Columbus Regional Health has moved a step closer to what it is calling a “strategic affiliation” with an Atlanta-based health care provider.
In reality, if approved, it would be a merger with Piedmont Healthcare, a not-for-profit hospital system that is spreading its reach across Georgia.
Columbus Regional confirmed Tuesday that its Board of Directors has unanimously voted in favor of pursuing a partnership with Piedmont. Columbus Regional managers and employees were informed of the decision Tuesday morning in meetings and emails.
A letter of intent was executed Monday, initiating an exclusive negotiation period between the two organizations that expires on Sept. 30, Columbus Regional Health President and Chief Executive Officer Scott Hill said.
The partnership would include Columbus Regional’s two hospitals — Midtown Medical Center and Northside Medical Center — as well as its John B. Amos Cancer Center, MyCare Urgent Care Centers and multiple physician practices.
A deal would have to be approved by the Piedmont and Columbus Regional boards of directors, as well as the Georgia Attorney General’s Office. The goal is to have a deal finalized by the end of the year, Hill said.
“When we started this, I told our employees if we could find an organization that believed in what we believed in and do things in a way we believe things should be done and had a similar culture, then we would probably partner with them,” Hill said.
Piedmont emerged from a process that included about a dozen for-profit and not-for-profit health-care entities that expressed serious interest in Columbus Regional. Three not-for-profit companies presented proposals to the Columbus Regional board at a retreat on April 28 at Callaway Gardens. Piedmont is the only finalist that Hill would identify.
When asked to define “strategic affiliation,” Hill said it was a merger.
“If we reach a definitive agreement with Piedmont, we will merge into the Piedmont organization,” Hill said. “There is a Piedmont Healthcare board and we expect there will be Columbus participation on that board. Our board, locally, will stay intact and there will be some participation from Piedmont on our board.”
That is similar to the way Piedmont Healthcare President and CEO Kevin Brown views it.
“At the end of the day it is one organization,” Brown said. “It is an operating company model. This isn’t like a for-profit company where we are picking up assets, holding them and then looking to hold for a period of time and either sell or not sell. This is a strategic partnership, but at the end of the day we are part of one Piedmont family.”
This is not the first time Piedmont Healthcare has tried to enter the Columbus market.
In January 2015, St. Francis Hospital — which was in the middle of a deep financial crisis that eventually led to the sale of the hospital to Tennessee-based LifePoint Health — announced it was in exclusive discussions with Piedmont Healthcare. Two months later, St. Francis and Piedmont had mutually agreed to reopen the search process.
Hill explained the deal in relation to the LifePoint purchase of St. Francis.
“The deal with St. Francis was an acquisition,” he said. “An organization came in and wrote a check. This is not that. We have two organizations that are merging their assets together. One of those organizations happens to be bigger than the other. But, it is still technically a merged entity at the end of the day. No one is purchasing Columbus Regional, because Columbus Regional has never been for sale.”
A year ago, Columbus Regional confirmed it was exploring the possibility of entering into a “strategic affiliation or partnership with another health-care organization.”
Columbus Regional, according to information it released a year ago, had 130 days of operating cash on hand, totaling more than $150 million. Today, Columbus Regional’s operating reserves on hand were $175.8 million, or 162 days of operating cash, at the end of March.
Brown said Piedmont was deliberate in its interest in Columbus Regional.
“As an organization for the last four years, we have been looking strategically across Georgia, and the Columbus market is one of the markets that we were very interested in if an opportunity presented itself,” Brown said. “As an organization, we are looking at having more of a statewide presence than just an Atlanta presence.”
The Piedmont Healthcare has seven hospitals and nearly 100 Piedmont-employed physician practice locations. In addition to its flagship Atlanta hospital, Piedmont operates other Georgia hospitals in Fayette County, Stockbridge, Jasper, Newton and Newnan. The most recent acquisition was Athens Regional Hospital in October.
“Our core strategy is keeping care close to home and growing these regional clinic hubs,” Brown said. “At the end of the day, it’s one organization serving many different communities. The intent is building up clinical programs to serve the broader Columbus community and to be part of a larger system where everybody gets value out of the scale associated with the larger system.”
Columbus Regional was formed as a nonprofit health care organization in 1986, but the hospital dates back to 1836.
Warren Steele, chairman of the Board of Directors of Columbus Regional Health, said it was a deliberate decision that led the organization to exclusive talks with Piedmont.
“Based on the core goals and objectives we laid out before we began our process, we are confident Piedmont is the right fit for us,” Steele said in a prepared statement. “Piedmont Healthcare has proven experience integrating hospitals into its operations and capitalizing on the unique expertise of each organization, in concert with working to meet the needs of every community they serve in Georgia.”
Columbus Regional Health’s Midtown Medical Center provides the region’s only advanced maternity services and neonatal intensive care unit; a Children’s Hospital, including a pediatric intensive care unit; comprehensive women’s services; a neuroscience center for spine and stroke care; emergency services — and the region’s only Level II trauma center and heliport, according to the Columbus Regional.