Mount Sinai eyes Long Island expansion

Mount Sinai Health System may soon expand its reach on Long Island.

The health system has begun negotiating a formal affiliation agreement with South Nassau Communities Hospital, a 455-bed facility in Oceanside, the two sides said in a joint statement Wednesday. The deal could "lead to an alignment of medical services, management and governance," according to the statement. If negotiations are successful, South Nassau would become the eighth hospital for Mount Sinai, an $8 billion system.

It would also represent the latest example of suburban hospitals joining forces with larger health systems as they seek partners with deeper pockets and extensive medical expertise. Last year NYU Langone Medical Center added Winthrop-University Hospital in Mineola, Long Island, while New York-Presbyterian, Northwell and Montefiore Medical Center have expanded into Westchester in the past few years.

South Nassau expects to receive $120 million in capital support from Mount Sinai as part of the affiliation agreement, Richard Murphy, the hospital's president and chief executive, said. Several health systems responded to South Nassau's request for proposals.

"Our propensity was to focus on the science of medicine and healthcare delivery," Murphy said. "Mount Sinai brought forward that science better than others."

The Manhattan-based system includes a flagship campus and a medical school in East Harlem as well as four hospitals in Manhattan, one in Brooklyn and one in Queens. Under the affiliation agreement, South Nassau would become Mount Sinai's Long Island flagship.

"We always had a desire to grow our program on Long Island. We have many loyal patients on Long Island that for generations have sought Mount Sinai care in Manhattan," said Dr. Kenneth Davis, Mount Sinai's president and chief executive and a Syosset native. "With a growing number of affiliated physicians there, we knew we needed a hospital presence."

South Nassau had partnered for decades with Winthrop through the Winthrop South Nassau University Health System. But when Winthrop jumped at an offer from NYU Langone, South Nassau started its search too, spending about a year weighing options, Murphy said. Deloitte Transactions and Business Analytics assisted the hospital with the process.

The way hospitals are paid is shifting, with systems such as Mount Sinai earning money for keeping patients healthy and out of their facilities, rather than for each test and procedure they perform. That shift has created an incentive for hospitals to seek out additional patients to manage, especially ones with commercial insurance. Private insurers pay higher rates than government programs such as Medicare and Medicaid do, and South Nassau treats a high percentage of patients with private insurance.

Mount Sinai may also attract patients who need complex—and expensive—surgeries not performed at South Nassau, such as heart and kidney transplants. Murphy said he believes preoperative and postoperative care for those procedures could be performed at a lower cost on Long Island.

To finalize the deal, the two sides will need approval from both the state Department of Health and the Federal Trade Commission. Murphy expects the affiliation to be completed late this year or early next year.

"Mount Sinai eyes Long Island expansion" originally appeared in Crain's New York Business.