Today's milestone for the community

At 4:48 p.m. today, Dr. John McCabe and I signed the final documents, completing the sale of Community General Hospital to SUNY Upstate Medical University, effective 12:01 a.m. tomorrow.

This is a milestone for health care in Central New York. This allows our hospital to continue its service to the community under the aegis of Upstate. This allows the physicians on the medical staff to continue serving their patients at the Community General campus. This keeps most employees in jobs and brings the significant potential of a larger hospital and the academic world.

This helps our hospital prepare for the many changes coming from health care reform, as well as from the challenging demographics and economy.

Achieving this milestone has taken the hard and conscientious work of many, including and especially Dr. David Smith, University's President, Dr. John McCabe, University Hospital's President, and their highly capable staffs.

Community General's board of directors has consistently kept in mind the best interests of patients and the community-at-large, as well as the hospital's stakeholders.

My thanks to Steve Infanti, our board chair, for the past nine years of his leadership (and for many more years, before that). I thank John Hession, Chet Amond, Jim Getman, and all our board members, including the physicians whose participation has been invaluable.

The State Health Department worked diligently to review Upstate's certificate of need application, including the detailed due diligence that was completed within the Department's otherwise demanding agenda from across the state. In fact, all divisions of government, including the Governor's staff, the State University of New York, the Department of Budget, the Attorney General, and the State Controller worked carefully and in a focused way to approve the complex transaction.

I would like to acknowledge the many elected officials who supported the Upstate-community combination, and I specifically reference State Senator John DeFrancisco, whose work was personal and unflagging on behalf of the acquisition. County Executive Joanie Mahoney also was very helpful.

Excellus, the area's largest health insurer, has worked for this moment for more than a dozen years by sponsoring community studies and by encouraging hospitals such as Community General to work toward a well-planned consolidation. My special thanks goes to David Klein, Chairman of the Lifetime Healthcare Companies (the parent company of Excellus) and to Chris Booth, CEO of Excellus BlueCross BlueShield of CNY.

I salute Community's employees who, despite worry, uncertainty, and distractions, always understood our hospital's unique role in the community and the importance of our continued caring. Finally, Community's management team deserves laurels for staying the course, for working hard in support of the combination, and for keeping the focus on patient services and quality throughout the complex process.

As I wrote recently to the board, there have been many instances of heroism and stamina in bringing the Upstate-Community combination to fruition. Too many, in fact, to recount, and so many, I do not know all of them.

In recent weeks many have expressed appreciation to me for Upstate's support and for the honorable way Upstate has worked with Community General and its employees. Such expressions have meant a lot to me, especially the kind words from individual employees and from patients and families.

To all who made this possible, thank you and congratulations. My best wishes to you, to Upstate, and to the community that is the ultimate beneficiary of this milestone.

Why 1199SEIU is worried

A recent letter writer to the Post-Standard suggested that Community General’s plans with Upstate University Hospital are somehow part of an “attack” on workers’ rights.

The writer said: “At a time when the rights of workers are under attack, it is important for people concerned with social justice to speak out when management and policy makers display insensitivity to process for the resolution of labor concerns. Such appears to be the case in the plans for the acquisition of Community General Hospital by Upstate Medical University.”

But the letter writer misunderstood what is happening at Community General. When Community becomes part of Upstate University Hospital, employees will continue to be represented by unions.

This is not a question of union vs. non-union. It is simply an issue of how Upstate structures its operations in a way that maximizes community benefit, fosters its mission, and preserves the most jobs for Community employees.

This week 1199SEIU held a rally in downtown Syracuse at which critical comments were made about Upstate for its approach in working to preserve the employment of Community workers. I would think that’s exactly what a union should be working for. But 1199SEIU cannot guarantee anyone's future without a job.

It is Upstate that offers Community workers continued jobs at the Community campus as part of the larger health care system.

To understand what’s behind 1199SEIU’s concerns, look at what’s happening.

In 2009 A.L. Lee Memorial Hospital (with over 200 employees) closed in nearby Fulton, NY. 1199 had a labor contract with Lee Memorial. The former hospital is now an urgent care center operated by Oswego Hospital.

This year Community General (with 1,100 employees) will become part of SUNY Upstate Medical University. 1199 represents about 800 of Community’s workers.

In our region at least two other hospitals with 1199 labor contracts also contemplating mergers with larger hospitals.

No wonder 1199SEIU is worried.

