Wellstar held accountable for closing racially inclusive hospitals

Wellstar Health System, a nonprofit health system in Georgia, announced last fall that they were closing their Atlanta hospital. This safety net was one of the most inclusive and generous hospitals in the state, according to the Lown Hospitals Index.

Wellstar Atlanta Medical Center (which consists of two campuses in the Atlanta area) ranked #2 on patient inclusivity in Georgia, which it earned by caring for a disproportionate amount of patients from lower-income communities and communities of color. In one of the most racially segregated hospital markets in the US, Wellstar Atlanta was one of few hospitals serving a large proportion of patients from communities of color.

Financial considerations behind the closure

Why did Wellstar close such a high-performing hospital? Because it wasn’t high-performing when it came to making money. Wellstar Atlanta reported that 16% of its operating expenses went to uncompensated care, far higher than the national median of 3%. And Medicare, Medicaid, the uninsured accounted for about two-thirds of its payer mix. Wellstar reported they have invested more than $350 million to support operating losses and capital improvements over the past six years. In the past year alone, inflation and increased cost of staffing and supplies led to a loss of $107 million.

However, other hospitals and community leaders argue that Wellstar’s decision to close their Atlanta hospital was not made out of necessity, but out of desire for profit. Despite the losses from their Atlanta hospital, the Wellstar system was doing fine, with more than $150 million in net income in 2019 and 2020, according to their tax filings. The system also received $186 million in relief funds from the CARES Act. Wellstar could have used the excess revenue from their wealthier hospitals to support the Atlanta branch.

What’s next for Wellstar

In early 2023, Wellstar revealed their next move — a partnership with Augusta University Health System to take over AU Medical Center, the faculty practice group for the Medical College of Georgia, the Roosevelt Warm Springs Rehabilitation facility, and other AUHS facilities and holdings. The partnership also includes building a “new state-of-the-art hospital in Columbia County.” This is a lucrative opportunity, because Columbia County is much whiter and wealthier than Atlanta, so more patients are likely to be privately insured.

However, Wellstar’s actions haven’t gone unnoticed by state policymakers or advocates. Earlier this month, the NAACP and local policymakers filed two federal complaints against Wellstar: one to the Dept of Health and Human Services’ Office of Civil Rights alleging discrimination and one to the IRS asking for an investigation of the system’s nonprofit status.

They argue that Wellstar closing their Atlanta campuses but keeping their suburban hospitals open violates the Civil Rights Act because it discriminates against poorer communities of color that now have limited access to healthcare services.

“What we’re talking about is no more and no less than healthcare redlining on the part of Wellstar. It means that they’ve chosen where they will do business and not to do business based on the color of skin and the size of the bank accounts in the ZIP Codes where they’re located.”

Robb Pitts, Fulton County Commission Chairman, Associated Press

They also argue that Wellstar did not fulfill its community benefit requirements. The IRS requires nonprofit hospitals to conduct a community health needs assessment (CHNA) every three years and create an implementation strategy to address those needs. Wellstar’s CHNA clearly states access to care as a priority health issue in Atlanta, so one could argue that the closure of the Atlanta hospitals goes directly against the implementation of their CHNA.

It’s encouraging to see advocates push back against Wellstar and make sure that they are held accountable. But it’s not just Wellstar making a decision — it’s an entire system of incentives that leads to healthcare redlining.

Hospitals that care for the communities most in need get paid less than hospitals caring for wealthier, whiter patient populations. Our current system incentivizes hospitals to compete for privately-insured patients for elective procedures, so that’s exactly what Wellstar is doing. This is structural racism in action.