Six months after getting state approval, the mega-merger between Sandy Springs-based Northside Hospital and Gwinnett Health System remains unfinished business.

The potential deal was originally announced in 2015, with a projected completion date of early the following year. But it has dragged out way beyond that. Even last year, there were still details to be worked out between the two organizations, Georgia Health News reported.

A publicity photo of Northside Hospital in Sandy Springs.

A Northside spokesperson said Monday that the system is “still awaiting’’ approval from the Federal Trade Commission.

Betsy Lordan, a spokesperson for the federal agency, which scrutinizes mergers for anti-competitive problems, told Georgia Health News on Monday that she “can’t confirm or deny whether the FTC is investigating the [Northside-Gwinnett] merger.’’

The state Attorney General’s office approved the proposed deal in mid-November. Afterward, Northside said the combined system could start running in early 2018.

The overall length of time that the Northside-Gwinnett merger has taken – since 2015 – has left many experts puzzled.

Three years for a deal to proceed from discussions to closing is an unusual amount of time, said Craig Savage, a consultant for CMBC Advisors in North Carolina.

It could be due to a backlog and staffing shortages at the FTC, or to the agency asking for more information about the deal, Savage added.

The FTC process “is a bit of a black box,’’ said Greg Charleston, senior managing director and Atlanta leader of Conway MacKenzie’s regional office, who has worked on merger approvals. “I think there’s a lack of clarity on what the FTC is looking for.’’

“An FTC review can be done in a couple of months,’’ Charleston said. “It may take longer if they have concerns.’’

There appears to be more FTC scrutiny of healthcare mergers over the past five years, added Charleston, who is not involved in the Northside deal.

“There are a lot of voices in a healthcare merger,’’ including physicians and insurers, he said.

Northside operates hospitals in Canton and Cumming as well as its flagship hospital in the “Pill Hill” Medical Center of Sandy Springs, which it says delivers more babies than any other U.S. hospital. It’s also among the state’s top providers of surgical services.

Gwinnett Medical Center, whose parent company is Gwinnett Health System, operates hospitals in Lawrenceville and Duluth.

If the deal is consummated, the resulting system would employ 16,000 people, making it one of the biggest employers in the region. The two would form a powerful health-care alliance stretching from the northern suburbs of Atlanta eastward into the suburbs in Gwinnett.

It would join the acquisition trend that’s rippling through the state’s hospital market, with giant systems of Emory, WellStar and Piedmont expanding their reach.

Northside recently pushed further into the Hall County market. It has moved to acquire Gainesville’s Northeast Georgia Diagnostic Clinic, the Gainesville Times reported.

Hospitals have pursued consolidation to lower costs and also enhance their clout in negotiations with health insurers over pay rates for medical services.

Often in such deals, the controlling entity – Northside in this case — will take over a facility that’s charging lower rates, such as Gwinnett Medical, and increase that hospital’s reimbursements, said Graham Thompson, executive director of the Georgia Association of Health Plans.

“Hospital mergers mean higher costs for insurers and consumers,’’ Thompson said.

Giant insurers also are looking to branch out. The pharmacy chain CVS is trying to buy Aetna for about $69 billion. At the same time, another health insurer, Cigna, seeks to buy the country’s biggest pharmacy benefit manager, Express Scripts, for about $54 billion.

The FTC objected to an earlier Georgia medical merger, that of two Albany hospitals, in 2011. The feds fought a long-running court battle against Phoebe Putney Health System’s $195 million acquisition of Palmyra Medical Center, its only competitor in the Dougherty County city.

The fight eventually resulted in a 2015 legal settlement. Phoebe Putney got to keep the former Palmyra facility, but agreed not to oppose creation of any other general acute-care hospital in the Albany area for up to five years.

–Andy Miller

This story was reported by Georgia Health News and published here in a partnership with Reporter Newspapers.

13Shares