An ambitious merger involving two of New York's most prestigious academic medical centers may or may not proceed without a hitch, but it is likely to whip up a frenetic game of musical chairs.
The agreement, announced last week, would merge the hospitals and medical schools of New York's Mount Sinai Medical Center, New York University and New York University Medical Center.
The Big Apple's healthcare establishment is defined by big-time hospitals, big-name medical schools and big-shot egos-all of which contribute to the difficulty of achieving concord. But at the stroke of midnight on June 30, the state's hospital rate-setting system will expire, unleashing a bidding war between competing hospital networks and managed-care plans. The financial pressures of supporting expensive research and teaching programs, looming Medicaid cuts and an excess of beds in the market are forcing providers to partner.
"Standing alone just doesn't make sense anymore," said Gary Horan, president and chief executive officer of Our Lady of Mercy Medical Center in the Bronx, a member of New York's 32-member Catholic Health Care Network.
Yet such a mega-merger of academic medical centers has not been seen since Hahnemann University in Philadelphia agreed in November 1994 to merge with Pittsburgh-based Allegheny Health, Education and Research Foundation, the parent of Philadelphia's Medical College of Pennsylvania and Allegheny General Hospital in Pittsburgh.
"(The Pennsylvania deal) is the only such merger between two private, independent academic medical centers....including both the medical schools and the tertiary academic teaching hospitals," said Jordan Cohen, M.D., president of the Association of American Medical Colleges in Washington. Currently, there are 125 medical schools in the country, which graduate 16,000 doctors every year.
Observers say the Mount Sinai-NYU combination is a natural match. Each academic medical center is managed by a single chief executive who oversees medical school and hospital operations. That helps to reduce some of the red tape.
With a regional network of 26 hospitals, 13 long-term-care facilities and three physician groups, Mount Sinai is the stronger partner in healthcare delivery, while New York University School of Medicine attracts more medical research dollars.
Under the agreement announced last week, Mount Sinai Medical Center and NYU Medical Center will combine operations, creating a medical center with 2,260 licensed beds, 1,300 staff positions and $1.4 billion in annual revenues. Mount Sinai President John W. Rowe, M.D., said he has been asked by the institutions' trustees to serve as president of the combined hospitals and health system.
Trustees of Mount Sinai, NYU and NYU Medical Center have begun the arduous process of hammering out a definitive agreement and developing and implementing a transition plan. They expect to complete the merger in a year.
A new NYU-Mount Sinai School of Medicine will operate as an academic unit of New York University. The consolidated medical schools will have more than 1,600 students, a faculty of 3,600 and $190 million in research grants and contracts.
For the year ended Dec. 31, 1994, Mount Sinai Medical Center recorded $971,000 in net income on net patient revenues of $728.4 million. Mount Sinai School of Medicine had net income of $5.6 million on total revenues of $450.7 million. Financial data on New York University Medical Center were not available.
Management and board members at both institutions seem committed to pulling off the deal. Still, some observers question whether the plan can be carried out in full.
Combining hospital operations will be easy and makes a lot of sense, said William T. Speck, president of New York's Presbyterian Hospital. But the argument for merging the medical schools, a difficult task at best, is less compelling because neither is having trouble attracting students, he said.
"I myself am somewhat worried about the merger in the sense that I'm not sure that it's actually going to happen," said Howard Berliner, a professor of health services management and policy at New York's New School for Social Research. Berliner said he fears that market share controlled by the combined medical centers through their own facilities and network affiliates could become an issue for Federal Trade Commission scrutiny.
Furthermore, Berliner said it won't be easy melding relatively distinct campuses and reducing duplicative clinical chairmanship positions.
"I think this is going to create some scramble effect," said Speck, who is already engaged in partnership discussions with New York Hospital President David Skinner, M.D. Within the next four to six weeks, Speck said he hopes they'll reach agreement on management issues, paving the way to a potential partnership.
New York currently supports six academic medical centers, including one state-run facility in Brooklyn.