2012 Annual Report
September 12, 2012
Two of Connecticut's top hospitals come together and become one of the five largest hospitals in the United States.
2012 was a remarkable year for Yale-New Haven Hospital for many reasons, but one historic event stood out above all others – Yale-New Haven Hospital and the Hospital of Saint Raphael became a single hospital. It was an unprecedented integration – for the hospitals, for New Haven and for Connecticut. Yale-New Haven Hospital is now among the five largest hospitals in the United States.
The Hospital of Saint Raphael (HSR) had been struggling financially for several years. Founded in 1907 by Sisters of Charity of St. Elizabeth, HSR was New Haven's third largest employer, with more than 3,500 employees. But HSR had lost money for at least five consecutive years – including $17.4 million in 2009. Employee pensions were at risk, patient volume was down and the facility needed upgrades.
Across town, Yale-New Haven Hospital was struggling with its need for growth and the roughly $650 million in costs associated with a new inpatient tower was daunting. Fortunately, as New Haven's second largest employer with 9,000 employees and 1,008 patients beds, YNHH had posted operating gains for the past three decades. Volume was through the roof. In fact, YNHH has been experiencing a bed shortage despite the fact that volume at most Connecticut hospitals has been flat or declining over the past several years.
Three years ago, the Hospital of Saint Raphael began a national search for an affiliation partner. Ironically, the search ended just a few blocks away, when HSR approached Yale-New Haven Hospital in 2010 to see if a relationship might be possible. YNHH, on the verge of considering construction of a new inpatient building, was very interested.
An acquisition would be mutually beneficial and be a local solution to a local need, as well as strengthen Yale-New Haven Hospital as a national figure. Both hospitals had long histories of serving the greater New Haven community. They shared similar missions and values.
The integration of the two hospitals benefits patients in the greater New Haven area and throughout the state by improving:
As cities go, New Haven is a relatively small one, and with the integration of Yale-New Haven and Saint Raphael's, there has already been progress in balancing the services, the technology and the beds so that the most appropriate placement and care is available to each patient.
As one unified hospital, Yale-New Haven has already begun to enhance access to high quality health care. Within days of the closing, major renovations to patient care units began on the Saint Raphael Campus and by the end of January 2013, more than 50 new beds were opened to handle increased volume.
Over the next several months, attention will turn to the clinical unification – which services should be available at both campuses and which should be located at York Street or Chapel Street. Both hospitals will continue to maintain emergency departments, general medical, surgical and obstetric services, but this is a time to avoid duplication of services and technology at two campuses less than five blocks away from one another.
Yale-New Haven is now a single 1,541-bed hospital with two inpatient campuses, implementing a single standard of care. The integration offers the opportunity to increase quality and safety outcomes by sharing best practices and processes.
We are currently standardizing nursing practice and physician care processes at both campuses, and already working on improving our rates for bloodstream and surgical site infections, pressure ulcers and other potentially avoidable complications, reducing readmissions, as well as improving the discharge process and patient satisfaction.
The integration will also provide patients with better access to the entire continuum of care – from health promotion to physician offices to emergency departments to acute inpatient care to ambulatory services to short-term rehabilitation care, and increasingly, to more post-discharge care at home.
Care will be better coordinated as clinical information and data will be accessible to all patients and providers though a new electronic medical record system called Epic. This will help YNHH position itself for the future model of health care – accountable care – in which hospitals will be have financial incentives to deliver high quality appropriate care for its patient population.
Two immediate benefits to the integration were to give YNHH 533 much-needed beds and provide financial stability for Saint Raphael's. YNHH was able to save nearly 3,500 jobs, pay off HSR debts and stabilize employee pensions. A large percentage of Saint Raphael physicians were already credentialed at both hospitals, but about 400 additional members of the HSR medical staff joined the YNHH medical staff.
The unification is expected to save about $300 million over five years by combining clinical and operational costs, and reducing the unnecessary duplication of equipment, buildings and services just a few blocks away from one another. Through the addition of the Saint Raphael Campus, YNHH was able to avoid construction of a new inpatient building, which would have taken five years to build and cost about $650 million – resources than can be better invested in direct patient care.
Healthcare is an economic engine for greater New Haven and the region, and this integration will help sustain a healthy and vibrant hospital system that can support continued growth in the field. Efficiency and financial stability are extremely important as the country moves ahead with healthcare reform and both YNHH and New Haven have become stronger through this integration.
The mission of a hospital is to serve the people of a community with the most effective, most compassionate care possible. Together, the Hospital of Saint Raphael and Yale-New Haven Hospital have invested nearly 300 years of devotion to this mission and service to the same community.
The new Yale-New Haven Hospital will continue that vision, bringing together the rich traditions, histories, skills and resources of both organizations. This will mean that one hospital can now guide patients completely, from diagnosis to treatment to recovery. One hospital can serve the New Haven community, while at the same time, grow stronger and more integrated, prepare for healthcare reform and become even more of a national player.
Together, Yale-New Haven Hospital and the Hospital of Saint Raphael are reshaping the delivery of health care in this Connecticut and serving as a model for the rest of the country.
By coming together, we will provide the community that has sustained us for so many years with a better healthcare system. One that will continue to respect the physical, emotional and spiritual needs of each and every person we serve. One that is dedicated to building an exceptionally caring organization, rooted upon the legacy of two extraordinary hospitals. We are healthier together.
The Hospital of Saint Raphael held discussions with many potential partners, including both state and national hospitals and systems; Catholic and secular, for-profit and not-for-profit companies. HSR approached YNHH about the possibility of working together.
The two hospitals publicly announced their interest in exploring a partnership. They signed a letter of intent, approved by both boards of trustees, in which YNHH agreed to purchase the assets of the HSR for $160 million; assume HSR's $75 million debts; stabilize HSR's employee pension funds; invest $130 million into capital equipment, facilities, clinical services and a clinical information system; and create a single hospital with two campuses.
After several months of due diligence – reviewing relevant documentation and negotiating a potential integrated hospital structure – a formal agreement was signed for YNHH to move ahead with the purchase. YNHH agreed to provide the necessary funding to meet their liabilities, invest in HSR buildings and technology, increase clinical activity and honor HSR's Catholic heritage at that campus.
YNHH spent countless hours and provided thousands of documents and exhibits to the Connecticut Attorney General, the Federal Trade Commission and the state Office of Health Care Access, whose all needed to approve the acquisition. Local and state elected officials and community leaders were overwhelmingly supportive of the merger.
HSR and YNHH file a joint certificate of need with the Office of Health Care Access related to the acquisition
The Catholic Church approved the request from the Sisters of Charity of Saint Elizabeth to "alienate" the property of the Saint Raphael Healthcare System, thus permitting the transfer of property to YNHH and allowing the hospital to relinquish its official Catholic designation.
CT Attorney General George Jepsen and the Federal Trade Commission announced that the acquisition of Saint Raphael's did not violate state or federal antitrust laws and they would not challenge it.
The Connecticut Office of Health Care Access (OCHA) holds a public hearing about the acquisition of HSR by YNHH.
The Connecticut Office of Health Care Access approved the certificate of need for YNHH to acquire HSR.
The "onboarding" process begins to transfer almost 3,500 Saint Raphael's employees to YNHH's job descriptions, payroll and benefits.
YNHH and HSR legally close on the purchase.