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AG approves Phoebe acquisition of Dorminy Medical Center

Photo by J.D. Sumner

Photo by J.D. Sumner

FITZGERALD, Ga. -- As Phoebe Putney Health System lawyers prepare to defend a planned $195 million purchase of rival hospital Palmyra Medical Center in Albany to the 11th Circuit Court of Appeals, State Attorney General Sam Olens has signed off on Phoebe's assimilation of Dorminy Medical Center in Fitzgerald.

Lauren Kane, a spokeswoman for Olens, said the attorney general is required by Georgia law to review mergers among nonprofit hospitals to ensure compliance with the Georgia Hospital Acquisition Act.

"The attorney general's review of the Dorminy lease agreement was limited to determining if statutory requirements were met under Georgia's Hospital Acquisition Act, which clearly is the case," Kane said.

According to information on Dorminy Medical Center's web page, as approved the lease grants Phoebe rights to Dorminy for 10 years, with either party retaining the right to terminate the lease after five years.

The lease can be renewed for up to 40 years and requires Phoebe to pay up to $50,000 to the Hospital Authority of Ben Hill County annually in exchange for the authority agreeing to a "non-compete" provision that prevents it from using any other medical center during the term of the lease.

According to Dorminy's chief financial officer, the hospital's net assets -- as of February -- were $19.5 million, and its liabilities totaled $15.4 million.

The move will allow Dorminy, which will now be known as Phoebe Dorminy Medical Center, to be assimilated into Phoebe Health System -- the holding corporation for all of the medical assets linked to Phoebe Putney Memorial Hospital.

"We are confident the partnership with Phoebe will enhance the health care options for the residents of Ben Hill County and the surrounding area right here at home," Warren Manley, Dorminy's CEO, said in a press release. "Our residents will have greater access to services, specialists and the latest technologies."

The decision by Olens comes three months after Georgia's attorney general joined the Federal Trade Commission in a civil action against Phoebe to block it from buying Palmyra. Olens chose not to join the FTC in appealing U.S. District Judge Louis Sands' ruling earlier this month.

Phoebe remains locked in a high-stakes legal fight with the U.S. government to eliminate its only health care competitor in Dougherty County.

Kane said that comparing the two acquisitions is not easy because of several considerations, including the fact that Phoebe's planned purchase of Palmyra was between a nonprofit and a for-profit hospital, and that the antitrust review of the Phoebe/Palmyra sale was instigated by the federal government.

Kane said that, despite such considerations, Olens believes the Phoebe/Dorminy purchase will not hinder competition in the area.

"The Dorminy Medical Center lease agreement does not raise the same federal antitrust concerns present in the Palmyra Park acquisition because Dorminy and Phoebe are not direct competitors and competition remains strong in the region," Kane said.

Despite the fact that Palmyra's parent company, Hospital Corporation of America, has agreed to the terms of the purchase, the FTC contends that the sale of Palmyra to Phoebe would lead to a health care monopoly with Phoebe at the top of the food chain, raking in an 86 percent share of Southwest Georgia's health market.

Phoebe Putney Health System is rapidly becoming one the state's largest health care organizations. According to court documents, the system, which operates hospitals, clinics and health-based facilities throughout Southwest Georgia, generated $1.16 billion in patient revenues last year.