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Supreme Court rules in favor of FTC in Palmyra acquisition

Phoebe CEO Joel Wernick, left, and Tommy Chambless, general counsel, conduct Tuesday’s news conference in the Willson Boardroom at Phoebe Putney Memorial Hospital.

Phoebe CEO Joel Wernick, left, and Tommy Chambless, general counsel, conduct Tuesday’s news conference in the Willson Boardroom at Phoebe Putney Memorial Hospital.

ALBANY —A slip opinion issued from the U.S. Supreme Court on Tuesday held that Georgia has not clearly articulated and affirmatively expressed a policy to allow hospital authorities to make acquisitions that substantially lessen competition.

This effectively reverses a ruling from the 11th U.S. Circuit Court of Appeals that allowed the purchase of Palmyra Medical Center by the Hospital Authority of Albany-Dougherty County to go through and sends the case back to the 11th Circuit Court for further proceedings consistent with the high court’s determination.

“The Supreme Court has today reversed a lower court decision allowing the Hospital Authority of Albany-Dougherty County, which owns Phoebe Putney Memorial Hospital, to acquire a competing hospital under the state-action doctrine,” a statement issued Tuesday by Phoebe officials said. “In effect, the ruling says the State of Georgia has not clearly articulated its intent that hospital authorities are entitled to the same protection from antitrust enforcement as the state enjoys. We are studying the decision closely.

“We are disappointed because the lower court rulings were clear in the applicability of state action immunity in accordance with long-standing precedent. This does not alter our resolve or the commitment Phoebe has to meeting the growing needs of this community and the region we serve. We are continuing with our planning process to implement needed changes and to allocate resources properly to protect the safety and improve the health and wellness of our community.”

Associate Justice Sonia Sotomayor delivered the opinion for the unanimous court.

“Under this Court’s state-action immunity doctrine, when a local governmental entity acts pursuant to a clearly articulated and affirmatively expressed state policy to displace competition, it is exempt from scrutiny under the federal antitrust laws,” the opinion begins. “In this case, we must decide whether a Georgia law that creates special-purpose public entities called hospital authorities and gives those entities general corporate powers, including the power to acquire hospitals, clearly articulates and affirmatively expresses a state policy to permit acquisitions that substantially lessen competition.

“Because Georgia’s grant of general corporate powers to hospital authorities does not include permission to use those powers anticompetitively, we hold that the clear-articulation test is not satisfied and state action immunity does not apply.”

Under State Action Doctrine, federal antitrust laws do not apply to anti-competitive conduct of certain subordinate public entities created by a state if the conduct is authorized as part of a “state policy to displace competition” that is “clearly articulated and affirmatively expressed” in state law.

“Today’s ruling is a big victory for consumers who want to see lower health care costs, and the Court’s opinion will ensure competition in a variety of other industries, as well,” Federal Trace Commission Chairman Jon Leibowitz said in a statement following the announcement of the decision.

On June 25, the Supreme Court granted certiorari in the FTC’s appeal following the Court of Appeals ruling in December 2011 that allowed the $195 million acquisition to close.

“We granted certiorari on two questions: whether the Georgia Legislature, through the powers it vested in hospital authorities, clearly articulated and affirmatively expressed a state policy to displace competition in the market for hospital services; and if so, whether state action immunity is nonetheless inapplicable as a result of the Authority’s minimal participation in negotiating the terms of the sale of Palmyra and the Authority’s limited supervision of the two hospitals’ operations,” the opinion states.

“Concluding that the answer to the first question is ‘no,’ we reverse without reaching the second question.”

The case was argued before the court on Nov. 26. From this point, it is anticipated that the case will go back to the Court of Appeals.

The opinion explains that the claim for state action immunity failed because there is no evidence the state affirmatively contemplated that hospital authorities would displace competition by consolidating hospital ownership, and that the powers exercised by the Hospital Authority mirror general powers routinely conferred by state law upon private corporations.

In a news conference Tuesday afternoon, Phoebe CEO Joel Wernick said the plans that have been established for Palmyra, now Phoebe North, will continue to move forward — and that the long-term strategic plan for Phoebe Putney Health System, of which they say the purchase was a part — will continue to be advocated.

