Phoebe buys Palmyra
By Kevin Hogencamp
It might be the local equivalent of Coke buying Pepsi. Or the Yankees acquiring the Red Sox. Or maybe — considering the power, influence and financial wherewithal of Phoebe Putney Health Systems – Tuesday’s astonishing announcement that Phoebe Putney Health Systems is acquiring Palmyra Medical Center may be more like Wal-Mart absorbing a competitor.
However it shapes up in the ranks of corporate takeovers, the deal that was conceived in late August and then gained tons of steam in the last three weeks before being approved and announced Tuesday stunned citizens throughout Albany and southwest Georgia on Tuesday.
Moments before Phoebe CEO Joel Wernick stepped up to the podium on Tuesday to announce the blockbuster $195 million deal had been approved by the Dougherty County Hospital Authority, a local Economic Development Commission representative described the scene – and all of its associated drama – as “surreal”.
Quickly, after quieting unsolicited and perhaps even discomforting chants of “Joel! Joel! Joel!” on a platform erected in the hospital lobby, Wernick wanted to make something clear at the start of his remarks.
“This isn’t about Joel Wernick. This is about quality of health care in southwest Georgia,” Wernick told a handful of news reporters and, perhaps more significantly, the hundreds of Phoebe Putney Memorial Hospital employees who were on hand.
“Everyone over there (at Palmyra) has been nothing but professional and it’s good to get the rivalry behind us,” Wernick said.
Thus, the bitter rivalry between Albany’s two hospitals – a nasty feud that resulted in lawsuits, disputes over rights to patient services, and a nasty split in the community — is apparently and suddenly over.
The acquisition includes all assets and property owned by the 248-bed private hospital and is a cash transaction. Palmyra is owned by Nashville, Tenn.-based HCA, formerly Hospital Corporation of America, which owns about 160 hospitals and surgery centers in 20 states and England.
“With the closing of the acquisition expected in January,” Phoebe said in a statement issued about two hours before the news conference. “Palmyra will convert from a for-profit hospital to a community-based not-for-profit facility and become a new wholly owned entity of the Hospital Authority, which also owns Phoebe Putney Memorial Hospital. The Authority will enter into a management agreement with a new entity, Phoebe North Inc., a subsidiary of Phoebe Putney Health System Inc., for the day-to-day operation of the facility. It will be called Phoebe North.”
Wernick said that mergers are a sign of the times during hardened economic times, and likely will become more and more commonplace as national political leaders attempt to iron out a reformed health care system.
“Two campuses will give us efficient use of beds, emergency services, clinical areas and technologies,” he said. “Across the country, hospitals are consolidating to maximize economies of scale and reduce costly duplication of services.”
While a sigh of relief was evident in Wernick’s tone, Palmyra CEO Mark Rader was matter-of-fact in a brief written statement issued Tuesday by Eric Riggle, the hospital’s marketing director.
“Phoebe Putney approached HCA with an offer to acquire Palmyra Medical Center,” Rader said. “HCA subsequently made the decision to enter into an agreement to sell the hospital. This morning, the Hospital Authority has voted to allow this transaction. While this is a significant step, the transaction is not yet final and the timeframe for completion is expected to be January.
“We have provided quality care to this community for almost 40 years and will continue our focus on our patients. While we have had great support from the community for broadening the services we offer, the dynamic environment makes this our best course of action. Throughout this process, our caregivers will not waiver from our mission of providing high quality care. We appreciate the support of our Board of Trustees, physicians, staff and community during this transition.
Rader and Riggle refused to answer questions or provide further details, including information about the deal’s inner-workings.
In reply to a reporter’s question, Wernick says that in late August, Phoebe Putney Health System officials decided to ask Palmyra officials if the hospital was for sale. Wernick refused to provide further details, citing a confidentiality agreement reached between the two entities, but said that over the last several weeks, he began running the notion of buying Palmyra by small groups of Hospital Authority members and Phoebe Putney Memorial Hospital board members.
“For us, and the needs of the patients we serve, it was either build or buy,” Wernick said. “In the end, it was decided that buying was the best way to go.”
When Hospital Authority members entered their meeting early Tuesday, they knew that the matter might be discussed, but not necessarily that they would be called to action, Wernick said.
As news spread throughout the community and beyond following the Hospital Authority’s unanimous early morning approval of the deal, these questions prevailed:
- What’s going to happen to Palmyra’s employees? All but five or so of the highest-ranking Palmyra officials will become Phoebe employees in January, pending background and drug screenings, Wernick said during his remarks, before the reporters started asking questions.
- Is taking the real estate owned by Palmyra, a for-profit corporation, off the county property tax digest going to result in a property tax hike? No, insists Wernick, again, before the reporters began firing questions at him.
- What’s going to happen to the likes of Dr. John Bagnato, a nationally famous Phoebe detractor who owns Palmyra Surgical and famously refuses to ply his trade at Phoebe. That answer belonged to Bagnato, who says that he and many other physicians may leave town because of Phoebe’s emerging, expanding health care monopoly.
Just before the news conference, Christi Dykes positioned herself in the front of the crowd alongside the reporters. And when the media event concluded with a rousing ovation from Wernick’s audience, Christy Dykes made a beeline to Wernick and described her family’s tenuous situation to the CEO. Dykes’ husband, Jody Dykes, left Phoebe under adverse circumstances, and now works at Palmyra.
“He’s not the only one. I wanted to know how our situation is going to be handled,” she said.
Wernick told Christy Dykes that her husband’s situation – and any similar scenarios – would be handled delicately and professionally on a case-by-case basis. To make matters more dramatic, Dykes is a Phoebe employee.
“Yes, as you can see, I’m anxious. We’re anxious,” she answered when asked whether the saga is a tumultuous one. “There’s a lot at stake – this is our family that we’re talking about. And it’s all happening so quickly. Since this morning.”
Palmyra opened in 1971. It has about 200 on-staff physicians, a medical support staff of about 400 employees, and about 50 volunteers. The hospital says it treated 55,640 patients in 2009, including 3,553 admissions and 31,253 emergency room visits.
Palmyra’s 2009 annual report states that the hospital pays about $29 million in salaries annually and provides about $8 million in charitable and uncompensated care; $1.1 million in federal income tax; $460,000 in state income tax; $538,000 in property tax; $674,000 in sales tax; $27,000 in unemployment tax; and $5,000 in other local taxes. The hospital’s economic impact in 2009 was about $53,000, according to the report.
Phoebe’s highest-ranking employees, according to the hospital’s Website, are Rader; Mat Gooche, chief operating officer; Karen Hayes, chief financial officer; Susan Mahoney, chief nursing officer; and Jefferson U. Davis, chief medical officer.
Palmyra’s board members as of its 2009 report were Rader; Dr. William E. Mayher III, a retired neurosurgeon; Dr. Chris Mann; Edward Meeks Jr., an attorney; Dr. Charles Gebhardt, chief of staff; Farris Shorter, a retired educator; Dr. Peter Sireno, Darton College’s president; Dr. Julie Isaac; James Speir; Judith Corbett, an independent consultant; and Dr. Ron Cucina.