When I was asked about the rally and some of the statements made by 1199SEIU, I told reporter Jim Mulder: “As a business, 1199 is understandably worried about maintaining its client base.”

Jim's news report on the rally was published yesterday.

Our new name will honor our past

When employees of General Hospital of Greater Syracuse joined the then-new Community Hospital in November 1964, the new hospital changed its name. It became Community-General Hospital of Greater Syracuse.

The name is used today without a hyphen, but the link to General Hospital was important for many. It recognized their association with a caring institution that served the community for 69 years.

Leonard Markert, Sr., a long-time community leader and a past director of Community General Hospital, once spoke earnestly to me about the linkage. "Don't forget," he said, "where we come from."

Upstate has talked about Community General's tradition of caring, even as our campus becomes part of SUNY Upstate University Hospital -- a single hospital with two campuses, as described in the Certificate of Need application.

Upstate has considered several versions of the Community General name. As we anticipate the closing of this transaction on or about July 1, the name "Upstate University Hospital at Community General" recognizes the new role of this campus, as well as "where we come from."

"How excited I am . . . "

Yesterday, the Human Resources staff from Upstate University Hospital began a series of 24 meetings at Community General during April.

They are explaining the Upstate benefits and answering questions about working for Upstate. I attended the first two sessions yesterday and found the Upstate people friendly and very capable. My Community colleagues were engaged and asked good questions.

This morning, one of the employees who attended yesterday’s sessions wrote me:

My e-mail is to state just how excited I am for this new venture for me and to be part of such a large cutting edge Facility with many many opportunities for the staff at CGH.

I moved here . . . (from out-of-state) and worked in a hospital that was purchased four times. None of the owners were really interested in the hospital staff or took the time that Upstate has taken to keep the CGH staff informed.

I very much advocate for this venture and share my opinion as often as opportunity has risen . . .

The advantages Upstate brings to Community are becoming clearer day by day.

The CON has been filed

Upstate Medical University has filed the Certificate of Need (CON) application with the State Department of Health to acquire Community General Hospital. This is an important step as we work to complete the transaction on or about July 1, 2011.

The CON describes the acquisition and how it will benefit Central New York. It includes a discussion of the advantages for Upstate in meeting the existing need for services and in fulfilling its clinical, educational, and research mission in the future. The CON affirms that Upstate seeks to build upon Community's reputation and history and to provide employment opportunities for substantially all of Community employees.

Specifically, the CON states that Upstate’s business plan forecasts growth in the number of discharged patients at the Community campus to some 11,000 by the third year of operation. This is almost 30% more than our 2010 discharges.

In addition, Upstate expects the number of full-time equivalent (FTE) employees at the Community campus to increase to 1,025. That is about 18% above the hospital’s 2010 FTE count.

The CON also identifies efficiencies that are expected. For example, the Community campus will benefit from Upstate’s lower medical malpractice rates, from expanded service lines and from Upstate’s broader complement of specialty physicians.

As we embark on this next chapter of our hospital’s history, we can take pride in knowing that Community will become part of a regional health care system, that employment opportunities will continue, and that our physicians, work force, and our caring campus will continue to provide the quality care for which we are known.

More support for Community & Upstate

In a post on Thursday, I wrote:

Last week Community General's board of directors approved a resolution that accepted Upstate’s offer to acquire our hospital and its affiliated companies . . .

You read it here first. Today the Post-Standard reported on the Board's decision, based on my memo to employees, which you can read by clicking here.

The combination of Community with Upstate University Hospital has also been supported by the Auxiliary to Community General Hospital. Click here to see the Auxiliary's endorsement.

Are stand-alones an endangered species?

Today we read in the Post Standard that Auburn Memorial Hospital, Oneida Healthcare Center and probably "every hospital within 100 miles" is interested in some form of stronger affiliation with a larger health system.

In a very public way Community General Hospital has been pursuing its strategy of affiliating with another, stronger hospital since 2009.

The newspaper quotes Gary Fitzgerald, President of the Iroquois Healthcare Association:

Our region has a lot of . . . stand-alone hospitals. They just can’t afford to stay completely independent without exploring other options . . .

Last week Community General's board of directors approved a resolution that accepted Upstate’s offer to acquire our hospital and its affiliated companies. This represents progress in defining Community's future role in Central New York.

The board action is good news for the community that we serve, as well as our medical staff and hospital employees.

