northern suburbs of Atlanta into populous Gwinnett County.
The potential deal was originally announced in 2015, with a projected completion date of early the following year.
The state attorney general’s office approved the proposed deal in mid-November of 2017. Afterward, Northside said the combined system could start running in early 2018.
The overall length of time that the Northside-Gwinnett merger has taken – since 2015 – has left many experts puzzled.
Three years for a deal to proceed from discussions to closing is an unusual amount of time, says Craig Savage, a consultant for CMBC Advisors in North Carolina.
The wait may be due to a backlog and staffing shortages at the FTC, or perhaps the agency has requested more information about the deal, Savage adds. Experts also say there may be more FTC scrutiny of health care mergers over anti-competition concerns.
Gwinnett Medical Center, whose parent company is Gwinnett Health System, operates hospitals in Lawrenceville and Duluth. If the Northside deal is consummated, the resulting system would employ 16,000 people, making it one of the biggest employers in the region.
It would continue the acquisition trend that has reshaped the state’s hospital market, with giant systems of Emory, WellStar and Piedmont expanding their portfolios.
Hospitals have pursued consolidation to lower costs and increase their leverage in negotiations with health insurers over pay rates for medical services. Insurers, though, say such deals actually raise prices for medical services.
In the Midtown development, Northside actually sold the new building to Physicians Realty Trust in September for $83 million. But Northside providers currently occupy most of the space.
Dave Smith, a consultant for Kearny Street Consulting, called the development a “huge move’’ for Northside.
The area has favorable demographics, with large numbers of young people and women in their childbearing years, Smith said. It also touches geographically on the Emory and Piedmont markets, he added.
The population growth in downtown Atlanta is not the only driver of the Northside move, said Chris Kane, a consultant with Progressive Healthcare. “Broader branding considerations and visibility with employers enter into the equation,’’ Kane said.
This story was reported by Georgia Health News and published here in a partnership with Reporter Newspapers.