The last pieces of the puzzle are falling into place for the long-awaited merger between Floyd Healthcare Management and Atrium Health.
The Cedartown-Polk Hospital Authority and the board of Polk Medical Center Inc. voted Friday to amend and restate the lease agreement between the two entities, a condition that lays the groundwork for the submission of Floyd’s member substitution agreement with Atrium to the Georgia Attorney General’s office for approval.
The agreement extends the Authority’s lease to 40 years from the date of closing on the condition of the approval of the AG’s office and the approval of a community foundation by the CPHA consisting of all of the existing surplus cash generated by Polk Medical Center as of the closing of the merger.
The resolutions amending the lease and providing the conditions of the lease agreement were approved unanimously by both boards at a special called meeting following a short executive session.
“This is another landmark day in the history of Polk Medical Center,” CPHA Chairman Frank Shelley said in a statement. “I am looking forward to the benefits that our combination with Atrium Health will bring to the citizens of Polk County.
“We still have to wait on the state’s approval, but today’s vote sets the stage for our citizens, our hospital and its critical services to have supportive health and economic relationships for the next 40 years.”
The board of directors of the Hospital Authority of Floyd County voted to approve a membership substitution, essentially a merger between two healthcare entities, during a called meeting Friday evening.
The member substitution agreement, once executed, establishes Atrium Health Georgia Inc., a subsidiary of the Charlotte-Mecklenburg Hospital Authority, as the sole member of Floyd Healthcare Management Inc.
The board also approved the restatement of the lease agreement between the Hospital Authority of Floyd County, the owner of the Floyd Medical Center building and property, and Floyd Healthcare Inc.
The two motions went forward without opposition.
Because the Floyd and Polk County hospitals are not-for-profits, they must demonstrate to the state how the deal benefits the communities they serve, including providing safeguards for both public interest and financial security.
Another of Floyd’s hospitals, Cherokee Medical Center in Alabama, will not have to submit a proposal. Alabama does not have the same set of regulatory requirements.
The alliance, which is likely the largest business deal in Floyd County history, will likely pump in excess of $650 million dollars into the Floyd system over the next 11 years. The process of review at the AG’s office takes 90 days. The closing of the deal is expected to be in mid-June or early July.
The amount of the Polk Hospital Authority community foundation is expected to be at least $20 million at the time of the closing, according to a release from Floyd Healthcare Management.
In addition, Polk Medical Center will contribute one-half of its earnings each year to the foundation until an additional $20 million dollars is reached.
The earnings from all of these contributions will be used on projects and initiatives that will address indigent care, disparities of care, social and other determinants of health, and other purposes — such as hospital equipment needs — to serve the Polk community.
Polk Hospital Authority attorney Mike McRae said the details of the foundation are in the process of being negotiated. The final layout of the foundation will have to be finalized and approved prior to the end of the AG’s approval process.
“Our management agreement with Floyd was signed nearly 10 years ago. Since then, Polk County has gained a new hospital facility, new services, a medical office building for physicians and outpatient services, a Trauma Center designation, recognition as the nation’s top rural hospital for the past three years, a community walking trail and important relationships in our community,” Shelley said in a statement.
“It is exciting and encouraging to imagine the growth and opportunities that will come from our relationship with Atrium Health.”