Long Island Business News
December 16, 2015
Collaboration and Consolidation
Looking ahead to 2016, hospitals and other healthcare providers will continue to make changes in response to healthcare reform. These includes consolidation, a move toward outpatient care and greater collaboration as the healthcare delivery system evolves from a fee-per-service model to one in which providers are paid for managing the health of a population.
“To make healthcare costs more sustainable over time, the approach the government has taken is to shift the delivery system to more accountable and more efficient care, in which the risk is being shifted from the payers – whether Medicare, Medicaid or private insurers – to the providers,” said Wendy Darwell, the Hauppauge-based vice president and COO of the Suburban Hospital Alliance of New York State, a trade organization that includes the Nassau-Suffolk Hospital Council. “The shift is toward a global payment system, in which providers get single payments to keep patients well – to keep them out of the hospital and make sure they receive preventive care.”
The paradigm shift is putting increased pressure on healthcare providers to be more efficient and to move toward economies of scale, thus leading to consolidation on all levels, Darwell said. Further, the reimbursement system is incentivizing healthcare providers to expand the network of providers and other organizations with which they collaborate.
“This past year has probably seen the greatest number of mergers and acquisitions in healthcare since the mid-1990’s,” said Terry Lynam, senior vice president and chief public relations officer of the North Shore-LIJ Health System, which will be known as Northwell Health in the new year. “Given the volume of activity this year, I’m not sure if 2016 will quite match it.”
In March, North Shore-LIJ announced a deal to acquire Peconic Bay Medical Center in Riverhead, giving the health system a presence on the East End while allowing Peconic Bay to continue meeting the needs of the communities it serves in an environment of declining reimbursements. The merger will be official Jan. 1, giving North Shore-LIJ 20 hospitals in the New York metropolitan area.
The health system’s 2015 acquisitions also included 14 physician’s practices with 16 locations. North Shore-LIJ now employs 2,318 physicians, having brought 513 additional physicians on staff so far this year.
“We will continue to see more activity when it comes to physician’s practices joining larger health systems,” Lynam said. “Physicians are now further along in responding to the challenges of the Affordable Care Act and now recognizing that in many ways having a large healthcare provider as a partner would ease some of the headaches of running day-to-day practices, such as dealing with electronic health records.”
Last week, Catholic Health Services of Long Island purchased the remaining 50 percent stake in Beacon Health Partners, a Westbury-based independent physician network with more than 200 practices and 670 affiliated physicians. This came on the heels of CHS and St. John’s Episcopal Hospital in Far Rockaway acquiring a 50 percent stake in the practice in 2014. CHS now owns 95.5 percent of the practice, with the remainder owned by St. John’s.
“We believe there will be further consolidation of the healthcare industry,” said Dr. Alan Guerci, president and CEO of Rockville Centre-based CHS. “In order to manage population health, more risk-bearing contracts will be developed. Also, we will see additional collaborative networks of doctors and hospitals emerge.”
It’s all about the DSRIP
New York State continues to implement the Delivery System Reform Incentive Program, which is restructuring the healthcare delivery system with the goal of reducing avoidable hospital use among the Medicaid population by 25 percent over five years (through 2019). A total of $6.42 billion has been allocated to the program, with providers receiving payouts for achieving system transformation and meeting population health benchmarks.
Stony Brook University Hospital is spearheading the Suffolk County Performing Provider System, one of about 25 PPS organizations throughout the state affiliated with the DSRIP. Stony Brook is collaborating with more than 500 organizations to meet the county’s DSRIP goals, including all county community health centers, the 11 county hospitals, skilled nursing and home health facilities, long-term care agencies, primary care physicians and specialists, behavioral health providers and pharmacies.
It’s an unprecedented collaboration, said Joseph Lamantia, chief of operations for population health for Stony Brook Medicine.
“We are getting together with these organizations, some of whom are our competitors, for the first time to come up with solutions collectively,” he said. “As a hospital, you see one side, but if you bring in other components you can gain insights along the entire continuum of care to develop a sustainable plan to achieve the goals.”
For the past year, Stony Brook has led the design and development phase of the Suffolk DSRIP, and the stakeholders are now on the cusp of implementation.
“The backbone of DSRIP is projects, including those focused on patient self-management for chronic diseases like hypertension, diabetes and asthma; integration of behavioral health and primary care; and transitions of care from one setting to another,” said Lamantia, adding the partners will be rolling out 11 projects in all, including one that was implemented in September.
The new structure known as CHS Beacon will help the health system achieve its DSRIP goals. CHS is partnering with both the Nassau Queens Performing Provider System and the Suffolk County Performing Provider System to improve performance metrics and long-term health for more than 200,000 people.
In the upcoming months, a major focus of CHS Beacon will be “to consolidate and better coordinate our efforts in population health, care management and care navigation programs…into one high-performing and efficient system,” Dr. Patrick O’Shaughnessy, senior vice president for medical affairs and chief medical officer for CHS, said in a statement announcing the deal.
In the new year, outpatient facilities will continue to pop up across the Island as care transitions from inpatient to ambulatory, with more and more procedures performed out of the hospital setting.
“Health insurers are not paying for inpatient stays or are looking to decrease the amount of time patients spend in hospitals, encouraging more care to be delivered on an outpatient basis,” Lynam said.
North Shore-LIJ projects that 58 percent of its revenue will come from inpatient visits and 42 percent from ambulatory visits in 2015, a significant change from just five years ago, when two-thirds of revenue stemmed from inpatient visits.
South Nassau Communities Hospital has seen a similar shift, with revenue from hospital patients trending down from 80 percent of total revenue 15 years ago to less than 60 percent today, according to Mark Bogen, senior vice president and CFO for the Oceanside-based hospital, which he said plans to “open and/or expand ambulatory sites to the east and west.” South Nassau also has plans to build ambulatory facilities in Long Beach to replace many of the services previously offered by Long Beach Hospital, which closed after Hurricane Sandy. South Nassau built an urgent care center in Long Beach last year and upgraded it to a freestanding emergency department this year, and is currently involved in community discussions about which additional facilities would best serve the barrier island, Bogen said.