The boards of directors for Faxton-St. Luke’s Healthcare and St. Elizabeth Medical Center have unanimously voted to move forward with an affiliation agreement and the submission of a certificate of need application to the state Department of Health. The boards signed a memorandum of understanding to affiliate the two organizations in December 2012.
“For the past year, we have been working through a number of steps including the review of legal and financial due diligence for the hospitals, meetings with a number of agencies within the Department of Health as well as representatives from the Federal Trade Commission,” Scott Perra, president and chief executive officer of Faxton-St. Luke’s Healthcare, said in a news release.
“We are pleased that we can now move to the next step, having our application reviewed by the DOH,” Perra added.
The hospitals submitted the application on Oct. 4 and are waiting to hear from the DOH about when the proposed CON will be on the agenda of the state Public Health and Health Planning Council.
They are hoping it could be as early as December of this year.
During a meeting with the O-D editorial board on Wednesday Perra and St. Elizabeth President and Chief Executive Officer Richard Ketcham said the formal affiliation could take place as soon as April 1.
The state and Federal Trade Commission still have to green light the affiliation, though, and the April 1 prediction relies on speed.
“Another step in the process is to file a notification with the Department of Justice under the Hart-Scott-Rodino Act. These types of affiliations are reviewed from an antitrust perspective,” Perra said in the release. “We anticipate that filing will take place by mid-October.”
The Hart- Scott-Rodino Act, signed into law in 1976 by President Gerald Ford, requires large companies to file a report with the Federal Trade Commission and Department of Justice before completing a merger, acquisition or transfers of securities or assets. Under the provision, government regulators determine whether the transaction would violate antitrust laws.
Ketcham and Perra anticipate the next steps will take between three to six months to finalize.
If the timing does not work out, the affiliation might not be finalized until closer to July 1, the CEOs said.
“I wish to commend both boards and our employees, medical staff and volunteers for their incredible patience and understanding,” Ketcham said in the release. “We have been working on this since December 2011 when our boards first agreed to explore the concept of affiliation. Throughout this process, the Sisters of St. Francis of the Neumann Communities and the Syracuse Diocese have been very supportive of our efforts, and involved with every step.”
The name of the proposed parent organization that will govern the two facilities is Mohawk Valley Health System. A new board of directors comprised of 18 members with equal members from the FSLH board and the SEMC board will govern the proposed parent organization. Each hospital will still maintain a separate board, which will have significant overlap of members with the parent board. Perra will serve as the CEO and will oversee the management team for both organizations.
Page 2 of 2 - The CEOs did reveal one condition of the affiliation not previously announced during their meeting with the O-D editorial board on Wednesday.
Although Faxton-St. Luke’s will still be allowed to do tubal ligations and other sterilization procedures, hospital officials agreed to two ethical conditions, Perra said: Faxton-St. Luke’s will never allow physician-assisted suicides, should they become legal, and the hospital will never allow abortions of healthy babies with healthy mothers. That condition still allows abortions to save the life of the mother, emergency care for women who experience complications during abortions elsewhere and, under certain circumstances, abortions for women with health problems who cannot safely have abortions in a community clinic, Perra said.
The affiliation is the result of intense financial pressures and changes in the health care industry that make it hard for the hospitals to survive on their own. Hospital officials have said Faxton-St. Luke’s has lost $4.3 million so far this year. Both hospitals have had layoffs and made other staff cutbacks this year.
“The hospitals cannot continue as they currently are. We need to reduce our costs, improve our quality,” Ketcham said.
Consolidation and joint partnerships are not new for the organizations. Faxton Hospital and St. Luke’s-Memorial consolidated their services in 2000.
SEMC and FSLH jointly sponsor the Mohawk Valley Heart Institute and have a collaborative agreement for the Central New York Diabetes Education Program.
The two organizations employ nearly 4,500 employees and have combined operating budgets of more than $500 million.
GateHouse New York reporter Amy Neff Roth contributed to this report