Georgia Bulletin

The Newspaper of the Catholic Archdiocese of Atlanta


Saint Joseph’s Hospital Sale Appears Imminent

By GRETCHEN KEISER, Staff Writer | Published March 3, 2011

The sale of Atlanta’s oldest and only Catholic hospital, Saint Joseph’s Hospital of Atlanta, is imminent, according to hospital officials.

The hospital and related entities, Saint Joseph’s Translational Research Institute, Saint Joseph’s Medical Group, Saint Joseph’s Service Corp. and Saint Joseph’s East Georgia in Greensboro, are those being considered for sale to a new parent company, according to Heather Dexter, chief operating officer of Saint Joseph’s Hospital.

A committee that includes representatives of the Sisters of Mercy, lay board members and physicians is expected to give the board of trustees of Saint Joseph’s Health System its recommendation this week among the final proposals submitted by a small group of competing bidders. A board vote will then be required on the recommendation.

“We are at the tail end of a very extensive process,” Dexter said.

While it is possible the hospital will no longer be a Catholic-sponsored facility, the mission of the Sisters of Mercy, who established the hospital in 1880 when Atlanta had no hospital at all, will continue, officials said.

“The bidders all value the culture and value system Saint Joseph’s has nurtured,” said Bill Garrett, president of Saint Joseph’s Mercy Foundation.

The bidders have been asked to demonstrate how they have lived out their mission throughout the years, how they have treated employees, what their charitable outreach has been and what they propose to do in the future in charitable work, Dexter said.

Also among the criteria used to evaluate competing proposals, she said, were a commitment to continue the hospital’s 24-hour-a-day chaplaincy program, the chapel, its just wage program for employees, its current employment practices, and its commitment to a community-based mission.

Mercy Care Services, an outreach of the medical facility to the poor, homeless and uninsured that operates from various clinics in metro Atlanta and from mobile medical vans, is not a part of the sale and will continue and hopefully expand, officials said.

“Several (bidders) have made strong support to Mercy Care a part of their proposals,” said Dexter.

Any board action has to be approved by the Sisters of Mercy and Catholic Health East, a multi-hospital system where Saint Joseph’s Hospital currently is affiliated.

Various facets of any sale of the hospital would also have to be approved for varying considerations by the state attorney general, the Federal Trade Commission and, since it is a Catholic facility, by the Vatican.

Saint Joseph’s Hospital is a highly regarded medical facility with particular specialties in cardiac, vascular and orthopedic services, cancer care and robotics.  The hospital has approximately 2,800 employees and is served by 750 physicians.

As a stand-alone hospital it has become increasingly difficult for Saint Joseph’s Hospital to compete financially when the medical landscape is dominated by affiliated hospitals with the ability to leverage lower purchasing costs and higher insurance reimbursements.

They looked first at a joint operating agreement with another hospital that would let Saint Joseph’s Hospital be a 49 percent stakeholder and still have veto power over certain items that were essential to the mission of a Catholic hospital, Garrett said.

Efforts to reach such an agreement first with Piedmont Hospital and then with Emory University Hospital were not ultimately successful. After that, in October 2010, the board of trustees “made the decision to go forward with divestiture,” Garrett said.

Cain Brothers & Co., LLC, investment bankers specializing in the health care field, have been representing Saint Joseph’s in the marketplace.

The process since then has whittled down potential qualified buyers from an initial 30 or so to a dozen who entered a confidential phase of disclosure and then a smaller group that submitted formal proposals to Saint Joseph. Detailed work has been done to evaluate a number of the proposals, including site visits and contract negotiations.

“Saint Joseph’s is valued well,” Dexter said.

“We are the first hospital in play in the metro area that has been a large, high-end specialty hospital rather than a smaller, community-based hospital in Atlanta.”

Dexter said that while only a small percentage of the hospital staff is Catholic, “if you survey employees, the Catholic identity is very important to them.”

The expectation would be that Saint Joseph’s, a hospital with outstanding medical specialties, would have more patients directed to the facility as a result of the affiliations accomplished through the sale.

Garrett said the action is comparable in magnitude to that made in 1975 when Saint Joseph’s moved from downtown Atlanta to what was then a remote location on Peachtree-Dunwoody Road in order to turn it around financially. Now its dominating medical campus and that of adjacent Northside Hospital and Children’s Healthcare of Atlanta’s Egleston campus are known as “Pill Hill.”

“In ’75 the records indicate the board had a monumental decision to make. It was close—shut the doors—or move. They made the decision to move,” Garrett said.

“In 2011 we are really faced with the same decision,” he said. “You can’t afford to keep operating a business that is losing money in its core operations.”

Whether the hospital continues to be designated as a Catholic hospital or not, Garrett believes “the patient experience the day after will be the same as it was the day before.”

“The Sisters of Mercy recognized a long time ago they couldn’t do it all themselves,” he said.

“They have done a great job” giving the nearly 3,000 employees at Saint Joseph’s a shared investment in their vision and mission of mercy, he said.

He also said it is likely a healthcare conversion foundation would be created from the proceeds to be directed toward service to the indigent and homeless, which was the initial mission of the Sisters of Mercy in Atlanta.