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What the finances of Northeast Georgia Health System look like
Legislature requires more transparency from hospitals
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Northeast Georgia Medical Center emergency room staff move about the area Thursday, Oct. 17, 2019. - photo by Scott Rogers

Newly disclosed financial data from the Northeast Georgia Health System shows a healthy financial picture and provides a look at some of the system’s investments, including strategic property acquisitions and new programs.

Nonprofit hospitals in Georgia were required by a new state law to post financial disclosure statements online by Oct. 1, and as a nonprofit health system, NGHS has created a “hospital transparency” section on its website. The documents include financial statements, a compensation and benefits report for its top-paid employees, some patient demographic information and copies of hospitals’ accreditation certificates.

About this story

Hospitals across the state have been required to make their financial information public as part of a new state law aimed at providing transparency in health care. Over the past few weeks, The Times has been examining these documents from the Northeast Georgia Health System and meeting with key hospital leaders to gain understanding about the data, which is available at The Times also worked to provide a clear picture of who the system's decision makers are.

In fiscal year 2019, the system had $61.1 million in operating income and 333 days cash on hand, according to a handout provided to The Times by the health system. In fiscal 2018, its income from operations was $43.9 million, according to the data made public on its website. Due to some costly investments, in fiscal 2017 that number was $13.6 million.

“Those investments include installing our new electronic health record, Epic. … We also acquired Barrow Regional Hospital to preserve that hospital for a community that relies on its services, and the Toccoa Clinic joined our team to improve care coordination in that corner of the region,” Brian Steines, chief financial officer of Northeast Georgia Health System, said. 

NGHS also had a $45 million loss on advanced refunding of a debt that year, although Steines said paying off that debt early saved NGHS money in the long run. 

The health system’s total liabilities and net assets were $2.1 billion in fiscal 2018 and $2 billion in fiscal 2017, respectively.

NGHS also has an investment portfolio, and it had more gains in fiscal year 2018 than in 2017, Steines said. NGHS has received A ratings from Standard & Poor’s and Fitch, two independent agencies that evaluated the system’s overall financial outlook by reviewing data such as balance sheets and reinvestment plans. The ratings include market position, service area, payer mix, operating risk and flexibility, quality of management and current and past financial performance.

NGHS, as a nonprofit, has to take any dollars generated beyond operating costs — what would normally be considered profits — and put that back into the health system, for example by adding new technology, improving services or expanding its workforce, spokesman Sean Couch said. While for-profit medical centers may have to pay out to shareholders, the nonprofit does not.

Some recent investments of the health system’s profits include $11.5 million for a new graduate medical education program, which welcomed its first residents in July, and $104 million to switch to Epic, which the Longstreet Clinic also uses and allows patients online access to their own health record. 

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Northeast Georgia Medical Center Registered Nurse Liz Ratliff prepares to get medicine for patients inside the hospital's emergency room Thursday, Oct. 17, 2019. - photo by Scott Rogers

The health system employs more than 8,000 people and is Hall County’s top employer. It spent about $574.5 million on salaries and wages in the fiscal year ending Sept. 30, 2018, plus $126.5 million in benefits. Employee pay was the top expense, while benefits were third. The second-largest expense was about $216 million for supplies.

The system also spends more than $8 million a year on free community classes on healthy cooking, diseases and other topics, Couch said.

As a nonprofit, NGHS is also required to provide medically necessary treatment to those without insurance or who cannot pay; it provided $63 million in uncompensated care in fiscal 2018, according to the data on the website.

NGHS has acquired what is now Northeast Georgia Medical Center Barrow, paying about $6.6 million for the Winder property in 2016, according to a report from the previous owner, Quorum Health. 

The land for its Braselton hospital, which opened in 2015, cost about $11.6 million. The health system still owns both those properties and 217 acres of land overall in Hall County. Nonprofit hospitals do not pay federal income or state and local property taxes.  

Patients enter Northeast Georgia Medical Center Braselton on Friday, March 1, 2019. - photo by Austin Steele

NGHS doesn’t own the property for its Gainesville flagship hospital — it is leased for $1 a year from the Hospital Authority of Hall County & City of Gainesville.

Starting up Northeast Georgia Medical Center Lumpkin cost $6.8 million. It opened in Dahlonega in July in the former Chestatee Regional Hospital building, but NGHS is not the owner of that property and is leasing it from the University System of Georgia Board of Regents. The Board of Regents is keeping the property on hold for the University of North Georgia to take over when NGMC Lumpkin moves to a permanent location off Ga. 400, set for 2022.

Tracy Vardeman, the system’s chief strategy executive, said that as the system moves to take over a hospital, it seeks input from the community and looks at what has worked in the past.

“We’re not trying to reinvent what hasn’t worked in that community,” Vardeman said. “We’re looking all over the country, we’re talking to people, and really trying to create what’s needed for that community, what can be sustainable, and meet the need, and relieve some of the volume that’s here (in Gainesville).” 

NGHS spokesman Sean Couch said when nearby hospitals start struggling, patients sometimes come to Gainesville anyway. 

“When these hospitals start to fail, patients are bypassing them anyway and coming to us,” he said. “When you think about being good stewards of our resources and trying to care for the entire region, sometimes you have to figure out how can we insert ourselves into those regions so we can help create that scaffolding and that infrastructure where it’s better for everybody involved.”

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Northeast Georgia Health System Lumpkin - photo by Austin Steele

Chestatee Regional Hospital in Dahlonega, for example, closed in 2018. NGHS expanded urgent care hours in Lumpkin to compensate for the loss of a hospital, then opened NGMC Lumpkin in the former Chestatee building in July 2019.

“The handwriting was on the wall for Chestatee hospital in Lumpkin. … We knew if that hospital just failed and closed, where are those emergency patients going to go?” Vardeman said. About 1,700 people from Lumpkin County were admitted to the Gainesville and Braselton hospitals in 2018. 

The legislation requiring the health system’s financial data be made public, House Bill 321, was approved by the Georgia General Assembly earlier this year. It gained the support of all members of Hall’s delegation. State Rep. Lee Hawkins, R-Gainesville, said it is part of a larger goal of offering more transparency for patients.

“With the rising cost of health care, it’s getting hard to kind of turn that needle down and reduce costs if you don’t really have a full grasp of all the factors that are driving that cost,” he said.

Making the data available to patients can help them make informed decisions about where they seek their care, he said.

“Patients can look and see how their own hospital is being operated,” Hawkins said. “Across the state, there are nonprofit hospitals and for-profit hospitals, and it helps them make decisions in the hospitals they want to use.”

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An ambulance in parked at the Northeast Georgia Medical Center emergency room Thursday, Oct. 17, 2019, after bringing a patient into the hospital. - photo by Scott Rogers
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