North Shore-LIJ, Phelps Memorial Begin Merger

Phelps Memorial Hospital Center initiates the process to join North Shore-LIJ Health.

Last week, Phelps Memorial Hospital Center’s Board of Directors unanimously approved a letter of intent to explore a partnership with the North Shore-LIJ Health System, which comprises a string of hospitals scattered across Long Island and New York City. Those already under the North Shore-LIJ umbrella include Lenox Hill Hospital in Manhattan, Long Island Jewish Medical Center in New Hyde Park, and Forest Hills Hospital in Forest Hills, Queens.

The partnership, if approved, would mark North Shore-LIJ’s first venture into the northern suburbs—and more broadly affirms the trend in hospital consolidation we’ve seen throughout the area in recent years, where free-standing community hospitals join larger, established healthcare systems. Many hospitals going this route are chasing greater scale to absorb rising healthcare costs and better adapt to structural changes underway as a result of the Affordable Care Act.

Dave Donelson wrote about this trend in Westchester’s Changing Healthcare Landscape in the Q2 issue of 914INC.

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Montefiore Medical Center CEO Steven Safyer told Donelson, “We’re seeking scale, not just because the cost per unit of laundry goes down, but because we want to have more lives under our care.” And Hudson Valley Hospital Center CEO John Federspiel shared this prediction: “…within 18 months, just about every community hospital in the county will have an affiliation with one of the hospitals in New York City.”

As for Phelps’ motivation, Richard Sinni, chair of the Phelps Board, said in a press release, “The primary objective of the Phelps Board of Directors in seeking partnership with an academic medical center has been to continue to provide the same, if not enhanced, quality services that our community has come to depend upon.” And contrary to what you might expect, Phelps President and CEO Keith Safian told us that “Phelps is financially stable, which is unusual for a hospital in New York” and that “the hospital has been profitable for 23 out of the past 24 years. In 2013, our bottom line was $4.7 million, and our cash on hand is strong.”

North Shore-LIJ is the largest private employer in New York State and the state’s largest integrated healthcare provider, with more than 48,000 employees, 17 hospitals, and more than 400 outpatient physician practices.

The merger is not expected to result in job losses or changes to the chief executive, board, or medical staff.

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