“We have not changed our vision,” Wernick said. “We will proceed with the plans we have until someone tells us we cannot. Nobody has told us that yet; (the opinion) just said that it is to go back for further proceedings.”

Comments

waltspecht 1 year, 1 month ago

Where does it all go from here? Will Palmyra re-open the Hospital? Will they just close it? Inquiring minds want to know.

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Trustbuster 1 year, 1 month ago

Hope and change is on the way baby.

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guardian 1 year, 1 month ago

i bet they close it and, after all the money that has been spent, you will still have Phoebe as the only game in town. .

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Trustbuster 1 year, 1 month ago

All hail to the Supremes! Poor little ole Phoebe.

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FryarTuk 1 year, 1 month ago

Is that a foresale sign on Phoebe North? Now I now why they put the Phoebe name on a plastic bag to drape over old Palmyra sign.

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KaosinAlbany 1 year, 1 month ago

WoW!!! Just proves one thing... if you can get a lawsuit out of the "good ole boy" town and state then justice WILL prevail.

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Trustbuster 1 year, 1 month ago

I can't wait for Caviar Joe's press conference. Somebody will be going on a diet plan soon.

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Albanite 1 year, 1 month ago

This comment was removed by the site staff for violation of the usage agreement.

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Trustbuster 1 year, 1 month ago

"We hold that Georgia has not clearly articulated and affirmatively expressed a policy to allow hospital authorities to make acquisitions that substantially lessen competition. The judgment of the Court of Appeals is reversed,and the case is remanded for further proceedings consistent with this opinion." Supreme Court Justice Sotomayor's statement in the conclusion of the opinion. Eat that Phoebe!

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ObjectiveEyes 1 year, 1 month ago

I'm not a big Phoebe fan, but, I'm not so sure this is good news. The big question is, what happens now? HCA is not coming back. Does that mean Phoebe North (Palmyra) closes it's doors...putting hundreds out of work?

Hold the bubbly for now.

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Trustbuster 1 year, 1 month ago

Well they can't use the Albany-DOCO Hospital Authority's power to limit competition. Phoebe tried to shield their monopoly behind a local govt. agency that regulated them. This ruling upholds the principle of free market competition.

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Cartman 1 year, 1 month ago

It is obviously a monopoly. It was obviously Phoebe buying Palmyra Park. Trying to paint it as anything else was a charade. Shame on the Hospital Authority for going along with it. I'm glad they were exposed. If nothing else was accomplished, those who sounded the alarm about Phoebe's conduct have been vindicated and not simply dismissed as being alarmists and conspirisy theorists.

This is a blow against the economic bully. It is a victory for the residents of this entire area.

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Trustbuster 1 year, 1 month ago

The hospital authority were political appointees tied to the Phoebe faction. You need to see the online video called "Do No Harm." It illustrates the lengths that Phoebe will go to in order to protect their profits from competition and questioning their authority. I have an old saying "Foxes guarding the hen house."

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QUIK 1 year, 1 month ago

I have labeled them as a "BULLY" since I first arrived in 1999. Glad the courts stepped in since the people were too afraid to voice a strong protest. Their monopoly run may be over!!! The last thing they are thinking about is "small town committment".

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FryarTuk 1 year, 1 month ago

Damn, Judge Sands got slapped down and hard 9 to 0. Do any of you guys understand what that means about that guy. 9 to Zip. Good lord! I been telling you about him.

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Trustbuster 1 year, 1 month ago

Maybe Judge Sands should consider retirement now. His wife makes enough money on WALB.

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mercat13 1 year, 1 month ago

Maybe the doctors that were run out of town by Phoebe should get together to form their own hospital authority. We need options other than the conglomerate known as Phoebe. Just a thought.

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stc1993 1 year, 1 month ago

They ought to go after Ken Hodges too, I believe he had his hand in the cookie jar.

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Albanite 1 year, 1 month ago

The people who should be "run out of town" are still sitting on the hospital authority. Every single person on that so-called "authority" has breached public trust and should be fired from that board before the day's end.

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OlDad2055 1 year, 1 month ago

So I take it that the appeals court is required to hear the complaints that they dismissed earlier now? The 'what next ' factor seems to be missing here.