We are fortunate to have the opportunity to become part of SUNY Upstate's health system.

Scale and efficiency

At the CNYHSA meeting last month, there was one comment by a physician. Dr. Douglas Tucker works for MVP health plan so he was actually speaking as an insurer, rather than as a physician.

Dr. Tucker said that the acquisition of Community by Upstate would be “a catastrophe” because patient services at Upstate cost more than at Community. As a result, he asserted, the combined hospital would be more expensive for the community-at-large.

He wasn't speaking about hospital costs. He was talking about what insurers pay hospitals for care given to their beneficiaries. (Hospitals aren't able to disclose what we are paid by insurance companies. To do so would violate antitrust laws.)

Is Dr. Tucker's concern a valid one? Will the combination of Community and Upstate help or hurt the cost of care over the next five or ten or 15 years?

First, let's be clear about Community's prospects as an independent community hospital. They are not great, as has been widely reported, unless we become part of a larger hospital system.

So why are Community's prospects "not great" as a stand-alone, community hospital? There are several reasons. A loss of cases in profit-making services. A limited ability to cost-shift to private insurers when there is underpayment from government payers. The ever rising costs of the hospital business. And fewer physicians who replace themselves when they leave practice.

Community has lost profitable cases to free-standing ambulatory surgery centers. This profit-making volume helps a hospital like ours subsidize the money-losing services, such as medicine, psychiatry, and 24/7 emergency services.

Over the years some ambulatory surgery cases have migrated away from the hospital in favor of free-standing ambulatory surgery centers, which are typically owned by physicians. Why do physicians need the additional revenue? Because their incomes have been frozen or otherwise restricted for a number of years.

What about insurers, such as Dr. Tucker represents? Arguably, insurers have been paying more than their fair share to hospitals, given the increasing statutory and regulatory controls on Medicare and Medicaid. Like other hospitals, Community relies on private insurers to make up the difference. But private payers do not make up all the difference, and there is a limit to this cost-shift. Dave Oliker, MVP’s President, recently called the cost-shift a hidden tax.

With this pressure on hospital revenues, we have also seen hospital fixed costs going up. Hospitals shoulder the added cost of services no longer provided by private doctors (such as 24/7 hospitalist service). We've seen higher costs due to federally-mandated electronic medical records (EMRs). And there are greater capital costs as hospitals construct private rooms (the emerging standard) and update medical technology.

Add to that the problems of doctor practices. Many older physicians do not replace themselves when they leave practice. A shrinking supply of doctors means hospitals scramble to buy medical practices as a way of replenishing physicians (and not incidentally, as a way to avoid competing with doctors for ambulatory surgery cases).

Community has been clear about what it wants from its affiliation with a larger hospital system: we seek to spread the fixed costs over a bigger base of operations, we seek to avoid duplicate and costly capital investment, we seek an integrated delivery system, and we seek better access to capital. Upstate provides these things.

The question about hospital system efficiency cannot be answered by looking at the hospital payment rates negotiated last year by the health insurers. Those rates represent the embedded costs of the old system. We are talking about future costs of a reconfigured system. Scale and efficiency are everything in the future system – only the larger, more efficient, and well integrated health care organizations will weather the storm.

Community General Hospital cannot build such a system. So we will join one.

We believe that Upstate’s investment in Community is a cost-effective way to best use the expensive assets in which this community has already invested.

We believe the combination with Upstate will foster a more efficient hospital system in the coming years -- and for decades.

Dr. Smith goes to Community

This morning I was meeting with Dr. David Smith, President of Upstate Medical University. He asked if we could spend a few minutes walking around Community General Hospital, just to see the facility and to meet people.

It was a great suggestion.

On our impromptu walk Dr. Smith had the opportunity to meet and speak with perhaps 80 or 90 people.

He thanked everyone for the work they do and said our work at Community will continue to be important after we join with Upstate.

Dr. Smith commented several times about the good care a member of his family received at Community during a hospitalization two years ago. He spoke about Upstate's teaching mission, about changes in the medical staff bylaws to support the ongoing private practice of medicine here, and about respecting Community's identity within the Upstate system.

There were a number of questions, mostly about jobs but also about the mission of the hospital.

Dr. Smith said that different employment models are under consideration, and he acknowledged the concerns of employees, saying Upstate is working to address the concerns.

One nurse observed that Upstate must be interested in Community's available square footage. Dr. Smith said, "We're interested in the workers. What you do is important. We're interested in keeping 1,100 jobs and in continuing the high quality care you are known for."

