New CHI Memorial Georgia hospital on hold as Parkridge appeals state approval

Officials from Chattanooga-based Parkridge Health System are appealing state regulators' decision granting CHI Memorial Hospital permission to build a new North Georgia hospital - a move that could either stop the project altogether or delay it for several years.

Last month, state regulators granted CHI Memorial a certificate of need, which is akin to a permit, to relocate its current North Georgia hospital in Fort Oglethorpe by building a more than $100 million replacement hospital just over 5 miles east in Ringgold, in Catoosa County.

In a letter submitted to the Georgia Office of Health Planning, attorneys representing Parkridge said they're appealing the certificate of need on the basis that "Parkridge offers substantially similar services as proposed within a 35-mile radius of (Memorial's) project and has a service area that overlaps the CHI Georgia's proposed service area."

The appeal effectively suspends Memorial's certificate of need until the situation is resolved, which could take years.

Andrew McGill, CHI Memorial's chief strategist, said in a phone interview Tuesday he anticipates a hearing will take place in late summer or early fall, with the soonest possible groundbreaking for the new Georgia hospital now pushed until early 2023.

Georgia law requires health care providers to obtain a certificate of need before building or expanding certain services by proving those services are needed in a given area.

Many states have certificate-of-need laws based on the rationale that creating unnecessary services will further drive up the cost of health care, but a common opposition to the regulation is that health systems too often use it as a way to block competitors in drawn out and costly legal battles.

Parkridge East Hospital, in East Ridge, Tennessee, is 6.5 miles away from CHI Memorial Georgia's proposed new location, making it the closest competing hospital.

Parkridge also recently received a certificate of need to build a new freestanding emergency department 6 miles from the proposed replacement hospital, and CHI Memorial is appealing that project in Tennessee.

(READ MORE: Catoosa County, Georgia, residents look to future of existing hospital campus)

Georgia last reformed its certificate-of-need law in 2019 to include a provision that only entities within a 35-mile radius of a particular project can oppose it. The other hospital systems within 35 miles of CHI Memorial Georgia - Erlanger Health System and Hamilton Health Care System - have opted not to oppose the new Catoosa County hospital.

McGill said that although Parkridge treats patients from Georgia, it's odd for a health system without a presence in Georgia to oppose a Georgia-based project.

"Memorial has been (in Georgia) for over 30 years, and this competitor to this market has nothing there and they're able - at this point - to deter this project. It just makes no sense," McGill said, calling the situation "incredibly disappointing on behalf of the people of Northwest Georgia."

Parkridge officials issued a statement following the appeal.

"Parkridge Health is committed to providing the highest quality health care to all patients we serve," the statement said. "We are proud to support and care for the Georgia community, as we have done for close to 50 years. CHI Memorial's proposed new hospital duplicates services in a region that is already well-served and reduces access to care for the patient base historically served by CHI Memorial Hospital Georgia."

Parkridge's decision to appeal CHI Georgia's certificate of need comes despite pressure from both Memorial and North Georgia leaders, including an anti-Parkridge advertising campaign and community rally asking Parkridge to "stand down."

Despite Parkridge's continued opposition, McGill said he's confident state regulators will ultimately stand by their decision to approve the project.

"This is Parkridge telling the state, 'You were wrong', and it's a pretty high bar to say the state was in error," he said.

The hearing for Memorial's appeal to Parkridge's freestanding emergency department in Tennessee is set for February 2023, according to a notice on the Tennessee Health Services and Development Agency website.

Contact Elizabeth Fite at [email protected] or 423-757-6673. Follow her on Twitter @ecfite.