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OlDad2055 1 year, 1 month ago

Sorry about that. My reading comprehension skills must have been sleeping when I posted this question yesterday. The story DOES answer the question about 'what next'. Still .... an interesting story. I wonder what the follow-up decision will be from the Appeals court -second look?

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buddy 1 year, 1 month ago

I find it odd that no one seems to see a "monopoly" at all the other towns that have one hospital?

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Trustbuster 1 year, 1 month ago

Some monopolies are natural or geographic. A govt. sanctioned monopoly usually restrains trade and competition. This is how Phoebe operates.

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buddy 1 year, 1 month ago

I agree Phoebe has a so called "monopoly" however, I do not agree that Palmyra was a better choice just to have a choice. HCA was always in trouble financially and I don't remember anyone else beating down the doors to get the building so I look at it as another employment opportunity vs a lack of one for some people. HCA was just as corrupt as Phoebe! http://en.wikipedia.org/wiki/Hospital...

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agirl_25 1 year, 1 month ago

buddy.....If I were you I would not rely on wikipedia for information on whether or not there was (yes there was) corruption in the HCA group. My reason for this is because when you read the wiki info, do you know who the authors are? They are regular people like you and me; so theoretically, absolutely anyone can write an article. The first draft of a Wikipedia article is usually written by someone who actually knows a little something about the subject but is not an anointed Wikipedia admin nor even a regular editor. I don't ever rely on wiki for information and in fact have emailed them a correction in the past, which they gratefully acknowledged. As far as HCA and its financial problems, you are correct, they had them under Rick Scott, CEO......and this page will show you 2 links. Click on the first 2 stories. If you read them you will see what I mean about anyone writing them as you will see what important person's role they left out. They are from the Pulitzer Prize winning page PolitiFact:

http://www.politifact.com/search/?q=Rick+scott+medicare+fraud

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Trustbuster 1 year, 1 month ago

Watch out for Wikipedia online source is changeable from day to day. Just ask Mark Taylor.

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agirl_25 1 year, 1 month ago

Is he someone I should know about? All I know is wiki is not a reliable source of true information and it is in fact written for the most part by everyday people. I have written them on a few occasions and informed them of mistakes. I will do a Mark Taylor search I suppose and see what I can find. I do like to use at least 2 sources of information tho, when I am researching something and am going to represent myself in something......and feel better NOT using wiki.

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happydoc 1 year, 1 month ago

It has been a long battle fought by the powers that be at Phoebe over the Palmyra Park hospital and the medical services that were offered at that facility. Justice has prevailed. Time for a serious look at the administrative structure at Phoebe and its multiple boards which all voted to try and monoploize the health care delivered to the citizens of southwest GA. The Hospital Authority of Dougherty County must evaluate the present situation and perhaps ammend their agreement / lease with PPMH for providing health care services at Phoebe Putney. Will the taxpayers bear additional costs in this process? Look hard at the recent scores from Leapfrog in reference to the lack of quality in healthcare that is being provided at Phoebe. A grade of "F" indicates a serious lack of concern on the current regime.

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Guess_What 1 year, 1 month ago

What next? Here is what's next:

http://www.legis.ga.gov/legislation/en-US/Display/20132014/HB/230

HB230 just introduced by State Rep. Ed Rynders would legislate that Georgia DOES grant state immunity to all hospital authorities, and also always intended to do so. We should ALL make sure that this bill is DOA!!!!!

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FryarTuk 1 year, 1 month ago

There he goes again. Ole Taxem Ed. Now we can call him Joel's Boy. We know where he stands with the working people in Southwest Georgia. Thanks big Ed. Publish your cell phone number again.

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ObjectiveEyes 1 year, 1 month ago

We are disappointed because the lower court rulings were clear in the applicability of state action immunity in accordance with long-standing precedent.

Well, I guess this means that the lower court, in this case, does not understand the law...or is it something else?

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FryarTuk 1 year, 1 month ago

You got it right the first time, they don't know the law. Neither does Judge Sands. Nine to ZIP, skunked. Humiliating!

