Wellstar Health System officials came under fire Monday for committing to invest nearly $800 million late last year in a planned partnership with Augusta University Health System (AUHS) after closing two Atlanta-area hospitals.
Wellstar and AUHS signed off on a 40-year partnership in December that included, among other things, capital for a new hospital, medical office building and ambulatory surgery center in suburban Columbia County.
Just a month earlier, Wellstar closed the 460-bed Atlanta Medical Center (AMC). Combined with the closing of a smaller Wellstar hospital in East Point earlier in 2022, it left what critics of the moves called a “health-care desert” in central and southern Fulton County.
“There’s money,” state Sen. Nan Orrock, D-Atlanta, told Wellstar executives Monday during a meeting of the Senate Health and Human Services Committee. “It was just not spent here. You folded your tent and walked away.”
But Wellstar officials told committee members the decision to close the two hospitals was unavoidable. Wellstar CEO Candice Saunders blamed aging infrastructure, low patient volumes, skyrocketing labor costs and the loss of coronavirus relief funds that had been available earlier in the pandemic.
Efforts to find a partner willing to help shoulder the financial burden proved unsuccessful, Saunders said.
“We were unable to find a partner because each of them reached the same conclusion we did: AMC’s financial trajectory was unsustainable,” she said.
Jim Budzinski, Wellstar’s chief financial officer, said AMC’s financial situation deteriorated from a 5.2% operating margin in fiscal 2019, the year before the pandemic hit, to a $109 million operating loss during the last fiscal year, not counting the estimated 650 million cost of replacing the aging hospital.
Critics of closing Atlanta Medical Center have charged racism. In March, a group of local and state elected officials asked for a federal investigation of both hospital closings, noting that the areas they served are mostly Black. On the other hand, Columbia County, where the new hospital will go, is primarily white.
Orrock and Sen. David Lucas, D-Macon, complained Monday that they weren’t told of the financial crisis Wellstar was facing until after the announcement of the AMC closing.
“These are my constituents. I represent that area,” Orrock said. “I never heard a word about this crisis.”
Saunders said she and other Wellstar officials asked state and local elected officials for help. While the state allocated $130 million in federal pandemic relief funds to Grady Memorial Hospital to help offset the closing of Atlanta Medical Center, nothing was forthcoming for AMC.
“We did our best,” Saunders said. “We exhausted all options we were aware of.”