Since his walk-through, several employees told me they were impressed with Dr. Smith's friendliness and his uplifting words.

There have been several questions about Upstate's organization, specifically how does Dr. Smith relate to Dr. John McCabe? Many employees have met Dr. McCabe in my employee meetings last year.

Upstate Medical University (UMU) is a large organization, a university, not just a hospital. Part of the State University of New York (SUNY) system, UMU has four colleges, plus University Hospital.

Dr. Smith is the President of SUNY UMU, the entire university. Dr. McCabe is the head of University Hospital. Dr. McCabe's official title is CEO at Upstate University Hospital and Senior Vice President of Hospital Affairs at Upstate Medical University.

Last week, when I met with the Auxiliary to Community General Hospital, one of the Auxiliary board members told me of the time she met Dr. Smith. It was several years ago when he was President of Texas Tech University. She saw him throw out the puck at a hockey game and asked him where he learned to skate. Dr. Smith told her he spent his early childhood in Toronto and learned to skate there. Later, as a student at Cornell University, he was a member of its hockey team.

Dr. Smith is a man of accomplishment. A pediatrician, he is also an avid outdoorsman. And he is a past Commissioner of Health for the State of Texas.

"A huge thing"

A recent comment on this blog observed that Community's intention to join with Upstate "is a huge thing" and employees "have every right to be scared."

It is a big deal, and not only for employees, but for the medical staff and for the community-at-large. It's a big deal in response to the big changes affecting all health care providers. There is an ongoing, significant consolidation in health care.

Look at what has happened to doctors in our community. A number of medical practices have merged, some doctors have left practice, and some groups have been acquired by hospitals. These changes over a number of years have consequences on services available at hospitals and on how much it costs hospitals to provide the services.

Add to that the higher costs of running a hospital (hospitalists, for example); the higher cost of mandates (such as electronic medical records); the cost of new technology; the restrictions, rules, the cost containment we have seen (and will continue to see) in Medicare and Medicaid, (and the limited ability of insurers and employers to make up the difference) -- these forces are inexorable, and they make the financial situations of stand-alone, community hospitals very difficult indeed.

We have seen this coming for a number of years. As I pointed out in my remarks before the Central New York Health Systems Agency (CNYHSA), the Syracuse hospitals have been considering mergers and consolidations since the 1990's.

I used the slide (above) to remind the CNYHSA about the various studies and reports that have recommended that Syracuse hospitals consolidate. You can find my full presentation here (click on "Tom Quinn's PowerPoint").

Community General Hospital is part of this industry-wide consolidation, and I expect such consolidation to continue, even increase, among New York's hospitals in coming years.

The question is not whether we can avoid such consolidation. The question is, given the massive changes in health care, what is best for our community and for the health care people caring for our community?

That’s why Community has sought a merger partner, first with Crouse Hospital and ultimately with Upstate Medical University. That is our Board’s responsibility – to assess the situation and, given the changes and the realities, to determine how Community General should best serve the community-at-large in the future.

There are and will be many technical and legal issues affecting the Community General combination with Upstate. All these issues have not yet been resolved. I believe our path with Upstate makes the most sense for our community, for Community’s employees, and for the medical staff.

We are working with Upstate to assure that Community’s mission, services and jobs continue as part of Upstate's larger organization and purpose. Let me call attention to the guiding principles, developed by Community and Upstate (available here), in which the importance of the existing workforces is recognized at both organizations. Upstate is a fair and honorable partner for Community, and I have confidence that the combination will ultimately be in the best interests of Community's employees.

For the most up-to-date information regarding affiliation and workforce issues, please see the Q&A section of the Community-Upstate website.

You read it here first

Yesterday I made the case for Community joining Upstate at an evening meeting of the Board of the Central New York Health Systems Agency (HSA). The HSA is a health planning agency for the region.

The HSA heard from Community and from Dr. John McCabe, Upstate University Hospital's CEO, as well as from the public. Among those speaking were members of Community's Board of Directors, employees from Community, and officials from 1199SEIU.

You can view the PowerPoint presentations from Dr. McCabe and me by going to the combined Community-Upstate website.

