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Georgia Department of Community Health: CON law would not prevent sale of Phoebe North

North Albany Medical Center receives response from DCH

The Department of Community Health has responded to a Tennessee medical group's questions regarding Certificate of Need issues of the former Palmyra Medical Center now known as Phoebe North. (File photo)

The Department of Community Health has responded to a Tennessee medical group's questions regarding Certificate of Need issues of the former Palmyra Medical Center now known as Phoebe North. (File photo)

ALBANY — A letter from the Georgia Department of Community Health received by North Albany Medical Center earlier this week states that Georgia’s Certificate of Need law would not prevent the sale or re-lease of the former Palmyra Medical Center, now known as Phoebe North, should the Federal Trade Commission order the Hospital Authority of Albany-Dougherty County to sell or get other management for the property.

The authority purchased the former private hospital from Hospital Corporation of America for $195 million and contracted with Phoebe Putney Memorial Hospital Inc. to operate the facility.

In a letter sent on March 12, North Albany Medical Center asked the DCH for information on whether Georgia’s CON laws would prevent the sale or lease of the Phoebe North property. The authority, FTC and Phoebe had reached an agreement in August that would allow the authority to keep Phoebe North and have it operated by Phoebe, but the FTC has not finalized that agreement. FTC officials have said the response to NAMC might impact the final agreement.

A statement responding the DCH letter was released by Phoebe Putney Health System officials on Wednesday.

“We are, of course, disappointed at the letter issued June 3 by the Department of Community Health. It ignores the agency’s own internal process and amounts to a decision dependent on speculative hypothetical scenarios, and it is wrong on the law in the answers it gives,” said Thomas S. Chambless, Phoebe senior vice president and general counsel. “That said, Phoebe is resolute in its course and will continue to advance the position we took on the issues before DCH. Ultimately, these issues will be decided by the Georgia courts, and we are currently considering our options for the best course to bring the DCH ‘determination’ to that venue, where we expect to prevail.

“As to the Federal Trade Commission and its interest in the DCH determination, we will continue to work cooperatively with them. The well-reasoned settlement which was reached last summer is the correct conclusion for this case. We hope the Commission will not renege on the settlement which was negotiated at that time. In any event, the Authority’s acquisition of Palmyra was the right step for health care in our area, and Phoebe is steadfastly committed to moving forward with the enhanced medical opportunities for our community which are possible because of the transaction.”

On April 14, the FTC asked U.S. District Judge Louis Sands for a 60-day extension for filing documents necessary for dismissing an order for preliminary injunction against the Hospital Authority and Phoebe in regard to the Authority’s acquisition of the former Palmyra.

The proposed settlement announced last year would have allowed the Authority to retain possession of Phoebe North and lease it to Phoebe for management, while restricting Phoebe from objecting to DCH about any CON requests for a new acute care hospital in the six-counties comprising metro Albany and Mitchell County for five years.

Phoebe, under the proposal, also would for 10 years not acquire without prior notification to the FTC any general acute case hospital, inpatient or outpatient clinic, or physician group of five doctors or more in the six counties. Phoebe and the authority would stipulate the acquisition of Phoebe North might lessen competition within the market and Phoebe would provide the FTC with annual reports of its compliance for 10 years.

In its motion filed in April, FTC officials explained that they were seeking the extension “because the Commission is still considering whether to make final the accepted consent agreement that settles the underlying administrative proceedings, and the consideration of this settlement may be informed by the DCH’s (Department of Community Health) response to to NAMC’s (North Albany Medical Center) request.”

Victor Moldovan, the attorney representing North Albany Medical Center, said that North Albany, which is based in Franklin, Tenn., has expressed interest in the property but would wait until the FTC makes its decision to decide what to do. A spokesman with the FTC said that the agency would not be commenting on the matter at this time.

The U.S. District Court has given the FTC until June 13 to reach a resolution on the agreement.