As Hospital Corporation of America settles in to its 60-day due diligence period before formalizing the purchase of Memorial University Medical Center and all its assets, it’s clear what the $710 million deal brings to the Savannah-based hospital that serves a 35-county area in southeast Georgia and southern South Carolina.
What isn’t as clear, however, is what HCA — the country’s largest for-profit hospital system – stands to gain by purchasing Memorial, a nonprofit, 604-bed “safety net” hospital whose unique-to-the-area services have a propensity for bleeding red ink.
Granted, since opening its doors in 1955, Memorial has evolved into one of the most advanced health care providers in the region, serving as a referral center for trauma care, children’s care, high-risk pregnancies and high-risk newborn care, among others.
But it’s those same services, coupled with the hospital’s commitment to provide care for the area’s low-income, uninsured and exploitable populations, that most impact its bottom line.
So why would HCA, with shareholders to keep happy, want to take on Memorial’s $420 million in debt and kick in another $280 million over 10 years to fund capital improvements?
While part of the answer is clearly the Savannah hospital’s reputation for excellence and cutting-edge medicine, there may be something else about Memorial that appeals to HCA — the “University” in its name.
The value of medical education
In addition to paying off debt and funding capital improvements, HCA has committed to such core services as pediatrics, Level 3 neonatal care and the hospital’s Level 1 trauma center for at least 10 years, despite the fact that all are budget busters.
HCA has also committed to the residency training program through Mercer University Medical School’s Savannah presence at Memorial, which dovetails nicely with HCA’s commitment to growing its increasingly robust Graduate Medical Education — or GME — program.
With more than 200 residency programs to date, HCA “plans to continue to grow the largest GME community in the country, offering residencies across a broad spectrum of specialties,” according to its website.
Indeed, the company is set to begin five new GME programs on July 1: an emergency medicine residency at North Florida Regional Center in Gainesville, Fla.; family medicine residencies at Mountain View and Southern Hills hospitals in Las Vegas; and neurology residencies at Riverside Community Hospital in Riverside, Calif., and SkyRidge Medical Center in Lone Tree, Colo.
On a more regional level, HCA’s South Atlantic division currently has residency programs at four of its 11 hospitals, according to Karen Nelson, vice president of public relations for the division, which is headquartered in Charleston.
“In July, as we welcome our new class of residents, we will reach 192 participants,” Nelson said, adding that HCA’s South Atlantic division currently offers residency training for specialty programs including internal medicine, family medicine, general surgery,emergency medicine, dermatology and psychiatry.
A big boost
The addition of Memorial to the HCA fold will nearly double the number of residents in the division.
The Mercer University School of Medicine enrolls a total of 572 students at its Macon, Savannah, Columbus and Atlanta sites. Of the 459 M.D. students, 182 are in the Savannah program at Memorial, according to Larry Brumley, Mercer’s senior vice president for marketing and communications.
Mercer’s medical school has had a clinical relationship with Memorial since 1996, when the Savannah hospital agreed to provide instruction for third and fourth-year medical students. Mercer established the full four-year MD program on the Savannah Campus in 2008.
Memorial remains the sponsoring institution for the residency program officially called the Mercer University School of Medicine (Savannah) Program. Its significant growing research and service programs are recognized nationally and internationally.
Accredited by the Joint Commission, Memorial is recognized for excellence in bariatric surgery, breast care, cancer care, colonoscopy and endoscopy and women’s health.
CareChex Hospital & Health System Quality Ratings also recognizes Memorial for excellence in heart and vascular care, joint replacement surgery and orthopedic care, neurosurgery, pneumonia care, spine surgery, stroke services and trauma care.
US News, in its 2016-17 Best Hospitals ratings, ranked Memorial “high performing” in the treatment of Chronic Obstructive Pulmonary Disease (COPD), heart failure and hip replacement.
“A special program we have in the School of Medicine at Mercer is the three-year primary care track,” Brumley said.
“This allows students to complete their M.D. degrees a year early, thereby saving on their educational costs and getting much-needed physicians into Georgia communities quicker. “
In Savannah, that accelerated track program is offered in Family Medicine and Internal Medicine.
Why teaching hospitals?
According to the Association of American Medical Colleges, the work of teaching hospitals is more important than ever, as the nation faces a growing shortage of physicians.
By 2020, the AAMC predicts the shortage will reach 91,500 doctors, while the Medicare populations grows by 36 percent and more than 30 percent of physicians reach retirement age.
Teaching hospitals such as Memorial provide around-the-clock, on-site, and fully staffed standby services for critically ill or injured patients.
These hospitals receive more than 40 percent of all transferred patients whose illnesses or injuries require a sophisticated level of technology and expertise not available elsewhere in the community.
According to AAMC data, even though teaching hospitals represent only 6 percent of all hospitals, they account for 62 percent of pediatric ICUs, 61 percent of all Level 1 regional trauma centers, 40 percent of the nation’s neonatal ICUs; and 22 percent of cardiac surgery services, often for the most seriously ill heart patients.
Teaching hospitals also provide 41 percent of all hospital charity care and 25 percent of all Medicaid hospitalizations.