Talk about your strange hospital bedfellows: Mount Sinai Hospital Medical Center, the 80-year-old medical center on Chicago's West Side built to care for Orthodox Jews, and the Accord Health Care Network of local Roman Catholic hospitals, formed about a year ago at the urging of the late Cardinal Joseph Bernardin, are talking about affiliating.
Mount Sinai's parent, Sinai Health System, initiated the talks with Accord, which won't lead to a merger, officials said. Rather, the two institutions would share managed-care contracts, clinical resources and patient referrals.
Sinai's drawing card: a $70 million, state-of-the-art renovation designed to boost capacity at the flagship hospital's maternity and child health unit, its trauma center and its nearby Schwab Rehabilitation Hospital and Care Network.
For Sinai, the negotiations with Accord are important. Because Sinai lacks any other well-financed suitors, the outcome could determine whether it flourishes in the long run or is relegated to the second tier of Chicago hospital competitors.
Long the state's poster child for struggling inner-city hospitals-about half its clients are Medicaid patients-Mount Sinai has held little appeal for Chicago's blue-chip medical center networks, such as Northwestern Healthcare or Rush System for Health.
If an affiliation with a major hospital player continues to elude Mount Sinai, the institution could become an also-ran as Chicago's half-dozen strongest competitors race to consolidate the region's healthcare services market.
"Mount Sinai, being dependent on Medicare and Medicaid, can benefit by being a part of a network with a broader slice of the commercial market," said healthcare consultant Daniel Schuh of University Park, Ill.-based Deer Creek Associates. "(Medicare and Medicaid are) not going to support a hospital in the long run," he said.
Mount Sinai has struggled as Chicago's hospital industry has become the province of well-financed medical center alliances.
The institution typically lives on the edge, with margins hovering around 1 cent to 2 cents for every dollar of revenue, and public-aid budget cuts spurring closure fears. In years past, executives have talked about some novel cost-cutting tactics-like reducing the number of times windows are washed at the hospital.
In June 1995, New York credit-rating agency Standard & Poor's Corp. placed Mount Sinai on CreditWatch "with negative implications" after the state reduced special payments to hospitals with high Medicaid populations. That move would have reduced revenues at the hospital by $25.5 million. But Sinai system officials warned the hospital would have to close immediately, prompting the state to restore about half that funding.
Mount Sinai appears to have stabilized its financial condition for the moment. For the fiscal year ended June 30, 1996, total revenues rose nearly 4% to $171 million. Net income jumped 47% to $2.9 million, although the net margin was a slim 1.7%.
More important, the hospital is now in the midst of its first major capital construction project, based on a $98.1 million bond issue insured last summer by the U.S. Department of Housing and Urban Development. The much-needed infusion will result in new maternal and child health facilities and a new trauma center.
Now, Mount Sinai President and Chief Executive Officer Benn Greenspan is striking an upbeat note: "We are comfortable enough that we are positioned to do well."
Mount Sinai, he added, is at the center of its own Medicaid managed-care alliance that already includes four Catholic hospitals.
Aside from the financial strength Accord brings to the table, the eight-hospital Catholic network, which includes Loyola University Medical Center in suburban Maywood, Ill.; Chicago's Resurrection Medical Center; and St. Francis Hospital in Evanston, Ill., "has people with a values orientation," Greenspan noted.
Of the potential synergies, Accord President and CEO Burton VanderLaan, M.D., said, "We share the same approach to faith-based (healthcare) systems."
VanderLaan added that Mount Sinai could provide more competitive firepower for Accord, in part, due to its rebuilding program.
If talks between 444-bed Mount Sinai and 2,873-bed Accord are successful, Sinai would become an important player in Accord's strategy to increase its Medicaid volume to profitable levels, while firming up Accord's West Side presence.
Although it was founded in 1919 to serve Chicago's Orthodox Jews, Mount Sinai today treats low-income patients who live in the hospital's predominantly black neighborhood, Hispanics in the nearby Pilsen community and Eastern European immigrants who live on the city's North Side.
A link with Accord-which reported 1996 operating revenues of $1.2 billion and combined assets of $1.7 billion-would enhance Mount Sinai's access to capital, increase its operating efficiencies and possibly attract more commercially insured patients.
An alliance between Chicago's major Jewish healthcare institution and the Catholic healthcare network certainly would be unusual.
Perhaps the most vexing issue is how Sinai and Accord might resolve sensitive issues relating to birth control and abortion, which are forbidden in Catholic healthcare institutions.
"There is no requirement for us to comply with any religious tenets we're not already doing," said Mount Sinai's Greenspan.
Even with an Accord affiliation, Mount Sinai will surely retain its Jewish character-unlike its former South Side counterpart, Michael Reese Hospital and Medical Center, which was bought by Louisville, Ky.-based Humana in March 1991, triggering an exodus of support from Chicago's Jewish community.
"The most direct, simple answer I can give you is, at the core of its soul, Sinai is a Jewish institution," said Joel Carp, senior vice president at the Jewish Federation/Jewish United Front of Metropolitan Chicago, which is the Jewish community's overall fund-raising, planning and community services organization. "No matter what happens, it's our Jewish hospital."