When two stalwart New York hospital systems announced that they were going to talk about a joint venture and then backed it up with $6 million, people in the industry sat up and listened.
But with time ticking away and an undetermined amount of the grubstake spent, Mount Sinai-NYU Medical Center/Health System, New York, and North Shore-Long Island Jewish Health System, Great Neck, haven't accomplished a whole lot since their discussions captured headlines in March 1999.
In the wake of the merger frenzy that created both systems in the late 1990s, inertia seems to have set in.
The joint venture has taken the shape of "a slow-growing initiative" that has no deadline in sight, said Gary Rosenberg, who is senior vice president of Mount Sinai-NYU.
The five-hospital Mount Sinai-NYU system and 14-hospital North Shore system are merely in the early stages of their original, free-wheeling agreement to share clinical data and establish some best-practice protocols, according to Rosenberg.
By deadline, officials from North Shore had not responded to several requests for an interview.
"It's not a business relationship at the moment beyond the notion as to why would we be doing quality separately when we can do it together and thereby effect quality in both our systems," Rosenberg said.
When the joint venture was announced following several months of rumors, it could have easily been construed as a slow, cautious windup toward a merger of the two mammoth systems. At the very least, it was clear that the joint venture partners--who between them have an acute-care hammerlock on Manhattan, Queens and Long Island--ultimately were hoping to boost their negotiating clout with insurers and solidify their market positions (March 15, 1999, p. 22).
They had to tread very carefully, however. North Shore was still nursing the wounds from an unsuccessful antitrust challenge by the federal government over the 1997 merger of North Shore Health System in Manhasset and Long Island Jewish Medical Center in New Hyde Park. Meanwhile, Mount Sinai was recovering from its own contentious merger with NYU Hospital Centers in 1998.
There is a fine line between cooperation and anticompetitive behavior, noted Francis Serbaroli, a healthcare attorney with Cadwalander, Wickersham & Taft in New York.
"There is nothing wrong with cooperating in studying utilization patterns to develop clinical guidelines for the efficient provision of medical services, and that is something the government should and would encourage," Serbaroli said. "The wise thing to do in this circumstance is put together a plan and run it by the antitrust authorities--especially in light of the government's prior involvement with the North Shore-LIJ merger."
But Rosenberg insisted a year-and-a-half later that a merger never was and still isn't on the radar screen for either system.
"We are what we call `cooperating health systems,"' Rosenberg said, noting Mount Sinai has a similar relationship with 10-hospital Saint Barnabas Health System in New Jersey. "We just merged with NYU two years ago, and are still trying to work that one out."
Discussions with North Shore to date have centered on several different topics, some progressing better than others, according to Rosenberg. The two systems are partnering on several studies: one on treatment of pneumonia; another on quality issues related to nursing; and a third on the effects of Medicare payment changes mandated by the Balanced Budget Act of 1997.
Officials are also discussing "where we might cooperate around managed care," although that admittedly is a more sensitive subject. Rosenberg stressed that those discussions have led to no conclusions. The hospitals "are grappling" with how to have that kind of discussion without treading into the dangerous arena of rate sharing, he said, because that's an antitrust minefield.
"It's a very rudimentary beginning," he said about the entire venture. Rosenberg did not know how much the two systems, which each committed $3 million to the project, have spent to date. The intention from the beginning was to tap into the bankroll over a period of several years, he said.
Mount Sinai doesn't have a lot of cash to spare. In 1999, the system earned $20 million on $1.7 billion in operating revenue, a thin 1% margin. This year it expects to reap $40 million on $1.8 billion in revenue, Rosenberg said.
The loss of John Rowe, M.D., who had been president and chief executive officer of Mount Sinai-NYU but resigned last week to take the helm at Aetna U.S. Healthcare, will have no impact on the joint venture, Rosenberg said.