Geisinger, AtlantiCare split is official

AtlantiCare is officially out from under the umbrella of Geisinger, taking with it one-quarter of the health system’s discharges.

Monday’s news comes after Geisinger agreed in March to drop its legal challenge to AtlantiCare’s departure because the two sides had reached a deal. At the time, the systems said it would still take up to 18 months to finalize the transaction, a process that ultimately took just seven months.

Geisinger and AtlantiCare said in a joint statement the separation isn’t expected to affect patients, employees, facilities or the communities they serve.

“We are grateful to all who have supported this mutual agreement, which preserves both organizations’ long-term success and allows for the most appropriate use of our non-profit, charitable resources for many years to come,” they said. Neither system commented beyond the news release.

But the loss of AtlantiCare, headquartered in Egg Harbor Township, N.J., means Geisinger is a noticeably smaller and financially slightly weaker organization. Including AtlantiCare, Danville, Pa.-based Geisinger lost $38 million on operations in its fiscal 2020 with an asset impairment loss, generating a 0.5% loss margin. Without AtlantiCare, that loss grows to $42.6 million, or a 0.7% loss margin. Geisinger’s 2020 revenue was $7.1 billion including AtlantiCare and $6.2 billion without the New Jersey system.

S&P Global Ratings wrote in its latest assessment of Geisinger in May that losing AtlantiCare will “incrementally weaken financial metrics and the enterprise profile,” although it probably won’t trigger a downgrade on its own.

However, S&P said Geisinger’s market will now be focused entirely in Pennsylvania, including in a central Pennsylvania market that’s become increasingly challenging due to its rural nature, limited growth and social issues.

AtlantiCare comprised roughly one-quarter of Geisinger’s discharges in fiscal 2020, which ended June 30, or about 24,100 discharges out of about 94,000 total. AtlantiCare also comprised about one-quarter of Geisinger’s nearly 2,100 available hospital beds in fiscal 2020.

The agreement the systems reached in March required AtlantiCare to repay or refinance all of the outstanding debt Geisinger had lent AtlantiCare and that Geisinger had borrowed on AtlantiCare’s behalf as of the deal’s close, according to a bond document. That debt stood at $227 million as of March 31.

Geisinger’s fiscal 2020 revenue included $153 million in federal coronavirus relief grants. Like its peers, Geisinger said it weathered lower admissions in fiscal 2020 compared with the prior year because of non-emergent procedures being suspended. The health system said its clinic outpatient visits fell 4.5% year-over-year because of the pandemic, and adjusted discharges fell 4%.

Geisinger drew $7.1 billion in revenue in fiscal 2020, about the same as in fiscal 2019. Its expenses inched up 2% year-over-year to about $7.2 billion.


Source: modernhealthcare.com

Tags: covid-19, pandemic

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