North Georgia Medical Center, Your Hospital

Opinion

Jeff Dunn, Hospital Administrator
A response about North Georgia Medical Center:

SunLink Health Systems, Inc., our parent company, is currently publically
traded on the New York Stock Exchange and has said it may transition from a
publicly-traded company to a privately-owned company. As a public company,
SunLink is obligated to take certain actions which can cost many thousands of
dollars to meet public-company regulatory requirements. One of the contributing
factors in seeking to become a private company was the annual cost incurred to
maintain SunLink’s publicly traded status. Also over the past 10 years, SunLink
has received several offers to purchase which have been costly and have been
distractions from operating the hospitals. This is part of the reason SunLink has
decided to buy back a portion of its shares and seek to become a private
company.

North Georgia Medical Center has not been advertised “for sale.” North
Georgia Medical Center’s financial status is public knowledge. Yes, we have lost
money in the past couple of years. This is the first time in the hospital’s history
of 60 years. This financial result can be attributed to several issues. With the
economy’s decline we have seen a significant increase in uninsured patients.
North Georgia indigent/charity care and bad debts for most recent fiscal year was
$5,801,520.00.

Current YTD results of indigent/charity and bad debt totals are
$3,987,596.00, with fiscal year ending June 30, 2013. This amount is 11% of
gross revenue.

Bad Debt is classified as those patients whose income is above poverty level.
The patient might have had insurance but didn’t meet the deductible and/or
didn’t pay the balance of the bill for the emergency services provided.
Indigent/Charity are those patients who fell below poverty level. Our last fiscal
year NGMC provided $2,492,588. We are hopeful this year to be reimbursed
$391,000 by the state to help offset this number. If it were not for Jimmy Lewis
at Hometown Health and our Speaker of the House, David Ralston, this would
not have happened due to budget cuts. More and more rural hospitals are
seeking the assistance of their local government to help offset the increasing
charity numbers, but NGMC has not.

Another issue contributing to NGMC current financial status is the payor mix.
Our Medicaid percentage is at 20.7%. With the state budget cuts in place years
ago, Medicaid pays us less than our cost in some instances. We just recently
fought the battle with the provider tax for hospitals in Georgia which allows the
state to draw down federal dollars. This was done in lieu of a 17% Medicaid cut.
Some of the larger hospitals that do not have large Medicaid clients were not in
favor of this bill. Not renewing the provider tax bill would have forced many small
hospitals to close and rural physicians to drop Medicaid Services. They simply
could not take a 17% rate cut. Once again the assistance of Jimmy Lewis at
Hometown and Speaker Ralston worked to protect the rural hospitals in the
state. NGMC has seen an increase in Medicaid, as well as a large increase in
indigent and charity percentages over the past few years. Consumers with
Medicare and commercial paying insurance are the payors a hospital system
must have to help offset the Medicaid and self-pay. When these payor services
utilize our competition’s outpatient center or go south for health care services, it
makes it extremely difficult for NGMC financially.

A new facility with private rooms and baths would have contributed
significantly to the improvement in North Georgia’s market share. If you will
recall, about five years ago North Georgia Medical Center had made a
commitment to replace the current hospital with a new hospital located on the
Garrett/Mundy property on Hwy. 515. We had architectural drawings, the
Certificate of Need was approved and we were ready to proceed as soon as we
closed on the land. We spent over $1.6 million on planning, due diligence and
preparation for the new hospital. The landowner, after a disagreement with the
County Commissioners decided not to honor his contractual agreement with
North Georgia Medical Center and did not proceed with the closing on the land.
We have been in litigation for the past few years and have been awarded a
summary judgment against the landowner. If they had honored their contractual
obligations, we honestly would not be having this conversation today. We would
be in a new hospital on Hwy 515. During the past five years the economy and
paying patients have declined. Obtaining financing for a $30 million project is a
very hard sell to any bank today, especially when you have lost money for two
years in a row.

We have continued to look for other ways to cut our operational costs and
reduce our expenses to assist with our bottom line. Most recently we opened our
new Medical Office Building. This 40,000 square foot building has been very well
received by the community. Our employed physicians have been located in this
building which reduced our rent. Classification and certification as rural health
clinics with employed physicians should allow us to go from an operational loss
of $1.3 million to a break-even point in year two. In today’s climate more and
more physicians are seeking employment rather than independent practices
mainly because of the ever changing regulatory environment, reimbursement
declines, HIPPA laws and the introduction of meaningful use. Also included in
the Medical Offices of North Georgia are radiology, bone density, ultrasound,
mammogram and cardiac stress testing. All were designed for the outpatient
setting of all patients regardless of who their physicians may be.

We have also been working with Northside Hospital of Cherokee, who was
more than willing to assist us with providing services that as a small community
we cannot provide. A prime example of Northside’s commitment to this
community is they helped us with Dr. Bhatt and his group of cardiologists who
has a rapidly growing practice here in Ellijay. Dr. Bhatt takes care of his patients
locally and then utilizes Northside Cherokee for services we cannot provide.
I offer you this information in the hopes of making you aware of the health
care needs of your community. Standing together is the only way a small
community is going to be able to weather this storm and succeed. Seeking
services outside our community, whether in another hospital, physician’s office
or imaging center that are not part of our local hospital system, only further
deteriorates and dilutes Gilmer County’s health care services and creates a
situation which makes maintaining a viable health care delivery system less
possible.

Last week the closure of Calhoun Memorial Hospital in Arlington, GA, was
announced. This community had a hospital, nursing home, assisted living, and
home health, all of which were unable to remain viable in today’s economy. Ask
Arlington’s community leaders how it is going to affect growth for citizens and
business. The loss of tax-based revenue generated by the employees and the
shift of taxes supported by businesses to citizens when a hospital closes and
business leave are not rumors but reality.

We at North Georgia Medical Center are committed to quality and to
providing a viable health care system for our community. Please support us in
our efforts.

Jeff Dunn, Hospital Administrator

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