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boog 1 year, 1 month ago

Congrats Bag..... I mean Trustbuster.... Too bad you had to relocate up north. I've got an idea.... Why don't you come back to Albany and buy Palmyra.... You could even be the CEO. I'm sure you'd do an excellent job...

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Vondifferis 1 year, 1 month ago

I am not sure much will change for the moment. The question...What is next? is right on target. Who knows. I do hate that many good employees of Palmyra left, or were pushed out, or were demoted, or were given jobs they did not want and had to leave.

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Albanite 1 year, 1 month ago

Since you removed it, I'll say it again! It is the CEO's job to make sure that the regulatory approvals are in place before such a move.
Imagine the results if the surgical teams did as poor a job of due diligence before a procedure and simply disregarded the rules before operating on a patient because it improved profitability.

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FryarTuk 1 year, 1 month ago

Wernick to SCOTUS: "Up yours buster! It's mine and I'll dowhat I damn well please."

SCOTUS to clerk: "Get me the Federal Marshall's number for the Southern District of Georgia."

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Jacob 1 year, 1 month ago

"Get me the Federal Marshall's number for the Southern District of Georgia."

Don't look now, buy your ignorance is showing again. Wernic's hospital isn't located in the Southern District of Georgia. As always, though, don't let the facts get in the way.

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FryarTuk 1 year, 1 month ago

Son of Heard, its Wernick with a "K". While we're correcting for ah "ignorance" you say. I'll call it your mistake. You are right it is the Middle District which should have been named. You have experience in courts apparently. I'll atone for my "mistake" in humor. So now you can get your panties untied from the wad. Cheers.

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Jacob 1 year, 1 month ago

LOL. I do believe it was you that was pointing out how the court of appeals consisted of dumb lawyers. Glass houses, you know. And no, I don't have experience in the courts. I just tend to try to learn about a subject a little before I declare myself an expert.

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Effetecorpseofimpudentsnobs 1 year, 1 month ago

You have nothing to worry about. No one will ever mistake you as an expert. I've read too many of your comments. As for dumb lawyers on the Court of Appeals, what would you call a group of legal experts who were slapped down nine to zero? Right. A bunch of dumb lawyers. You keep trading feet.

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FryarTuk 1 year, 1 month ago

Just cut him off at the knees, Snob. You're ruthless. I love it. He may want to take you bow hunting and collect some trophies. LOL

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Jacob 1 year, 1 month ago

I would call them presidentially appointed judges who are well educated and have lifetime appointments. Of course, you are an expert on any topic that arises, so feel free to keep chirping away with your snide little commentary from behind your keyboard. By the way, you seem a little upset. Try speaking with your husband about your feelings and have another glass of chablis. I bet you feel better right away . ; )

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FryarTuk 1 year, 1 month ago

Well, as the Snob said you just keep switching feet. They are all political appointees with or without scholarly pedigrees but for sure from the political stables. Put some pepper on your shoes next time that might help you with your hoof in mouth disease.

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FryarTuk 1 year, 1 month ago

Could be but you're light lifting.

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FryarTuk 1 year, 1 month ago

I recommend that you do continue studying up and it might be helpful to try memory excercises on spelling names mentioned in the previous paragraph to your learned comments. Glass houses and all. It's tough to have it wiped in your face and you can't get away from it isn't it ? LOL

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Effetecorpseofimpudentsnobs 1 year, 1 month ago

Good literary humour, Fryar. Middle-Diddle? Who cares? It went over the concrete head of Jacob. No accounting for a poor sense of humour and dull wits.

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FryarTuk 1 year, 1 month ago

Nine to ZERO. What a slap down for Judge Sands and the Appeals Division. Not a single one sided with them. Must be a bunch of dumb lawyers on those benches.

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trudy2 1 year, 1 month ago

Maybe it is time for Mr. Wernick et al to be replaced and or to have a better oversight of the backroom deals they cut between themselves.

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D_Zaster 1 year, 1 month ago

I hope the former employees that were forced from Palmyra have some sort of legal recourse against Phoebe now that the Supreme Court has ruled they should have never been ask to leave. These are the people who have been hurt the most IMO.

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southwestga 1 year, 1 month ago

Anyone on the Hospital Board with integrity needs to step up now. It's not supposed to be Wernick's decision about the future of North. Be a man and do your job.

