Jun 15 GREENVILLE NEWS: Greenville Health System and Palmetto Health form new health company
Greenville Health System is joining forces with Palmetto Health in Columbia, creating the largest health system in South Carolina, officials said Thursday.
The newly created and yet-to-be-named company will see 1.2 million patients a year, generate $3.9 billion in annual net revenue and become one of the 50 largest health systems in the nation, officials said.
The arrangement also makes the new company the largest private employer in South Carolina with more than 28,000 employees, including 2,800 physicians.
No money is changing hands in the arrangement, which is an affiliation, or partnership, to form a single parent company to guide the strategy and financial vision of the organization, said GHS CEO Michael Riordan.
“A merger assumes one is merging into the other and that’s not the case,” he said. “Both GHS and Palmetto Health will stay as separate legal entities.”
Frances Ellison chair of the Strategic Coordinating Organization board which governs GHS, said the deal represents “two equal partners coming together to create a new company.”
The combined organization will have a larger population footprint that will enable it to attract programs, subspecialists and research dollars that neither could on their own, she said. It also will provide patients with access to services they might have to go out of state to get now, she said.
For instance, patients in the Upstate and the Midlands often go to Charlotte or Atlanta for kidney transplants, Riordan said, acknowledging that transplant services have been on GHS’s wish list for some time. The new company will be in a better position to evaluate service areas to expand in the future, he said.
Nearly half of all South Carolinians will be within 15 minutes of the new company’s facilities, he said.
Currently, the Medical University of South Carolina is the only transplant hospital in the state.
Ellison said the arrangement is a “needle changer for South Carolina’s health” because it will provide residents access to care they otherwise wouldn’t have.
Hospitals around the country have been affiliating at an increasing rate as a hedge against reduced reimbursements. And Riordan said the changing financial landscape played a role in the decision.
“We’re not seeing more money on the horizon,” he said, pointing to proposed Medicaid cuts.
And because nearly half of hospital expenses are personnel costs, Riordan said the systems will be “looking at everything” to reduce costs and become more efficient.
The new $4 billion system also will be able to invest up to $1 billion more over five years because it will have better access to the capital market, and saving 3 percent, or about $20 million a year, through economies of scale, Riordan said.
“This is an investment in our community to create a solution that will help residents be healthier and address rising health care costs,” Ellison said, “now and in the future.”
GHS remains open to other partnerships in South Carolina or in neighboring states, Riordan said.
“We think that partnerships are going to be important in the future,” he said. “That’s why we partnered with Acadia, to do things we couldn’t do on our own.”
GHS last year announced plans to build a new $64 million psychiatric hospital on Grove Road in partnership with Acadia Healthcare.
The partnership with Palmetto Health was a natural evolution of the relationship the two already had, Riordan said.
“Palmetto Health and GHS decided we were the right partners to make the biggest impact,” he said. “They’re a safety net hospital and we’re a safety net hospital. We have a long relationship with (them) … We have the joint venture with Baptist Easley and we formed Initiant to look at costs. This is a natural next step.”
The Initiant Health Collaborative was designed to save money through group purchasing and other shared activities.
The affiliation makes the new system South Carolina’s leading provider of charity and uncompensated care and nearly a third of the state’s Medicaid services, officials said.
Palmetto Health CEO Charles D. Beaman Jr. said the partnership will create a culture that attracts, retains and develops the highest quality and diversity of team members, and continue to teach the next generation of physicians and other caregivers.”
“Both organizations are committed to ensuring our community members receive the health care they need, regardless of their ability to pay,” he said. “Our integration to become a new health company continues our commitment to serving our patients.”
Though the new entity doesn’t have a name yet, both hospitals recognize that local identity is important, Riordan said, adding that brand identity in both markets will be maintained and supported.
A new board with equal representation from GHS and Palmetto Health boards will oversee the new company, with Riordan and Beaman serving as co-CEOs. All GHS obligations will remain intact and honored by the new company, Riordan said.
The two systems have been working on the project for months, Riordan said, adding that the deal must undergo a review by the Federal Trade Commission and isn’t likely to close before the end of the year.