What began as a trickle of mergers and partnerships has become a flood for New Jersey’s hospitals, which are increasingly exploring partnerships as a way to fend off the fiscal pressures of a new and changing health care landscape.
“Throughout the state and the country, you’re seeing consolidation in the industry,” said Robert Garrett, president and CEO of Hackensack University Medical Center. “There was almost a frenzy that started after health care reform was passed two years ago, and that frenzy has continued and accelerated. I think standalone hospitals that traditionally had no interest in joining a system or network are now rethinking those positions, because they’re wondering can they survive on their own in the future.”
Earlier this month, Hackensack UMC, along with partner LHP Hospital Group Inc., filed an application with the state Department of Health and Senior Services to take ownership of Mountainside Hospital from Kentucky-based Merit Health Systems LLC. That partnership continues to move forward on its plans to reopen the once-freestanding Pascack Valley Hospital, in Westwood, which shut its doors in 2007.
James Orlikoff, president of Orlikoff and Associates Inc., an international health care consulting firm in Chicago, told the New Jersey Hospital Association at the organization’s annual meeting in January that many factors contribute to the economic pressures being placed on hospitals, including some that are out of executives’ control.
“If nothing else had changed, if we were still in the middle of an economic boom, if we weren’t struggling with globalization, just the baby boom alone and the unprecedented impact of the largest and wealthiest generation in history retiring at the same time … would fundamentally destabilize and force us to restructure the economy and think about how we deliver health care services,” Orlikoff said.
Orlikoff also cited the pace of health care spending out-growing the national gross domestic product, changes to insurance reimbursement models and health care reform legislation as impetus for hospitals to change their business models.
Chilton Hospital, in the Pompton Plains section of Pequannock, is among them. Hospital executives announced to its staff Feb. 3 that a strategic positioning committee, comprised of board members and hospital administration, had been formed to evaluate options for partnerships or mergers.
Anna Scalora, director of marketing and public relations for Chilton, said there have been no formal meetings with potential partners, but it is well known in the industry that the hospital is in the game.
“It’s ubiquitous — it’s what every hospital system is talking about right now,” she said.
Another Morris County-based health system hopes to announce a partnership in the spring. St. Clare’s Health System, which operates four hospitals in Boonton, Denville, Dover and Sussex, and its parent company, Englewood, Colo.-based Catholic Health Initiatives, issued a request for proposals for partnerships in October. A spokeswoman said the board is evaluating a number of proposals; Catholic Health Initiatives said in a statement it hopes to replicate previous success in creating partnerships.
Not every hospital is convinced it needs to partner to survive the shifting landscape. Holy Name Medical Center, of Teaneck, had an offer on the table from Ascension Healthcare Network, but the hospital turned down the offer in early fall, according to Jane Ellis, vice president of marketing.
She said the hospital doesn’t have any plans that “deviate from business as usual.”
“We’re mainly setting our goals on trying to be financially efficient,” Ellis said. “We also recognize that health care is rapidly changing, and we’re putting together programs and services that will help us from wellness and prevention to end-of-life care. We provide service lines that go across the spectrum of aging … we are moving rapidly along those lines.”
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