A proposed merger between Marietta, Ga.-based Wellstar Health System and Augusta (Ga.) University Health has drawn scrutiny from lawmakers and civil rights advocates alike — but the health systems defended their vision in a June 27 public hearing.
The hearing, hosted by Georgia Attorney General Chris Carr, explored possible implications of the merger agreement finalized in late April. Some lawmakers and members of the public have raised questions about Wellstar’s commitment, considering the health system shuttered two hospitals in primarily Black neighborhoods last year — Atlanta Medical Center and Atlanta Medical Center South — citing financial hardship. If the deal with AU Health comes to pass, Wellstar will invest $797 million in the university health system over the next decade This includes construction of a new hospital in the primarily white Columbia County, Ga.
The NAACP and Georgia Democrats have filed two lawsuits with the IRS and HHS’ civil rights office against the health system, alleging the decision to close some hospitals and invest in others was racially motivated — and questioning its nonprofit status. Sen. Nan Orrock and Rep. Kim Schofield of Atlanta wrote a joint letter with the NAACP ahead of the June 27 public hearing, alerting Mr. Carr to their concerns, according to The Atlanta Journal Constitution.
“Wellstar’s actions raise questions of its trustworthiness to control a major state asset like AUHS,” the letter said. “We believe extreme caution is warranted concerning the disposition of this major state asset.”
Ms. Orrock expanded on this in an interview with Augusta-based news station WRDW. A reporter asked Ms. Orrock what would happen to the deal if the IRS pulled Wellstar’s 501(c)(3) status; Ms. Orrock agreed the deal would “crumble.”
“It’s why the Attorney General should be applying a very, very sharp eye and scrutinizing this deal,” Ms. Orrock said. “Because there are these liabilities out there.”
At the June 27 hearing, Wellstar CEO Candice Saunders and AU Health CEO Brooks Keel, PhD, gave their reasoning for the merger. Dr. Keel said AU Health’s financial situation is “not good,” and pointed to Wellstar’s hefty investment as a life raft. Ms. Saunders promised Wellstar would not close any core services at the Augusta University Medical Center, including its 24/7 emergency room; the current contract guarantees the hospital will remain open through the next decade, she assured.
AU Health brought forward a PYA accountant hired to examine the transaction, The Augusta Chronicle reported June 28. PYA evaluated Wellstar’s investment into AU Health — accounting for inflation and some likely contingent payments — at $584 million, $208 million above the value of AU Health. An Ernst & Young partner hired by the attorney general’s office to review PYA’s evaluation agreed that Wellstar would be investing more in AU Health than it would receive in assets.
Sen. Harold Jones of Augusta said he favored the deal, telling a Journal-Constitution reporter after the hearing that he was confident Wellstar would keep its commitments.
U.S. Sen. Raphael Warnock also penned a letter to the attorney general offering “conditional support” for the merger, writing that although it could help the fragile AU Health, Wellstar’s decision to close AMC raises questions about its “reliability.” He asked for more safeguards in the deal, including a commitment from Wellstar to maintain current services at the Augusta hospital for at least 20 years and allow staff to remain in Augusta rather than forcing relocation.