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dickyboy 1 year, 1 month ago

Sounds like he's going to ignore their decision....

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rightasrain 1 year, 1 month ago

Fryar Tuck...you can always reach Rynders through his email on his website. Just be informed...he told me that he wasn't elected to represent his voters...but to do what HE decided was best...I, for one, will be diligently working against his reelection.

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FlunkyMonkey 1 year, 1 month ago

"We will go forward until we are told to stop." How arrogant can Phoebe and its leaders be? I hope it is determined that Phoebe has a monopoly and is ordered to sell (not close) the medical facilities in the small towns....

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PumpkinEater 1 year, 1 month ago

Having little expertise in the issues before the SC or familiarity with all the facts, I can't weigh in on the technical aspects of the SC ruling, however I do wish to point out that I and those I know, including family, have always received excellent service from Phoebe and its staff and providers. I, personally, have been thankful for the care given.

As to the Phoebe anti-trust fears, seems that any way you look at it, Palmyra, as it was, is a gone. Is it likely that another entity, in this heath care climate, with small hospitals closing, will gen up the Palmyra facility or build a new one? Probably not, but just speculating.

Further, I would suspect that Phoebe has a contractual obligation with HCA to pursue approvals or pay some heavy money anyway and maybe even get the building besides. I don't see HCA just taking an empty building back and starting all over again. So, in terms of theoretical anti-trust concerns, is that a fait accompli already?

Isn't the Phoebe network quite an asset to an Albany, given market size and low population growth?

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FryarTuk 1 year, 1 month ago

The issue here isn't with the doctors and nurses. Our families have received satisfactory medical care as well. Some might say the community has had no growth because of Phoebe. You really have to understand there is a difference between Phoebe Hospital and Phoebe Health Systems My major concerns with PPHS focus on several factors inherent to the monopoly issue. First as a non-profit corporation the small size of the county means Phoebe's growth diminishes the tax base of an already struggling political and cultural system. The community structures are completely overwhelmed by this. Secondly, there are the prices of medical services, inpatient and outpatient which Phoebe suffocatingly controls. I don't know all of the charges but several years back, I was sent for a thalium stress test which required insurance pre-approval. The tariff at Phoebe was in excess of $2800 plus various supplies. My insurance said no. They would pay $750 less co-pay and that was it. I got a list from out town docs. Called a couple of friends who practice medicine and wound up at Cardiology of Ga in Decatur, GA. They did them everyday for $750 out the door. So I know it is real. Another problem which derives from Phoebe is its administration that asserts an insatiable, monolithic control over all it surveys. Being a small community, businesses are damaged considerably by their creating businesses that compete unfairly. Whether its a Buckhead Boutique in the hospital, an employee pharmacy, a child care center, a fitness center, a restaurant, an office building or an extravagant price for a local potentate's property inside their stable. The administrative structure has no checks and balances to bring it to conformity with sound community values and interests. The only person I know who ever questioned Phoebe (Wernick) direction was an editor of this paper who was soon after dispatched. The term County Hospital Authority is an oxymoron since as a public agency they are impotent cuckolds of Phoebe administration. So these are some of my fundamental concerns about the monopoly of PPHS. Of course, it appears HCA Palmyra's ship has sailed but whether there is a remedy here when all the dust settles, who knows. For all the good the hospital does, I wish it no harm but PPHS has to be brought under reasonable control and I don't think they will be able to thumb their noses at SCOTUS without a price. John Roberts doesn't strike me as a person who is longsuffering with fools and more particular fat little self-absorbed caliphs in the cotton patch of Southwest Georgia.

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agirl_25 1 year, 1 month ago

Bravo!! bravo--- stands up and applauds......bravo bravo...very well stated.

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PumpkinEater 1 year, 1 month ago

Fryar Tuk... I'm with you on your practical concerns.