Also addressing the meeting was Ron Lagoe, Executive Director of the Hospital Executive Council (HEC). For almost 30 years the HEC has been the cooperative arm of the four Syracuse hospitals, working together to improve the health care system. The HEC members are Community General Hospital, Crouse Hospital, St. Joseph's Hospital Health Center, and Upstate University Hospital. Last evening the HEC said "the acquisition of Community General Hospital by University Hospital is consistent with the Hospital Executive Council objectives of improving efficiency and outcomes for regional health services..."

Following the public discussion, the HSA Board of Directors voted unanimously in support of a resolution that supports "the process and development of the proposed affiliation and acquisition of Community General Hospital by Upstate Medical University." The resolution is predicated on continuing services at Community's campus, enhancing the role and mission of Upstate, integrating private practice and teaching responsibilities, considering the suggestions of the public, and continuing to engage the HSA.

Last evening's public discussion was covered by the Post-Standard, YNN, WSYR, and CNY Central, but the news media left before the HSA Board voted -- so you read about it here first.

Earlier this week, I participated in a half-hour discussion about the CGH-Upstate combination with George Kilpatrick, along with Dr. David Duggan, Upstate's Chief Medical Officer. You can see that discussion on WCNY's Central Issues.

"A smart move"

Yesterday's Post-Standard published an editorial supportive of the proposed combination of Community General Hospital with Upstate University Hospital.

Here's the link to the editorial.

There is also a joint Community-Upstate website on this topic, and you can find that here.

A lot has been written about this already -- and no doubt there will be a lot more.

Our opportunity with Upstate

Today's Post-Standard has a story about Community's financial condition, based on a recent report by Moody’s Investor Services.

The Moody's report considers the flat population in Central New York, Community's smallest market share, and the cost of competing in the four-hospital Syracuse market. Moody’s concludes, correctly, that it will be difficult for Community to invest properly in the hospital in the future.

These are among the factors the Board of Directors considered in 2009 when it decided that -- as a strategy to better serve patients and our community -- Community should become part of a larger hospital system. And in a somewhat public way, we have been seeking the right hospital partner ever since.

Our discussions with Crouse Hospital were announced in the fall, 2009. They did not work out, but our planning with Upstate is going well.

We have largely completed many of the legal and financial reviews (“due diligence” process) that are necessary, and we have been able to add to Community's medical staff a number of physicians from Upstate, even in advance of a formal combination. These are good signs of progress.

Community has a strong medical staff and workforce and an excellent physical plant. We operate on a 42-acre suburban site. Our patient services are strong. Today's newspaper notes that Community has "the lowest rate in inpatient complications of any hospital in the city." Last year, Consumer Reports acknowledged us for low infection rates. HealthGrades recently awarded us for the sixth straight year, its overall excellence award in New York State for orthopedics care. Yes, that's in New York State.

And . . .Community was recently re-accreditated by the Joint Commission.

These advantages bring value to Upstate as it meets its academic, clinical and research missions in the broader Central New York region.

Remember, there is an old saw about risk and opportunity. The Moody’s report identifies risk for Community. Community and Upstate see the opportunity in doing something important for our community.

Employee meetings tomorrow

Since the poster appeared last week, several have asked me,"What's the big announcement?"

No big announcement -- just a progress report on the journey Community General and Upstate University Hospitals are making to become a combined hospital.

This round of meetings gives employees the opportunity to meet Dr. John McCabe, the President and CEO of University Hospital, and to hear him discuss our progress.

NOTE: Because of a conflict, Dr. McCabe will not be able to attend the 2 p.m. meeting, as planned. The other meetings will proceed as scheduled.

Dr. McCabe was appointed President & CEO at University Hospital and Senior Vice President for Hospital Affairs at Upstate Medical University in August 2009. He has been at Upstate for more than two decades and developed its Emergency Medicine residency training program. Dr. McCabe served as Dean at Upstate Medical University for six years in the 1990s. His national leadership positions include serving as Chair of the Board of Directors of the American Board of Medical Specialties, the organization that oversees the certification of physician specialists in the United States.

Dr. McCabe has served as editor of the journal, Resuscitation. He is a Past President of the American College of Emergency Physicians. He has served as a member of the American Board of Emergency Medicine since 1996 and is on its Board of Directors.

Dr. McCabe attended medical school at the SUNY Upstate Medical University, completed his internship at the Charles F. Kettering Medical Center in Kettering, Ohio, completed his residency in Emergency Medicine at Wright State University School of Medicine in Dayton, Ohio.

For those who cannot attend the meetings, I will provide a recap in several days.