Northeast Georgia Health System is set to acquire Habersham Medical Center a year earlier than anticipated, as the rural hospital descends into further financial decline.
NGHS received approval Tuesday from Habersham County’s Board of Commissioners and Hospital Authority, as well as Hospital Authority of Gainesville and Hall County.
The vote by the hospital authority and commissioners Tuesday, Jan. 10, will “increase an existing line of credit from $1.5 million to a new maximum of $6 million” to cover HMC’s operating costs until ownership is transferred to NGHS on July 1.
A previous $1.5 million line of credit approved by Habersham’s commissioners in December went to a portion of outstanding debts, and an additional $4.5 million added to the line of credit will consist of local American Rescue Plan funding.
The two entities signed a five-year deal back in 2019, with NGHS agreeing to five annual installments of $3 million to the hospital for a five-year period, amounting to $15 million.
A first round of $3 million funded HMC’s latest Rehabilitation and Orthopedics Center, while a total of $6 million from the second and third funding cycles appropriated to HMC went to finance the renovation of Habersham Home, a 84-bed nursing facility nearing completion.
The fourth $3 million payment was allocated toward capital improvements to HMC’s facility, specifically on hospital equipment needs.
The millions in additional capital wasn’t enough to sustain HMC’s operations, though, as NGHS is expected to take ownership of the struggling hospital this summer after a fifth and final $3 million payment is delivered.
John Kueven, recently named president of Northeast Georgia Medical Center, said he doesn't foresee the immediate termination of the nearly 500 HMC employees as restructuring efforts commence in July.
“We have a lot to figure out,” he said. “That’s what the next several weeks are going to be, figuring out that transition plan…we have to make sure (HMC) remains open, and in order to do that, we have to make payroll. Our overall philosophy is anyone who is willing and qualified, we will absolutely find a place for them.”
According to Habersham County Manager Alicia Vaughn, HMC currently has $35 million in bond debt, which won’t transfer to NGHS after the deal becomes official.
“It’ll be a transaction, and the debt and liabilities – and accounts receivable – will remain with the Hospital Authority of Habersham,” Kueven said. “(Habersham’s) Hospital Authority won’t have governing authority of the hospital anymore, but it will need to remain intact for the debt structure.”
Under the agreement, HMC will instead be governed by The Northeast Georgia Governance Structure of NGHS, according to Kueven, who called the next six months “an assessment time in planning for that transition.”
“We’re excited,” Kueven said. “We’re going to bring state of the art technology for electronic medical records … and then looking at syncing up pay and benefits and all those things that go with an acquisition. The next six months for us will be ensuring we make that as smooth as possible.”
Despite the transition, Kueven told The Times that Habersham County residents will likely continue to receive certain types of treatment at HMC for health care, depending on a patient’s specific needs.
“Some of the reasons (patients) aren’t able to stay (at HMC) is there’s not a full complement of subspecialties and support services for those patients, so they end up coming to Gainesville,” Kueven said. “Over time, we’re going to look at what makes the most sense … to be able to keep those patients in Habersham. We’ve got a strong reputation around quality, around our care model, and so we would expect some of those patients to stay up there … we’re going to keep that hospital in Habersham.”
Kueven noted the impact the COVID-19 pandemic had on hospitals like HMC. He said the latest move to take ownership of HMC aligns with NGHS’s mission to “improve the health of the communities served.”
“I think (HMC) is not immune to the challenges rural healthcare is facing across the country,” Kueven said. “Coming out of the pandemic, it’s just been even more challenging to remain financially stable … the hospital is struggling from a cash flow perspective and has more going out than coming in, and so as we look at that financial stability and the commitment to serving that community, it made sense to advance that sale date so that we can ensure there’s healthcare still in that community.”
Habersham County’s leaders have maintained that “increasing the line of credit will not place any tax burden on the citizens,” and Chairman Bruce Palmer called the deal with NGHS “a win” for Habersham County.
“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 – positioning HMC to become a vital hub for healthcare in this part of the
state,” Palmer said. “It’s a big win for our county and an increasingly rare positive outcome for a rural hospital at a time when at least eight rural hospitals have closed in Georgia during the past decade.”
Habersham Vice Chairman Bruce Harkness, who said he was hesitant to vote for more funding to the HMC, stated a belief that extending the line of credit and the impending transfer of hospital ownership is in the best interest of Habersham’s taxpayers, especially from a “business” perspective, for the county in the long run.
“I think in the long run, for (NGHS) to take it over quicker, I think it’s going to be in the best interest of the county,” Harkness said.
Dolly Ritchie, chair of the Hospital Authority of Habersham County, expressed confidence in the latest decision by Habersham’s officials.
“This is the best possible scenario for the future of Habersham Medical Center and the
health of everyone in our community,” Ritchie said. “It’s a little earlier than originally planned, but it’s the right thing to do for all the right reasons.”
Carol Burrell, president and CEO of NGHS, also lauded the recent announcement.
“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,” Burrell said. “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.”