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St. Joseph’s to join second-largest Catholic health-care system

By Eric Reinhardt

Date:

SYRACUSE — St. Joseph’s Hospital Health Center has agreed to join the second-biggest Catholic health-care system in the nation, in a move to boost its standing in the changing health-care market as the national health-reform law is implemented.

St. Joseph’s Hospital on July 10 announced its intention to join Livonia, Mich.–based Catholic Health East (CHE) Trinity Health, which provides health-care services in 21 states via 82 hospitals and 89 other facilities and programs. The board of directors of both organizations signed a non-binding letter of intent the day before.

St. Joseph’s expects to finalize the agreement with CHE Trinity in about three to six months, Kathryn Ruscitto, president and CEO of St. Joseph’s Hospital Health Center, says in an interview.

The move will shift the sponsorship of St. Joseph’s Hospital from the Sisters of St. Francis of the Neumann Communities, which founded the hospital 144 years ago, to Catholic Health Ministries, the group that sponsors CHE Trinity Health.

St. Joseph’s looked for a partner that could help the hospital preserve its mission and that could provide “access to intellectual capital, access to capital,” Ruscitto says.

“This is not a sale. This is a change in sponsorship,” she stresses.

CHE Trinity Health will provide the sponsorship with “reserved powers” that include overseeing and ensuring the hospital’s mission by appointing the board of directors and hiring and firing the CEO. It will also approve “major capital expenditures,” she says.

“So the same power the Sisters [of St. Francis] have will now transfer to CHE Trinity,” Ruscitto adds.

The sisters who founded this Catholic health-care system developed a “system allocation that is very small compared to what the return on benefit is to the organization,” she says.

Ruscitto declined to disclose how much St. Joseph’s will pay in fees annually to be part of the CHE Trinity Health organization.

CHE Trinity Health was formed in May when Pennsylvania–based Catholic Health East merged with Michigan–based Trinity Health. The combined system generates annual operating revenue of about $13.3 billion and has assets of about $19.3 billion. It employs more than 87,000 people, including 4,100 employed physicians, according to a joint news release from St. Joseph’s and CHE Trinity Health.

The non-binding LOI is the first such agreement CHE Trinity Health has entered into since consolidating.

Catholic Health System of Buffalo and St. Peter’s Health Partners in Albany are also part of the CHE Trinity Health system, Ruscitto says.

The CHE Trinity system includes 85 hospitals that are able to achieve “both intellectual best practices, as well as capital,” Ruscitto says.

“For example, their bond rating at CHE Trinity across all their hospitals is a AA+,” Ruscitto says.

As a member of a system with that many hospitals, facilities can self insure for malpractice and can purchase materials “at a much different rate,” she says.

“They [CHE Trinity Health] have already identified substantial savings that they’re going to be able to help us achieve by scale,” Ruscitto says.

In addition, department directors at St. Joseph’s will be able to speak with the people of similar titles at any of the hospitals in the CHE Trinity Health system, she says.

Over the next three to six months of finalizing the agreement, both sides will perform “the necessary due diligence,” according to Ruscitto.

“I want our physicians to talk to physicians in the other systems in New York state. And all that’s to make sure that this is a durable partnership going forward,” she says.

St. Joseph’s has been examining this “strategic option” for about three years, Ruscitto says, and the hospital’s discussion with CHE Trinity Health started about a year ago.

The announcement will have no affect on the current employment level of more than 3,700 full-time workers at St. Joseph’s, she adds.

St. Joseph’s Hospital Health Center is a nonprofit, 431-bed hospital and health-care system providing services to patients in 16 counties in Central New York.

The hospital generated $586 million in revenue in 2012 with net income of $9 million.

CHE Trinity Health also offered its thoughts in the joint news release.

CHE Trinity Health is “committed” to strengthening Catholic health care in the U.S., and the system is “delighted” that St. Joseph's Hospital Health Center shares its future vision, Judy Persichilli, interim president and CEO of CHE Trinity Health, said in the release.

“With our scale and scope, commitment to exceptional care, and a unified voice for serving vulnerable people, we believe that we can help St. Joseph’s Hospital Health Center meet the challenges of health care reform and continue to provide outstanding care for residents of Central New York,” Persichilli said.

Ruscitto also referenced the national health-care reform law as playing a factor in the combination. “This alignment will provide a strong financial foundation for the future of St. Joseph’s and help ensure our ability to meet the potential challenges of health care reform,” she said in the news release.

 

Contact Reinhardt at ereinhardt@cnybj.com

 

 

 

 

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