Upstate University Hospital offers proposal to collaborate more closely with Community General.
Community General Hospital is considering a proposal from Upstate University Hospital to former a closer relationship. At the same time, Community is halting its work on merging with Crouse Hospital.
Upstate University Hospital has worked out a proposal on ways the hospital could work more closely with Community General Hospital.
Syracuse, N.Y. -- Community General Hospital has put the brakes on merger plans with Crouse Hospital so it can entertain an unsolicited overture from Upstate University Hospital.
After talking to Crouse about merging for more than seven months, Community wants to look at other options, said Tom Quinn, Community’s president and CEO.
Community’s directors decided at a meeting Tuesday not to take the next steps in the merger planning process with Crouse. Those steps would have been conducting due diligence and asking the state for permission to merge with Crouse. The board at Crouse had voted to move ahead. The hospitals had hired a consulting firm to perform a $700,000 merger feasibility study.
“We are interested in continuing our planning discussions with Crouse, just not on an exclusive basis,” Quinn said.
Dr. Paul J. Kronenberg, president and CEO, called the action by Community a “disappointment.”
“We believe that there were strong opportunities for collaboration with CGH that would, over time, create cost efficiencies as well as patient benefits,” Kronenberg said in a staff memo.
Quinn said he received an unsolicited proposal earlier this week from Upstate. He refused to disclose any specifics about the proposal which he described as a comprehensive strategic affiliation.
Dr. John McCabe, Upstate’s chief executive officer, said Upstate had maintained an interest “at a distance” in the Crouse-Community General merger talks because any outcome of those discussions would affect Upstate. That’s because Upstate, a teaching hospital part of a SUNY academic medical center, collaborates with both hospitals clinically and has doctors in training who work at both institutions.
McCabe said within the last week several third parties, whom he would not identify, asked Upstate to produce a document outlining its ideas on forming a closer collaboration with Community. He said that document was reviewed by Community’s board and influenced its decision Tuesday not to proceed with the Crouse merger.
» Read the memo sent to Community General employees
Upstate doctors already run Community’s emergency department and inpatient rehabilitation unit, McCabe said. The proposal would create even more collaborations like that, he said. The proposal seeks to preserve some of Community’s mission and expand Upstate’s mission, he said. Upstate is “bursting at the seams,” McCabe said.
Inpatient volume has been growing at Upstate and shrinking at Syracuse’s three other hospitals that serve the general public. Here are their 2009 inpatient market shares: St. Joseph’s, 31 percent; Crouse, 30.7 percent; Upstate, 26.1 percent, and Community, 12.2 percent.
Hospitals are facing a rapidly changing environment with significant reductions in Medicare payments anticipated as a result of federal health care reform.
“You could argue that a bigger system will be better able to manage those changes and small places will continue to have difficulty,” McCabe said.
Crouse and Community General affiliated in 1999, but scrapped that partnership three years later. The alliance was supposed to help the hospitals cut costs and improve services, but it didn’t work in part because the hospitals did not combine clinical services. The partnership also was derailed by Crouse’s 2001 bankruptcy filing.
Crouse and Upstate also have tried unsuccessfully to merge several times.
Tom Dennison, a Syracuse University professor and health care expert, said Community is wise to consider Upstate’s proposal. “A prudent organization needs to be careful about choosing what path to go down,” he said. “If they have another proposal they have a fiduciary responsibility to take a look at that.”
Ruth Heller, area vice president of SEIU 1199, the union representing workers at Crouse and Community, said she was surprised by the turn of events.
When Upstate and Crouse attempted to merge in 2001, 1199 hired a consultant who did a study that predicted combining a public teaching hospital with a private non-teaching hospital would not work. The union opposed the proposed merger.
“We have the same concerns now we had in the past,” Heller said.
Peter Banks, who heads the Public Employees Federation union at Upstate, said his union has not taken a position on the new proposal.
"We've got an open mind, but we need more information before we can make a decision," Banks said.