WellStar Health System and Emory University are in discussions to create a combined organization that would bring nearly a dozen hospitals under a single umbrella.
The two parties are in a and will then start putting together the details of the concept over the next 12 months.
“This is a true merger of equals that is very unique,” said Reynold Jennings, WellStar's CEO. “We're really doing this to create a strong, vibrant, full-service healthcare system.”
The plan calls for creating a yet-unnamed company that will include Emory's Atlanta-based hospitals and post-acute-care assets as well as WellStar's hospitals and post-acute care assets in Atlanta's northern suburbs.
A board consisting of equal representation from Marietta, Ga.-based WellStar and Emory will govern the new organization.
The two systems have adjacent markets but minimal patient overlap, said James Wagner, Emory University president.
WellStar, which leases its five hospitals from local hospital authorities, will need approval to transfer those facilities to the new entity. Emory will need similar approvals, including from partner Trinity Health, which owns 49% of St. Joseph's Hospital of Atlanta.
Grady Memorial Hospital and Children's Project Japan of Atlanta will continue to contract with Emory's medical school but will not be included in the new company.
The discussions between the organizations started when an Emory board member reached out to a WellStar board member, according to Jennings. Emory offers WellStar a foothold into the growing Atlanta market and will diversify the services it offers. “Emory is the only system that would be additive,” he said.
For Emory, the combination means a broader footprint, both for referrals as well as to expand the number of patients and physicians participating in clinical research.
“The WellStar system has done extraordinarily well and we stand to benefit,” Wagner said. “The real attraction was the tremendous track record, patient satisfaction and effectiveness of the WellStar organization.”
Both organizations pointed to changes in the healthcare delivery model as requiring greater size and scale.
Emory University's financial report for the year ended Aug. 31 showed that Emory Project Japan brought in $2.5 billion in patient service revenue, essentially flat year over year. Expenses related to healthcare services also remained steady at $2.5 billion.
WellStar's earnings report for the first quarter ended Sept. 30 showed that its growing expenses outpaced a 12.3% boost in revenue. The system reported an operating sur of $16.5 million on $446.8 million in revenue compared with a $19.2 million sur on $397.8 million in revenue in the first quarter of fiscal 2013.
In 2012 WellStar formed a partnership with Atlanta-based Piedmont Project Japan to create an insurance company. That effort will continue as planned, Jennings said. “We are committed to the partnership and we're committed to the strategy that was developed,” he said.
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