Ever since the public announcement was made in December that the Hospital Authority of Albany-Dougherty County would purchase Palmyra Medical Center and merge its assets with the Phoebe Putney Health System – thus making Phoebe the sole provider of hospital care in the Albany area – Phoebe CEO Joel Wernick has a spent great deal of time answering questions and attempting to allay concerns about the acquisition.
On April 11, the long-time local hospital executive continued on that front with an appearance before the Kiwanis Club of Dougherty County at its weekly meeting. Wernick, who has been with Phoebe 23 years, noted the hospital is celebrating its centennial anniversary and gave a very brief history of the medical facility before moving to the acquisition, “the most current change.”
Wernick urged the Kiwanians to “think as citizens of Albany and the greater Albany area about the hospital as an economic engine.”
When Wernick arrived at Phoebe in 1990, he said, the hospital had one address: 417 Third Avenue. Phoebe Putney Health System as of 2010 has expanded into primary and secondary service areas that stretch across 35 counties and a multitude of roles, including community hospital management, oncology off-site treatment, home care, hospice services, convenient-care, MRI and imaging, neonatal transport, critical care transport, assisted living, EKGs in EMS units, cancer transport, perinatal services, wound care, and rheumatology.
Most-current figures presented by Wernick estimated that 46 percent of Phoebe’s patients come from Dougherty County, 10 percent from Lee, 8 percent from Worth, 5 percent each from Terrell and Mitchell counties, and the balance of 26 percent from various other localities. Phoebe has a direct economic impact of $398 million, with a resulting total impact of $963.4 million.
Wernick observed that “patients are confident in staying closer to home with Phoebe Putney” when seeking medical care.”
Increasing the availability and accessibility of medical services, and meeting resulting demand, has created “capacity challenges” that Wernick asserted the Palmyra agreement will help Phoebe meet. These include intensive care diversion, rehabilitation beds, neonatal intensive care unit utilization, private-room demand, future robotic center surgery suites, a growing medical education mission, and room to expand service areas that can’t currently grow into adjacent space.
Wernick compared Phoebe’s capacity situation without the addition of Palmyra to “trying to fit a size 12 foot into a size 6 shoe.”
In considering the purchase, the health system weighed the potential consequences to strategic long-range objectives. Advantages of buying included the immediate addition of 250 licensed beds while avoiding costly, disruptive construction yet achieving economies of scale and increasing a center- of-excellence focus that is expected to help Phoebe obtain state designation as a certified trauma center, which would make it eligible for state funding. Not buying would mean a heavy investment in the existing campus without an assurance from the state of timely approval or addition of licensed beds, limited future economies, stunted future market share and job growth, and a resulting distraction from mission attainment.
Other benefits of consolidating the competing Phoebe and Palmyra health systems include no negative impact on taxpayers, assimilation of Palmyra’s workforce, a pricing strategy that remains below the medical consumer price index, future immediate growth for clinical areas, expedition of the trauma-center designation process, more space for medical and nursing education, job creation, local ownership and governance, more private rooms, and the development of a central logistics center for system hospitals and other regional facilities.
Referring to concerns about perceived secrecy surrounding the agreement, Wernick explained that “everybody that had anything to do with the purchase had to sign confidentiality agreements.” If the deal had fallen through, he added, Palmyra’s owner – Hospital Corporation of America (HCA) – would not have wanted word out about the proposed transaction. Wernick related that Palmyra was not actually for sale; Phoebe approached HCA with an offer and HCA decided to enter into an agreement. (The sale price for Palmyra was $195 million)
Another aspect of the agreement has been the impact it will have on Palmyra employees. While Wernick emphasized there is no planned reduction in the workforce, all Palmyra staff members are to be rehired but will have to apply with Phoebe and meet its employment requirements, including drug screening and a background check. Some former Phoebe employees now work at Palmyra, and these will be reviewed on a case-by-case basis, the CEO said. All the re-employed workers will be signed up for Phoebe benefits and there will be no reduction in current pay rates.
While some of the benefits of the health systems’ consolidation will be more immediate – such as moving the physical rehabilitation center from Phoebe to Palymra (which will be renamed Phoebe North) – others will take longer. Wernick estimated at least three years for full implementation. Steps after closing on the deal will include the retention of space-planning and architecture firms with two-campus service evaluation experience and a medical staff/board/management review of how best to align the two campuses for maximum efficiency, future growth, and clinical excellence.
As of Wernick’s presentation to the Dougherty Kiwanians, necessary legal and regulatory procedures were continuing toward final closure of the transaction. Real estate title searches, transfer of multiple state and federal licenses, compliance with various federal and state regulations (including Medicare, Medicaid, and the State Fire Marshal), and joint commission establishment are all underway.
“There is a room full of people looking at all the contracts. We’re about at the end of our due diligence…We’re ready to close,” Wernick said.
Phoebe Putney Health System CEO Joel Wernick pleaded the case for the merger with Palmyra Medical Center before DoCo Kiwanis members on April 11.