November 30, 2022

Wellstar Health System plans to close Atlanta Medical Center, a 460-bed hospital that has shouldered a disproportionate load of the area’s uncompensated care. 

The not-for-profit system will start winding down services and close the hospital by Nov. 1 after determining the facility cannot sustain waning revenue and surging labor and supply costs, Wellstar said in a news release issued late Wednesday. Atlanta Medical Center has recorded significant operating losses from 2017 to 2021, racking up $107 million in losses over the last 12 months alone, according to the health system.

Atlanta Medical Center, which also operates inpatient psychiatric and rehabilitation facilities, has consistently provided higher-than-average uncompensated care, a combination of outstanding payments from patients and insurers and charity care. Its uncompensated care as a percent of operating expenses exceeded 16% from 2017 through 2021, significantly outpacing the median of roughly 3%, according to self-reported Medicare cost report data from more than 2,500 short-term acute-care hospitals. 

Medicare, Medicaid, the uninsured and indigent accounted for about two-thirds of its payer mix, cost report data shows.

Once Atlanta Medical Center closes, the city will be left with only one Level I trauma center at Grady Memorial Hospital—the next closest would be 80 miles away at Atrium Navicent Health Medical Center in Macon, said Ian McCarthy, an associate professor of economics at Emory University in Atlanta.

“This certainly doesn’t bode well for access to care, particularly among some of the most vulnerable populations in our area,” he said. 

Atlanta Mayor Andre Dickens wrote a letter to Wellstar executives, calling on them to provide more information about mitigation strategies, and plans for the campus and the current staff. In May, Wellstar consolidated Atlanta Medical Center South’s inpatient services and converted its inpatient operations to primary-care and rehabilitation services.  

“This decision will have deep and reverberating consequences for the half a million residents of Atlanta and the hundreds of thousands of visitors and commuters to our city each day,” Dickens said in his letter. “The City of Atlanta received no advance notice of this decision and had no opportunity to engage with you to understand or help mitigate the factors leading to this closure.”

Georgia’s failure to expand Medicaid was likely a motivating factor to close the hospital, said William Custer, former director of the Center for Health Services Research at Georgia State University

The health system has tried to work with government agencies, healthcare providers and local organizations to stabilize the hospital, but to no avail, according to Wellstar CEO Candice Saunders. Executives did not say how many employees will be affected.

“For several years, Wellstar has continued to invest in and operate AMC with significant losses to provide more time to partner on a creative, long-term, sustainable solution for the hospital’s future,” Saunders said in the news release. “After an exhaustive search for a solution that would support the healthcare needs of the community, we are disappointed that a sustainable solution at AMC has not emerged.”

Piedmont Healthcare, the largest health system in the state, has been encroaching on Wellstar’s market share after a series of recent hospital acquisitions. Piedmont added eight Atlanta-area hospitals in 2021 and 2022 and its footprint now includes 19 short-term hospitals, 

Wellstar has reported healthy operating incomes over the past several years. The 10-hospital system had operating income of $377.1 million on $4.25 billion of revenue in 2021. That was up from operating income of  $142.5 million on $3.78 billion of revenue in 2020. 

Through the nine months ended March 31, Wellstar reported $151 million in operating income on $3.48 billion of revenue. 

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