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Northwell Health report recommends consolidation of struggling Brooklyn safety-net hospitals

The four hospitals combined will require more than $300 million in state operating assistance in FY2017 to keep doors open, the report says.

Beth Jones Sanborn, Managing Editor

Photo by <a href="https://commons.wikimedia.org/wiki/File:KJMC-Main-Photo.jpg"> Wikimedia </a>Photo by Wikimedia

A long-awaited report by Northwell Health on how to ensure the survivability of four struggling Brooklyn hospitals commissioned by the state Department of Health is suggesting the hospitals merge into one regional health system.

Northwell's 37-point plan recommends the consolidation of the four hospitals -- Brookdale University Hospital and Medical Center, Interfaith Medical Center, Kingsbrook Jewish Medical Center and Wyckoff Heights Medical Center -- into a single entity to share resources and align their governance and management.

This prescription comes none too soon: In fiscal year 2017, the four hospitals combined will require more than $300 million in state operating assistance to remain open, the report said.

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[Also: Northwell Health to spearhead effort to save struggling Brooklyn hospitals, scores $500,000 to fund study]

Early this year Northwell Ventures, the consulting division of Northwell Health, was awarded a grant to conduct the feasibility and sustainability study for the state, which in 2015 approved $700 million for the creation of the Kings County Health Care Facility Transformation Program. These capital funds were earmarked specifically for bettering the organization and delivery of health services among hospitals that fit the profile of the four that were studied -- facilities that are struggling financially due to factors such as declining inpatient admissions, a patient mix that approaches 90 percent public payers and charity care, and an aging or insufficient physical infrastructure.

"The overarching goal here is to figure out a way to provide comprehensive, sustainable healthcare to these vulnerable communities," said Terrance Lynam, senior VP and chief public relations officer for Northwell Health. "The key recommendation is the restructuring of the four hospitals into a regional health system, developing an extensive primary and ambulatory care network, and also developing what's known as a health enterprise zone that would focus on addressing some of the social determinants of health."

One of the reasons the state asked Northwell to look at those hospitals in particular, said Lyman, is because there are a lot of health disparities in the communities served by those facilities, including higher rates of disease, mortality, that are leading some to flee the area altogether.

[Also: Northwell Health, Davita join forces to deliver, expand kidney care services]

"A lot of residents there are leaving the borough to get care, and those who are availing themselves of their services are going to the emergency departments," said Lynam. "The majority of those conditions for which they're being treated should not be treated in the emergency room."

Part of the challenge is that, aside from federal and state budgetary restraints, new payment methodologies require a major overhaul of the clinical and business model of care. Advances in medicine mean that many services once offered exclusively by hospitals are now delivered efficiently, and effectively, in an ambulatory or home setting. This places hospitals like the ones in Brooklyn at a disadvantage because, lacking geographically dispersed ambulatory care networks, they can't offset declining inpatient revenues with with growing ambulatory revenues, a must when it comes to success under value-based purchasing.

One thing the study makes clear: It's virtually impossible for the four hospitals to survive as stand-alone facilities.

While Northwell Ventures is offering up a framework for consolidation, the group warns that it's important to manage expectations. The proposed transformation would likely take about five to seven years to accomplish, largely because it would require the creation of a new governance structure, a restructuring of clinical services and the development of an ambulatory care network, not to mention capital investments in the inpatient facilities themselves. The system would also require additional operating support and capital investment beyond the $700 million provided through the Transformation Program, which would seek to maintain current staffing levels.

[Also: EmblemHealth, Northwell partner in health plan/provider shared-risk agreement]

"These hospitals are standalones," said Lynam. "They don't have the benefit of being part of a large healthcare organization. More than 80 percent of the patients being treated by those hospitals are either on Medicaid or Medicare; there are a very low number of patients who are covered under commercial insurance plans. The reimbursement rates make it very difficult to operate in the black, or even break even."

Aside from revamping the governance structure and establishing an ambulatory care network, the combined entity would need to make critical infrastructure investments in technology, applications and equipment to position itself for future growth in the world of population health, the report said. A common IT platform would need to be established in order to bolster care, patient outcomes and optimize revenue cycle opportunities. A new ambulatory electronic medical record was also advised by Northwell.

The new health system should also develop a managed care contracting entity that would be responsible for joint fee-for-service and value-based contracting for the hospitals and its independent practice association, according to the report.

Additional recommendations include partnering with unions to retrain staff in ambulatory care; decreasing the reliance on foreign medical school from student clerkships to accommodate medical students from downstate; and developing a program to position the system as an economic engine for the surrounding communities. A little rebranding would also be in order, according to Northwell.

If these changes are implemented, the study estimates that the annual projected operating deficit of $405 million could be slashed to $228 million by 2021, a $117 million difference.

Assuming that happens, Lynam said this consolidation plan may well serve as a template for other disadvantaged community or safety-net hospitals throughout the country.

"I do think overall it could serve as a guide for other financially distressed hospitals that have not been able to partner up with larger health systems, and are out there on their own," said Lynam.

Twitter: @JELagasse

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