Westchester’s Changing Healthcare Landscape
Forget Obamacare. It’s nothing compared to the massive forces reshaping Westchester’s healthcare system.
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One of Westchester’s largest industries—healthcare—is undergoing major changes. While the Affordable Care Act gets all the headlines today, the tectonic shift in the business comes from market forces that have been building strength for many years. They are changing who signs your doctor’s paycheck, where you get your blood pressure measured, how long you stay in the hospital, even whether or not your treatment was “successful.” New players are staking out claims in the market, hospitals are becoming insurance companies, and doctors are banding together to apply the Walmart business model to your healthcare needs.
“This is the biggest change the healthcare system has seen in 50 years,” according to Steven Safyer, CEO of Montefiore Medical Center. He isn’t talking about the Affordable Care Act, either. Safyer is referring to the shifting economics that led the Bronx-based behemoth to buy bankrupt hospitals in New Rochelle and Mount Vernon, start its own insurance company, purchase a 90-acre office complex in Tarrytown to handle back-office functions, open the first of probably several urgent-care facilities in Yonkers, and team up with Westchester-based WESTMED Medical Center to build an outpatient center in Riverdale.
Safyer’s observations about the sea change in Westchester’s healthcare industry aren’t unique. “I’m going to guess that within 18 months, just about every community hospital in the County will have an affiliation with one of the hospitals in New York City,” says Hudson Valley Hospital Center CEO John Federspiel. “Everybody I’ve talked to has signed multiple non-exclusive confidentiality agreements.”
WESTMED founder and CEO Simeon Schwartz takes it a step further. “Half of the hospitals in the County will close,” he declares. “Westchester’s population is not growing. As the number of hospital admissions continues to go down, you’ll have twice the number of hospital beds you need.”
Hospital mergers (or closures) aren’t the only significant changes. Medical group practices like WESTMED, Mount Kisco Medical Group, and Scarsdale Medical Group are taking over an ever-increasing share of the care in the County by hiring hundreds of doctors, building and equipping dozens of clinics and other facilities throughout the County, and providing outpatient services previously done on an inpatient basis at the County’s hospitals. “Between us and Mount Kisco Medical Group,” says Schwartz, “I believe we take care of a significant part of the patient population in the County. We are moving from a hospital-centric to an ambulatory-centric model of medicine.”
When an industry the size of healthcare in Westchester gets shaken up, a lot of people are affected. The County is home to eight community hospital acute-care mini-networks and one tertiary-care facility (Westchester Medical Center) at the moment. Together with specialty hospitals like the Blythedale Children’s Hospital and Burke Rehabilitation Center, they generate about $2.6 billion in revenue. If nationwide ratios hold true, the County’s healthcare industry is worth nearly $9 billion annually—that’s a lot of aspirin. A total of 57,000 jobs, or just over 14 percent of all the jobs in Westchester, are in healthcare facilities.
What’s driving all this change? Northern Westchester Hospital CEO Joel Seligman says it starts on the macro level: The US spends nearly twice as high a percentage of its GDP on healthcare as the rest of the developed world—without better results. “Costs are out of control,” he says. “The fact that we’re bankrupting industry, the government, and the taxpayer, is driving the agenda right now.”
That force works its way down to your family doctor. “Fundamentally, there is a lot of demand to reduce costs and improve quality,” explains Kevin Dahill, president of the Northern Metropolitan Hospital Association. “The pressure is not just on the hospitals. It’s being felt by any healthcare provider: physicians, physician groups, nursing homes, home healthcare agencies.” The result? “Whenever you have that kind of pressure, competitive forces accelerate. It’s hospital versus hospital, physicians versus hospital, nursing homes versus home-care agencies—everyone is trying to find where they can maintain viability.”
Those pressures favor some providers while punishing others. Hospitals have heavy fixed costs; large, sometimes outdated, and always expensive facilities to support; and legal requirements to provide service to everyone who asks for it—regardless of their ability or willingness to pay. Federspiel points out that Hudson Valley Hospital Center’s 2012 tax return showed $15.6 million in uncompensated care for the year. “We are about a $165 million operation, so when you think about that much going into uncompensated care, it’s extraordinary.” How many for-profit businesses could stand to write off nearly 9.5 percent of their gross revenue as bad debts?
Those entities that can control costs do much better—just ask Schwartz. WESTMED now has roughly 260 doctors, 900 other employees, and four centers in Westchester. Proprietary software and centralized management systems squeeze costs while making care delivery more efficient. “At WESTMED,” he explains, “if a woman has an abnormal mammogram in the morning, we can get her an appointment with a quality breast surgeon the same day, a biopsy by five o’clock, and the results by noon the next day.” All of that care, from imaging to the lab work, is done in-house—which means revenue isn’t shared with other institutions.
WESTMED and Mount Kisco Medical Group aren’t the only healthcare providers putting competitive pressure on the market. Nearly every major New York medical system is scrambling for a piece of the action in the County, too, as is Connecticut-based Yale New Haven Health System, which operates Greenwich Hospital and a growing group of physicians in Westchester. County residents have always gone south for major medical procedures (tertiary and quaternary care) and many New York City medical systems have affiliation agreements with Westchester community hospitals, sponsor or own group physician practices in the County, or have specialized facilities like NewYork-Presbyterian’s psychiatric hospital in White Plains.
Now, though, they’re stepping up their game. In one of the more aggressive moves, Memorial Sloan-Kettering Cancer Center is building a $142 million, 114,000-square-foot cancer treatment center on Westchester Avenue in Harrison. When the facility opens next year, it will provide outpatient services that Westchester’s community hospitals say will duplicate those they already offer, a plea the state health authorities rejected when they approved the new facility. (For its part, Memorial Sloan-Kettering obviously rejects the notion, as well. A spokesperson says, “The cancer center in Harrison will make it more convenient for patients in Westchester to access cancer care, due to the increasing needs and the aging population.”)
Columbia University Medical Center takes a more traditional approach to shaping its presence in Westchester, at least so far. On the primary and secondary care level, it operates several ColumbiaDoctors locations throughout the County, and plans to expand its primary care reach with the acquisition of Northstar Medical Group's eight Westchester locations in February. Many ColumbiaDoctors' physicians both work as part of their system and operate their own practices. COO Mark McDougle explains, “People will know by the sign on the door that the physicians are Columbia doctors. In Westchester, there are a large number of practices with whom we have a relationship largely because many of them went to the College of Physicians and Surgeons here at Columbia or trained at NewYork-Presbyterian.” Columbia has practices in cardiology, orthopedics, OB/GYN, internal medicine, and rehab facilities in Westchester.
What it doesn’t have is a hospital, nor does it want one, according to McDougle. “We want to treat patients in environments that best fit what they need,” he says. “There are hospitals that only want patients to come to their facility in Manhattan. That is not what we do. When we talk to doctors about affiliating, we want them to take care of their patients in the community.”
Of course, Columbia has a long, long relationship with the NewYork-Presbyterian system, which also has affiliations with Lawrence Hospital and White Plains Hospital Center—and may well be looking for a deeper, stronger relationship with them or other community hospitals in the County. In a rapidly shifting market like this, it’s sometimes tough to tell the players without a scorecard or seeing whose name is on the confidentiality agreements.