Habersham County Medical Center is joining Northeast Georgia Health System sooner than expected. The Habersham County Hospital Authority and county commission have agreed to a deal to hand over the facility to the Hospital Authority of Hall County and Gainesville by July first of this year. That Authority will then, in turn, lease the hospital to NGHS.
As part of the deal, Habersham County’s board of commissioners and hospital authority voted Tuesday to increase HMC’s existing credit line. The county approved a credit line of $6 million to help cover the hospital’s operating costs until the ownership transfer on July 1.
The original $1.5 million line of credit the Habersham County Commission approved last month has already been used to help HMC pay down a portion of outstanding debts, officials say. The additional $4.5 million will come from local American Rescue Plan (ARP) funds Habersham County commissioners had previously approved for new hangars at the county airport.
In a news release announcing the deal, NGHS says, “Increasing the line of credit will not place any tax burden on the citizens of Habersham County.”
Financial trouble factored into the move
In 2019, Habersham County entered into a five-year agreement with Hall County and NGHS to secure HMC’s future. That agreement called for the Hospital Authority of Hall County and Gainesville to invest $3 million a year in capital improvements over five years to enhance and expand HMC’s services. In exchange for that $15 million investment, the Hall County hospital authority was given the option to assume ownership of HMC at the end of the agreement in 2024 or earlier.
On Tuesday, all three parties involved in the original agreement agreed to execute an early transition due in large part to HMC’s current financial situation.
“This is the best possible scenario for the future of Habersham Medical Center and the health of everyone in our community,” says Dolly Ritchie, chair of the Hospital Authority of Habersham County. “It’s a little earlier than originally planned, but it’s the right thing to do for all the right reasons.”
According to NGHS, the first $3 million investment it made helped establish HMC’s Rehabilitation and Orthopedics Center. The second and third investments funded the renovation of Habersham Home (HMC’s senior living facility).
The fourth $3 million investment was issued last November.
The fifth and final $3 million investment is due on or before July 1, 2023. At that time, the Hospital Authority of Hall County and the City of Gainesville will immediately lease the hospital to NGHS or its affiliate.
Under new management
Also, on Tuesday, HMC and NGHS agreed to enter into a Management Services Agreement until the acquisition is finalized. Under this agreement, NGHS management will provide day-to-day oversight and review of critical functions and services as well as financial services and information technology (IT) services support, with regular updates to the Habersham County Hospital Authority and county representatives.
“Stabilizing the long-term future for HMC and putting the hospital on a better financial path to grow is currently the most pressing need in our community, and this agreement accomplishes that,” says Haberesham County Commission Chair Bruce Palmer.
Palmer calls the early transition a “big win” for Habersham at a time when many rural hospitals in Georgia are struggling. At least nine have closed in the past decade. Many healthcare officials blame state officials for refusing to expand Medicaid. Unreimbursed medical expenses significantly negatively impact a hostipal’s bottom line.
At least nine rural Georgia hospitals have closed since 2010. Even with the federal government pitching in at 90% of the cost, Medicaid expansion would still take some extra state money, which Georgia’s Republican-led legislature has always opposed even as it now sits on top of a $6.6 billion surplus.
“The challenges HMC has experienced in recent years mirror those of so many other independent, rural hospitals across the state and nation,” says Tyler Williams, president and CEO of HMC. “These challenges are only increasing, so the time to act is now. Our hospital joining NGHS – a well-respected organization with a strong financial track record, who many people in our county already trust for their care – is going to stabilize and improve healthcare across the entire region.”
Economic impact
The latest reports from the Georgia Hospital Association estimate HMC’s local and state economic impact at $117 million. NGHS’ four hospitals have a combined impact of more than $3.5 billion. An NGHS spokesperson says the health system has also received “A” grades for its current finances, as well as “positive” outlooks for its financial future from the national ratings agencies S&P and Fitch.
“There is clear data that shows a direct link between the economic health of a community and having a vibrant, local hospital and healthcare providers,” says Charlie Fiveash, executive director of the Habersham Economic Development Council.
Fiveash says being connected to a “rock-solid” organization like NGHS will help attract more economic development in Habersham, broadening the county’s tax base and easing the tax burden on property owners.
Generational impact
As president of Northeast Georgia Medical Center in Gainesville, John Kueven also has oversight of NGHS’ hospitals in Lumpkin and Barrow counties. He says the health system is committed to making more long-term, multi-million dollar investments in infrastructure improvements at HMC in the coming years “at no cost to the county or taxpayers.”
“Those reinvestments, like installing the same electronic health record we use at all other NGHS hospitals, are necessary to accomplish our shared vision to coordinate care better – so people can get most of their routine, specialty, and hospital care without leaving Habersham County,” says Kueven.
Both NGHS and HMC plan to work with local physicians and the larger medical community across the region to seek input on how to align services to ensure long-term sustainability.
“Our goal throughout these discussions, over many years, has always been to best serve the people of Habersham County by providing high-quality, local care they can trust,” says NGHS President and CEO Carol Burrell. “We should all be thankful for the Habersham County leaders and community supporters who worked diligently together to help save their local hospital, which will be the key to physical and economic wellbeing for generations to come.”
