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Ballad Health announces plan to consolidate urgent care clinics

Zach Vance • May 6, 2018 at 3:42 AM

Ballad Health plans to close four urgent care clinics — in Johnson City, Abingdon, Kingsport and Greeneville — over the coming months, according to a statement released by the hospital system Saturday.

After the Mountain States Health Alliance and Wellmont Health System merger, Ballad Health now operates two urgent care clinics in each of those four cities, and the decision to consolidate its walk-in clinic services, according to the statement, was to “make better use of its resources.”

In Abingdon, Johnson City and the East Stone Drive, Kingsport, location, the former First Assist Urgent Care clinics will move to the former Wellmont Urgent Care locations.

In Greeneville, the former Wellmont Urgent Care Clinic will move to the former First Assist location on the Andrew Johnson Highway.

“A process was put in place to determine which locations would offer optimal flow for patient care, visibility and expansion capabilities,” company officials said about the closures.

“Because the consolidation is only in areas where the service was duplicated, patients will still have ready access to urgent care clinics close to home. The (Certificate of Public Advantage) requires Ballad Health to maintain specific levels of urgent care access relative to population density.”

About 42 currently filled positions will be eliminated as a result of the clinics being consolidated. Those positions make up part of the 150 layoffs Ballad Health CEO Alan Levine announced on April 17, the company said.

“The team members whose positions are affected received advance notice, but will remain in their jobs until changes take place at their individual locations,” the company’s statement said. “We will work with these team members to ensure as many as possible are able to transfer before consolidation takes place.”

In addition to consolidating its services, Ballad Health officials are also in the midst of consolidating the debt accrued by Mountain States and Wellmont.

On April 27, the Greeneville Health and Education Facilities Board unanimously voted to issue a $950 million tax-exempt bond to Ballad Health.

“We’re not going to be issuing any debt that will add to our total debt load. It’s kind of like refinancing your home mortgage. We’re doing the same thing with our existing debt of Wellmont and Mountain States to make it Ballad Health debt,” Ballad Health Chief Operating Officer Marvin Eichorn said.

“So this $950 million is not new money. It’s strictly going to replace some existing debt that either Wellmont or Mountain States had separately prior to the merger.”

Eichorn said the move to refinance will save Ballad Health approximately $20 million a year in debt payments. The company is currently paying about $105 million a year on its debt, but once the bond issuance is closed, that figure will be reduced by about 20 percent, to $85 million a year.

The estimated average interest on the bond over the next 30 years will be approximately 4.2 percent. Eichorn credited Ballad Health’s recent upgraded credit ratings from Fitch Ratings and S&P Global Ratings as contributing factors to the reduced interest rate.

Eichorn said the Greeneville health board will not be responsible for paying back any of the debt issued. He said Greeneville’s health board was chosen because other health boards in the region, such as Johnson City’s or Sullivan County’s, already had plans to issue debt later this calendar year.

In total, Eichorn said Ballad Health has about $1.4 billion in debt, $950 million in tax-exempt bonds and the remaining $450 million held by banks.

“The first couple years after we get this bond refinancing done, we’re going to make what I would call normal principal payments on our debt, just what we have to pay as far as principal reductions,” Eichorn said.

“But, starting in 2021 to 2023, we plan to pay down an additional $385 million of debt. So over the next five years, we plan to pay down somewhere around $535 million of debt, $385 million of extra principal and $150 million of normal principal payments.”

Ballad Health officials expect the bond issuance will be finalized on June 6, but before it is, each county government and municipality where Ballad Health provides services will have to sign off on the issuance. Last week, the Johnson City Commission voted to approve its part. Other governing bodies are expected to take up the matter later this month.

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