Trend Radar: February 2009

Help For Hospitals?: Rural Georgia has attracted the attention of an Atlanta area healthcare company looking to expand.

Alpharetta’s Jackson Healthcare, a staffing and technology firm, announced last fall it is forming a new company to acquire community hospitals in Georgia’s rural areas and metro suburbs.

The new company, Jackson Hospital Affiliates (JHA), is hoping to use cash and expertise to appeal to hospitals that may be struggling or looking for a new management approach.

“But we would also look at private nonprofit hospitals, faith-based-operated hospitals and investor-owned hospitals,” says Gary Bell, president of JHA. “All of these hospitals, in these economic times, will be rationalizing their portfolios, and there may be some we’d be interested in.”

Bell expects more than a few Georgia hospitals will be interested in talking with him. “I did a survey using publicly available information,” for 2007, he says. “I looked at the 108 general acute care hospitals in the state. Of that 108, only 46 had positive financial operations after depreciation. That … is a very, very troubling statistic because without adequate earnings for operation the hospitals cannot buy the equipment and recruit their physicians and will not be able to weather the [economic] downturns. These hospitals are at risk.”

That risk will be even greater for some hospitals this summer. “Georgia hospitals have not received an increase in Medicaid payments in six years,” Bell says. “Costs continue to go up but they have not received an increase in reimbursements in six years.

“There’s a program called Disproportionate Share Payments in the Medicaid program where hospitals that treat large numbers of Medicaid patients have, in the past, received additional payments to offset their costs for taking care of the Medicaid population. As of July 2009 most Georgia hospitals will no longer be eligible based on the way the statute is written.”

According to Bell, hospital authorities and other owners who do not have taxing powers will not be able to receive the Medic-aid Disproportionate Share payments.

“We look at this as an opportunity roll up our sleeves and work with hospitals to try to offset that through physician recruitment and through capital infusion for hospitals that need it,” he says.

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