Piedmont commits to assume Columbus Regional debt, invest $250 million-plus as part of deal

As the merger of Columbus Regional Health into Piedmont Healthcare nears reality, terms of the deal that would place the city’s largest local health organization under the Atlanta-based nonprofit corporation are now public.

Piedmont has agreed to put a significant financial commitment into Columbus Regional, as well as assume all of the local organization’s debt, according to the terms on file with the Georgia Attorney General’s Office.

The organization’s name will change to Piedmont Columbus Regional when the deal is finalized, which is targeted for March 1.

The deal must be approved by Attorney General Chris Carr’s office before it can be completed. Terms of the merger were submitted to the attorney general in late October. They have up to 120 days to review it. Officials from Columbus Regional and Piedmont have met with the attorney general’s office during this process, Columbus Regional Health President and Chief Executive Officer Scott Hill said last week.

The hearing conducted by the attorney general’s office was originally scheduled for last week, but was postponed due to the weather. It has been rescheduled for 5 p.m. Thursday in the community room at Midtown Medical Center.

Next week’s rescheduled public hearing will consist of testimony from Columbus Regional and Piedmont officials, as well as a community benefit analysis, Hill said.

One of the critical terms of the deal is that Piedmont Healthcare, an Atlanta-based company, has committed to invest $250 million in capital improvements in the Columbus market over the next eight years.

“The way it is broken out, is for the first four years, they are going to spend $40 million a year, then $22.5 million a year for the last four years of the capital commitment period,” Hill said. “It is a significant amount of money. It is more than we have been able to generate in the past on our own. We’re excited about this investment they will be making into our organization, our employees, our physicians and into the services we provide in Columbus.”

Two major projects currently ongoing could fall into the capital commitment by Piedmont, Hill said. There is a $7 million emergency room being built at Northside Medical Center scheduled for completion in April. There also is a nearly $25 million expansion and upgrade of the John B. Amos Cancer Center.

Asked why Piedmont could come in and make that kind of commitment to capital improvements and Columbus Regional couldn’t if it remained independent, Hill was careful in his answer.

“There is a strength and stability they bring to Columbus Regional as a larger organization, certainly,” Hill said. “We have a certain amount of money been that we have traditionally been able to generate on our own and put toward capital, but we also have a significant amount of debt as an organization.”

Columbus Regional has about $280 million in debt which will be assumed by Piedmont when the deal closes.

“We have always made our debt payment and never missed a debt payment or been close to missing a debt payment,” Hill said.

In addition to the $250 million in capital expenditures and assuming the debt, Piedmont has committed to spend between $30 million and $50 million to install a new electronic medical records system for the Columbus facilities.

It is not all about the money, Hill said.

“This investment they are making into Columbus Regional and the Columbus community is about growing our healthcare services,” Hill said. “And growing what we do from a programmatic perspective, growing what we are doing from a clinical perspective and growing what we do from a strategic perspective.”

This process to find what Columbus Regional executives have termed a “strategic affiliation” has been ongoing for more than two years.

The Columbus Regional Board of Directors unanimously voted in early May to pursue a partnership with Piedmont, a non-profit company that had previously examined the acquisition of St. Francis Hospital in 2015 when that healthcare organization was in a financial crisis.

“We always felt like and continue to feel like Columbus is a great community and market for us,” Piedmont Healthcare President and CEO Kevin Brown said last week in a telephone interview. “And we feel like that we can add value with our partnership in the market.”

As Piedmont has expanded with the acquisition of healthcare systems in Athens, Newnan and south of Atlanta, they have been picky about which organizations to align with, Brown said.

“We feel strongly that we can bring value to Columbus, and Columbus Regional can bring value to Piedmont,” Brown said. “As we have gone through this process, we have passed on a lot of opportunities we could have taken over the last 12, 18, 24 months. This deal made sense. They are a very good alignment with our view of the world.”

Piedmont Healthcare is a private, not-for-profit organization serving nearly 2 million patients across Georgia. Piedmont consists of eight hospitals, 21 urgent care centers, 28 Piedmont QuickCare locations and 527 Piedmont Clinic physician practice locations, and it has more than 1,800 Piedmont Clinic members.

Piedmont has 17,800 employees, compared to about 2,000 for Columbus Regional Health.

Columbus Regional officials term the deal a partnership and have since the discussions began, Hill said.

“What it is is two strong organizations coming together,” he said. “There is an acquirer, and in this case it’s Piedmont. We will be merging our assets into the Piedmont organization.”

The legal term for the deal is a membership substitution, Hill said.

“Their organization, Piedmont Healthcare, will come in and sit on top of Columbus Regional Health,” Hill said. “All of our entities will stay intact.”

Five corporations fall under the Columbus Regional Healthcare System, Inc. umbrella:

▪ Medical Center Inc., which is responsible for the Midtown Medical Center and its operation. Doctor’s Hospital, which is not an operating part of Midtown Medical Center, also falls under this corporation.

▪ Hughston Hospital Inc., which owns and operates the Northside Medical Center off Veterans Parkway.

▪ Columbus Regional Senior Living Inc., which in responsible for Spring Harbor, a retirement and medical facility on River Road.

▪ Ambulatory Health Services Inc., which is responsible for the Columbus Regional employee-physician group.

▪ Columbus Regional Foundation, which has about $10 million in assets and supports the needs of the philanthropic arm of the organization.

According to terms of the deal, the Columbus Regional Board of Directors will remain in place and have three Piedmont representatives on it. Hill, Brown and one other person will represent Piedmont on the 13-member board. One Columbus representative, likely the local board chairperson, will be appointed to the Piedmont board.

Hill will become part of the Piedmont senior leadership team, Brown said.

“They have a real talented leadership team,” Brown said. “Scott and his team will be able to help Piedmont and what we do in other markets.”

This story was originally published January 20, 2018 at 6:00 PM with the headline "Piedmont commits to assume Columbus Regional debt, invest $250 million-plus as part of deal."