YNHH acquisition of St. Raphael’s approved by the FTC

Officials are looking at considerable savings and new opportunities

Among the 300 people attending a January cocktail receptions for physicians from both Yale and St. Raphael’s were Robert Alpern, MD, dean of the Yale School of Medicine, and Christopher O’Connor, president and CEO of the Hospital of Saint Raphael.

Yale-New Haven Hospital (YNHH) and the Hospital of Saint Raphael (HSR) are taking the last steps toward becoming one institution. If all goes well in the next weeks, the acquisition will be effective on July 29.

At that point, the two hospitals will become one 13,000-employee 1,519-bed entity providing care on two medical campuses under the Yale-New Haven banner, making YNHH one of the five largest hospitals in the United States.

“There is great anticipation about the opportunities presented by this new relationship,” said Peter Herbert, MD, chief medical officer for YNHH, adding that the merger is expected to result in considerable savings for both hospitals, as well as better access and improvements in clinical care for patients.

According to David J. Leffell, MD, deputy dean for clinical affairs for the Yale School of Medicine, “The acquisition will provide unprecedented opportunities and some meaningful challenges, but the effort will be worth it.”

At the OHCA hearing in June, officials heard testimony from four speakers (shown l-r): Peter Herbert, MD; Alan Kliger, senior vice president and chief medical officer for HSR; Christopher O’Connor; and Marna P. Borgstrom, chief executive officer of Yale-New Haven Hospital.

Progress in recent weeks

In May, the Office of the State Attorney General and the Federal Trade Commission (FTC) completed an antitrust investigation by agreeing not to block the acquisition. This month, representatives from the hospitals gathered to present their case to the state Office of Health Care Access (OHCA) to examine a certificate of need and approve the deal. Final approval will weigh on OHCA’s review of such criteria as access to services, cost-effectiveness, financial feasibility and quality of service.

If OHCA’s approval goes through, YNHH will run both campuses under a single organizational structure and license, with one medical staff and one workforce. Integration of clinical services and electronic recordkeeping—with implementation of the new Epic system—will occur over the next year.

Medical campuses on both York Street and Chapel Street, will feature active emergency departments, as well as departments of obstetrics and gynecology, medicine, psychiatry and surgery, Dr. Herbert said. He anticipates some services, such as major trauma and pediatrics, will be consolidated on the York Street campus, while there are plans to create a musculoskeletal institute on Chapel Street incorporating such related services as anesthesia, endocrinology, neurosurgery, neurology, orthopaedics and physiatry.

About 80 percent of the physicians at Saint. Raphael’s are already credentialed at YNHH, and the remaining 400 doctors should be credentialed by July 29. “The Hospital of Saint Raphael has 132 physicians in their graduate medical education programs, and there will be great opportunities for the Yale School of Medicine to pull these together and optimize these programs,” Dr. Herbert said.

A solution to capacity challenge

Most importantly, the integration will address significant capacity challenges at YNHH, while bringing financial stability for HSR, which experienced tough fiscal problems for five consecutive years starting in 2005, including a $17 million loss in 2008. Speaking to reporters at this month’s OHCA hearing, Christopher O’Connor, president and chief executive officer of the Hospital of Saint Raphael’s Healthcare System, said, “We can no longer exist as a stand-alone provider. ... Independence is not an option for Saint Raphael’s.”

The integrated hospital is expected to realize savings of almost $300 million over five years as a result of the acquisition. YNHH won’t have to spend $622 million on a new patient tower to alleviate a space crunch, because it will have access to 511 hospital beds at HSR.

“There should be considerable benefit to the community with these expense savings, together with improved access and clinical care improvement as a consequence of consolidation,” Dr. Herbert said. “For Yale-New Haven Hospital, this will provide considerable near-time relief from the great capacity challenges we have faced over the last two years.”

For more information and regular updates on the merger, visit http://www.newstory.org.