Wellstar agrees to spending nearly $800 million over next decade in AU Health merger

The agreement on the merger between Augusta University Health System and Wellstar Health System into Wellstar MCG Health is finally public.

The office of Georgia Attorney General Chris Carr received the notice on Friday, kicking off a legal review followed by a public hearing. This also means that the agreement is finalized and can be released to the public for the first time.

The 89 documents included in the notice to the attorney general's office offers in detail what the transfer will mean, including a cover letter outlining the highlights of the agreement.

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Wellstar's commitment to spending - and care

The cover letter notes that the transaction is not a sale; Wellstar will become the "sole corporate member" of AU Health. The agreement comes with a hefty financial commitment from Wellstar − $797 million spent over 10 years. This includes:

• Construction of the Columbia County Hospital and moving the Surgery Center of Columbia County;

• Implementing the Epic Electronic Health Record System (which the state contributed $105 million to earlier this year);

• $31 million a year for the first two years of the agreement spent at the AU Medical Center Campus; and,

• $139 million spent on capital projects at the AU Medical Center in Augusta in years three through 10 of the agreement.

About a quarter of the spending is subject to performance, meaning Wellstar can defer $201 million of the spending if the AU Health System is not operating with a 2% operating margin.

During the first 10 years of the agreement Wellstar commits to operating AUMC and the new Columbia County Hospital as full-service acute care hospitals. Wellstar also commits to insuring AUMC and the Roosevelt Warm Springs Rehabilitation & Specialty Hospitals continue to provide clinical core services at current levels. For AUMC these include emergency rooms, Level I adult trauma and Level II pediatric trauma services, the Children's Hospital of Georgia and oncology services, among others.

They will also continue the residency and fellowship programs at AUMC at current levels and for at least a year continue the current indigent and charity policies for AU Health before transferring to the relevant Wellstar policies.

Wellstar and AU Health will work to establish a regional medical campus for Medical College of Georgia students at Wellstar Kennestone Regional Medical Center in Marietta.

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A 40-year contract a part of the deal

The documents provided a summary of the Master Affiliation Agreement, the 40-year contract between Wellstar and the University System of Georgia Board of Regents, who oversee the AU Health System. The MAA can be automatically extended for another 40 years by Wellstar. The agreement can only be ended through mutual agreement, a finding the contract is illegal, or a breach of contract "by one party that also creates long-term corporate or financial harm to the other party."

The properties which AU Health operates currently will continue to be leased from the Board of Regents by Wellstar for a nominal rent of $10 per year. When completed, the Columbia County Hospital property will be transferred to the Board of Regents and then leased back to Wellstar.

For the first 10 years of the agreement, if Wellstar looks to transfer or sell its control in the new Wellstar MCG Health system, the Board of Regents will have a right of first refusal.

The Board of Regents will also be able to nominate a member of the AU Health System Board to the Wellstar Board of Trustees for the lifetime of the agreement. They will also be able to nominate a second second member of the AUHS board to serve on the Wellstar Board of Trustees for the first two years of the agreement. Neither of the nominees can be members of the Board of Regents.

Wellstar will take on some of AU Health's debt, and commits in the meantime on working to avoid violating the terms of the debt.

Other documents outlined in the cover letter include an agreement to allow AUMC to continue as the primary teaching hospital for the Medical College of Georgia, an agreement to allow MCG faculty to provide medical services through Wellstar, the leases and the development agreement for the Columbia County Hospital. The attached development agreement; however, is unfinished and consists of one page reading "to be provided upon completion."

Recap of previous USG approval

The Board of Regents voted on March 31 to approve 14 documents outlining the agreement — all but one of which was listed as a draft. USG Chancellor Sonny Perdue or his office was empowered to finalize the agreement by the regents, and the regents authorized the agreement once the attorney general approved it.

The regents meeting on March 31 was specially called to consider and vote on the proposed merger, and the meeting had no formal agenda, just a meeting notice. The vote was held at 8 a.m. and hours later Perdue, Wellstar executives, Augusta University administrators and even Gov. Brian Kemp were briefing news media about the agreement.

"We're going to file these agreements, the first of the week, so the ... Attorney General's office can go make sure we've done things legally, for the benefit of all Georgians," Perdue said during a press conference following the March 31 vote.

This article originally appeared on Augusta Chronicle: Wellstar, AU Health file agreement with GA attorney general's office