Compared with the Lifespan-Care New England merger plan, this one seems simple: just two community hospitals and their ancillary operations, serving similar demographics, coming together to save costs in a tough economy.
Even the Catholic-secular connection has been uncontroversial. Informational meetings held in recent weeks were sparsely attended. If St. Joseph Health Services of Rhode Island and Roger Williams Medical Center want to merge, it seems, no one’s going to stand in their way.
But for anyone wondering why the other, much-bigger plan is taking so long to be completed and wend its way through the regulatory system, a look at this smaller plan is a lesson in the complexity of health care – and the challenges in connecting even similar organizations.
The case for the “affiliation,” as the hospitals have called it, is simple: It’s a tough economic environment, and being part of a system rather than independent, as they see it, is a big help.
In this fast-changing health care market, the application notes, “it has become increasingly difficult for smaller independent hospitals to survive.” Without a merger, it adds, “it is unclear how far into the future both entities can survive on their own.”
By coming together, on the other hand, both hospitals estimate they can save $15 million in the first three years alone, and ultimately about $7 million per year through “administrative and support efficiencies” and $8 million per year from clinical-services integration, department-level consolidations, supply-chain consolidations and other changes.
Altogether, the savings would equal about 5.3 percent of the hospitals’ combined operating budgets, the application estimates – a huge improvement given that each lost money on operations for three of the five years between 2003 and 2007 (the latest year for which complete figures are available); in 2007, Roger Williams eked out a 0.07 percent operating profit, while St. Joseph had a 1.3 percent operating loss, figures compiled by the state show.
But achieving those savings won’t be simple.
For starters, both organizations are more complex than is immediately obvious. Roger Williams not only runs its hospital, but Elmhurst Extended Care (a nursing home) and physician offices, plus it’s a partner in a for-profit radiation therapy facility. It operates senior centers in four communities, and it runs a home-care service.
All those services, the application stresses, will continue to be offered by the combined entity, to be known as CharterCARE Health Partners – in most cases, just as they’re offered now, but in other cases, in some consolidated form, if it’s deemed to be more efficient.
“There will be no reduction or elimination of clinical services as a result of the conversion,” the application notes. But “consolidation,” it says, is expected to happen in lab services, outpatient rehabilitation, home care, hyperbaric medicine, occupational health, bariatrics, oral surgery and hospice care.
And “centralized management and clinical direction” will affect an even broader range of services, from diagnostic imaging, to psychiatry, geriatric pharmacy and emergency care. Cancer services, orthopedics, neurosciences, pain management and other functions are also likely to be consolidated, the application says.
But the whole process of bringing the two entities together is so complex that the plan doesn’t even envision clinical services starting to be consolidated for three to five years after the merger – only after nonclinical functions have been integrated.
Given that time frame, the hospitals acknowledged, it’s hard to know how things will actually work out. “In these fast-paced, changing times in health care,” the application notes, “it is difficult to predict what changes will occur within one year, and virtually impossible to determine what will occur in 10 years, particularly because so much of what impacts hospitals is out of the actual control of hospitals,” such as reimbursement rates and legislation.
Fortuitously, the application notes, both hospitals have adopted “very similar technology strategies,” using the same fiber infrastructure, the nonprofit OSHEAN coalition, to connect their facilities and the same software vendor, Meditech, for their clinical, administrative and support IT systems.
Still, doctors at Roger Williams won’t just be able to plug into the Fatima system on day one. Within 180 days, the application predicts, both entities’ networks will be accessible at each other’s locations. Additional integration will take much longer.
In terms of staffing, the plan doesn’t envision major cuts at all: The two entities combined are starting with 2,435 full-time-equivalent employees, the application says, and over three years, they will cut a cumulative 39.8 FTEs due to “efficiencies” – but they also expect overall volume at the hospitals to grow by about 2 percent per year, requiring 90 new FTEs. The bottom line: a net gain of 50 jobs by the fourth year of operations.
Even without controversy or significant public input, the complexity of the application and the regulatory process set out by the Hospital Conversions Act is such that the merger can’t go through for many months still. Public comment is being accepted through June 17.
As for Lifespan and Care New England, which first unveiled their merger plan almost two years ago – in late July 2007 – both entities still say they’re committed to moving ahead, but they’re not even guessing on a time frame these days.
“We continue to work through the application process,” said Lifespan spokeswoman Linda Shelton. “It is very complex and complicated, because we are applying for seven hospitals and two health systems, so it’s just been a very long process to work our way through.”
How long then?
“You know, my crystal ball cracked,” Shelton quipped. “I couldn’t even hazard a guess.” •
