Skip to main content

Piedmont Pursuing 'Hub-and-Hub' Growth Strategy

News  |  By Steven Porter  
   February 05, 2018

The Atlanta-based nonprofit system is poised to double its number of hospitals in just three years.

By the end of this month, the Georgia Attorney General’s Office is expected to release a report that could give Atlanta-based Piedmont Healthcare the go-ahead to continue its aggressive growth strategy in the state, where massive nonprofit providers are jockeying for healthcare market share.

Having already executed a number of mergers and acquisitions in recent years, Piedmont has turned its attention to Columbus Regional Health, a nonprofit system consisting of two hospitals and a number of other facilities in western Georgia.

Piedmont President and CEO Kevin Brown says the goal is to establish a third regional center around which related services will be oriented and expanded.

“We call it kind of a ‘hub-and-hub’ strategy,” Brown tells HealthLeaders Media. “We’ll now have kind of three clinical hubs: Atlanta, Athens, Columbus. And then as other opportunities present themselves, we’ll be looking at other metropolitan markets as well.”

If everything goes through as planned, then Piedmont will soon be operating in markets that represent about 70% of Georgia’s population, Brown says.

The hospital authority that governs Columbus Regional approved a letter of intent with Piedmont last October, and the Federal Trade Commission issued a brief notice last month indicating that it and the Department of Justice Antitrust Division had completed their reviews of the deal and decided against taking any enforcement actions.

Related: Piedmont Takes Over 27 Walgreen’s Clinics

That leaves approval from the state’s top attorney as Piedmont’s last big hurdle. A public hearing on the pending acquisition was held January 25, and the attorney general’s report is expected to be released February 26.

Piedmont has committed to assuming about $280 million in Columbus Regional’s debt, spending $30-50 million on a new electronic medical records system, and investing $250 million in capital improvement projects in the Columbus market over the next eight years, The Ledger-Enquirer reported last month.

Scott Hill, president and CEO for Columbus Regional, is expected to join the post-merger Piedmont senior leadership team.

'Cautious and selective'

With the addition of Columbus Regional’s two main campuses, Piedmont will have doubled its number of hospitals, from five to 10, in the past three years.

In 2015, the Georgia Attorney General’s Office signed off on Piedmont’s acquisition of Newton Medical Center in Covington, which is about 35 miles east of Atlanta. In 2016, it signed off on Piedmont’s deal with Athens Regional Health System.

In 2017, Piedmont announced it had signed an agreement with LifePoint Health to purchase Rockdale Medical Center in Conyers, located between Atlanta and Covington.

Despite its rapid M&A strategy, Piedmont has remained “cautious and selective” throughout the process, Brown says.

“We’ve passed on about 18 opportunities in the last 24 months,” he says.

Piedmont has been looking for partners that will mesh both strategically and culturally, and it’s been looking for communities in which it can invest for the long haul, Brown says.

"This isn’t a holding company strategy,” he says. “It’s an operating company strategy.”

Finance and philanthropy

Regardless of their size and composition, health systems nationwide are being forced to reckon with intensifying financial pressures.

“It’s probably the most difficult time from a fiscal perspective in a long, long time to operate in a healthcare environment,” Brown says.

Piedmont owes some of its success to an internal task force dedicated to rooting out inefficiencies systemwide. The group has made more than $250 million in non-labor improvements over the past three years, Brown says.

“If we hadn’t been ahead of this curve, we’d be struggling to kind of catch up,” he adds.

As a nonprofit organization, Piedmont’s financial footing also depends on philanthropy. In 2016, the system received a $75 million gift—the largest in its history—from The Marcus Foundation to support Piedmont’s heart and vascular program.

Piedmont isn’t the only Atlanta-based nonprofit health system to benefit from recent high-dollar gifts. Emory University received a $400 million pledge last month from the Robert W. Woodruff Foundation, as The Atlanta Journal-Constitution reported. The money will go toward capital improvement projects that will also benefit Emory Healthcare.

“We’re in a fantastic community that has done incredible things from a philanthropic perspective,” Brown says. “We feel blessed to be in it.”

Related: Emory Healthcare Moves Closer to Acquisition of DeKalb Medical

As Emory and Piedmont each pursue their own M&A strategies in Georgia, Piedmont announced last week that it had plucked an executive from Emory and added him to its own team.

Mike Mandl, who had served most recently as executive vice president for business and administration at Emory University, joined Piedmont as the system’s only executive vice president, answering directly to Brown, the organization announced Friday.

Mandl founded the business advisory firm Mandl & Co. with partner Jack Tillman, who has also joined the Piedmont executive leadership team. Tillman will serve as vice president and chief of real estate.

“Piedmont’s rapid growth and strong prospects for creative yet disciplined approaches to building, buying, and selling assets are part of the opportunity set that led Mike and I to join with Kevin and his team and transition away from our advisory work,” Tillman said in a statement. “We look forward to executing on this work in the months and years ahead.”

A bit of advice

Speaking from personal experience, Brown advises current and future health leaders to take risks and learn as much as possible about the business by working in a wide array of roles.

“I’ve had the opportunity to have a very broad spectrum of opportunities," Brown says.

“I grew up in rural Wisconsin, and I worked in and around … a rural hospital, doing everything from mowing the lawn to painting, to working in the gift shop, to collecting bad debts,” he says.

That diversity of experiences has continued throughout his professional experiences. He’s run a medical group, worked in the for-profit HMO sector, and worked in small and mid-sized hospitals. He credits his mentors with giving him a number of those opportunities.

Before taking his job at Piedmont in 2013, Brown served as CEO for Swedish Health Services, based in Seattle.

“It would have been easy for me to stay on the West Coast,” he says. “I came to Georgia, a place that I’d never been to in my life, or at least spent any significant time … I’m very glad that I made the decision to do it because it’s everything I had hoped it would be, both professionally and personally.

“I feel like we’re making a difference here in Georgia for Georgians.”

Steven Porter is an associate content manager and Strategy editor for HealthLeaders, a Simplify Compliance brand.

Get the latest on healthcare leadership in your inbox.