A waning tax base is a major concern for Dougherty County. I have seen the impact of a decimated commercial tax base on communities elsewhere and it is not pretty. Talk about a "tipping point," when so much more of the burden shift to the residential sector, and when the MEAG money runs out...plus the timing of the expiration of the TAD keeping the increment out of current cash flow ... look out. All the many new not-for-profit start-ups in Albany, including churches and charitable ventures taking existing properties off the rolls contribute a very major future issue...those have a huge impact on revenues. Along that vein, years back, when Mr. Coleman was (briefly) still mayor, I spoke with him, and Mr. Wernick separately, and then, later with other city officials about a PILOT (Payment In Lieu Of Taxes) adopted by many large-impact not-for-profits, often universities and medical systems around the country. Phoebe did something like this with its Palmyra acquisition, by making current tax payments. Kudos if it continues that way. Be aware that the argument expressed before against the PILOT was that Phoebe already provides many services to the community gratis, but that does not support municipal services. Taking a half-million in annual Palmyra contribution out of the budget would be a hit. I personally do not agree that not-for-profits should be able to fully avoid ad valorem taxes on their real estate.

I too have been troubled by the seemingly higher charges for services at Phoebe, both to the self-pay patient and non-negotiated plans, and also compared to other providers for some similar services. Other than the argument advanced that pre-negotiated rates for larger payor plans are always at lower rates, I can only speculate that sometimes people and companies do pay and that covers the many pro-bono services provided and gives Phoebe a higher starting point in rate negotiations. I am not clear on the comparative cost studies provided through Phoebe and one or more employers which say Phoebe is not higher and is higher than other comparable systems.

I am not so troubled by Phoebe's size. A larger facility can provide more services with equipment that keeps up with current technology and medical advances, which attracts more talent.

All good for discussion and watchfulness, but I at least Phoebe brings money from the outside into the community. I am more concerned about the Walmarts that provide tax base, but bring zero new money into the community and withdraw profits and perhaps cause other businesses to fail and therefor cost tax base and jobs. Yes, they provide short-term urban renewal, but the long-term impact is suspect, at best.

Albany has some tough issues facing it...and then, of course, there is the future of the Base.

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FryarTuk 1 year, 1 month ago

I agree with most every thing you have written. A couple of points I am more sensitive to are Phoebe's setting up a muscle-bound community within the very small community so that there is no give and take. The very aggressive behavior on a bookkeeper by hired guns in his work place parking lot shows the extent they feel bound by civil and legal codes. An excrescent of that attitude is their failure to engage the community commerce and move within the retail streams reinforcing and growing the local economy. Having jewelry shows and apparel exhibits for the anointed along with previously sited entities doesn't make the natives feel very happy especially when managers tote away million dollar salaries, have low or no interest loans and tell the Atlanta press, the damn place is ours and we'll do what we want. The referral and advanced services do bring money into Phoebe from out of Albany but very little of it generalizes to the good of the community at large. I grant you the advanced medical care and facilities are anchors that could allow some very strong development. As for the taxes that are paid by Phoebe on the Palmyra property, I do agree that is good fortune. However, when you are talking about the size of PPHS there is so much more property that has been moved from the tax base which takes away from financing general services. I know that the small size of the county along with the improvident political structures contribute to the dilemma as well. The perception of PPHS not the hospital is that of an overgrown bully. When the Supremes slap them down 9 to 0 if even only for the moment, there is a collective expression of satisfaction. I appreciate your very thoughtful comments.

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stc1993 1 year, 1 month ago

They need to pass a law these so called non profits can't move their money & corporations to the Cayman Islands. If they're American non profits they ought to keep their money in U.S. banks.

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agirl_25 1 year, 1 month ago

PumpkinEater.....welcome back to the forum. It is always a pleasure to read your comments. I wonder if your knowledge base extends outside the Albany area? I am curious about whether or not you know anything about the Dothan, Alabama area hosptials. There are 2 hospitals there, SAMC and Flowers, and from what I read online they don't seem to have the problems Phoebe and Palmyra have. They both seem to be able to hold their own so to speak, and the city seems to be thriving. I had to go thru there last week on my way to Ozark, Alabama and was pleasantly surprised at how nice the area looked.

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reb_arty1863 1 year, 1 month ago

It is time for rynder to go. He has been there too long. His vote is for the checkbook of campaign contributions of which Phoebe has copious amounts. Perhaps someone will challenge him and use this house bill that supports Phoebe's gluttony as ammunition against him.

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