Hospital Consolidation Accelerates in New York City Market

BURLINGTON, Mass., June 4, 2014 /PRNewswire/ -- Decision Resources Group finds that hospital consolidation in the New York City market is growing quickly as six hospitals move forward with acquisition or partnership deals. If the agreements become final as expected, the number of independent hospitals in suburban Westchester County and on Long Island will decrease, boosting negotiating power for the larger systems they plan to join. Clinical integration will increase for Bronx-based Montefiore Health System, which plans to establish a regional integrated network after acquiring its third hospital in Westchester County.

Other key findings from the New York City Market Overview:

• More mergers, acquisitions, partnerships and affiliations are likely in the New York City market as hospitals contend with thin operating margins and adjust their strategies in response to healthcare reform. The result will be fewer players controlling healthcare delivery.  
• The state of New York is attempting to transform its healthcare delivery system via a new Medicaid waiver, which will allow the state to reinvest $8 billion in federal funds that the state already saved by implementing Medicaid reforms. About $6.4 billion will be used for a program with performance-based incentives for healthcare delivery improvements; the goal is to reduce avoidable hospital use by 25 percent over five years. The waiver also provides funds for temporary financial assistance to safety-net hospitals and investments in home health development, long-term care, behavioral health services and the healthcare workforce.
• The New York City market includes more than 25 accountable care organizations. More ACOs are likely to form, but at a cautious pace.
• Healthcare providers in New York will be adjusting to the dynamics of nearly 950,000 more people covered by health insurance because of New York's health insurance exchange and Medicaid eligibility expansion.

Comments from Decision Resources Group Analyst Deborah White:

• "New merger, acquisition and affiliation agreements are contributing to growth in clinical integration in the New York City market. For example, Mount Sinai Health System is building an integrated system after its merger with Continuum Health Partners, and Montefiore Health System in the Bronx is building an integrated network in Westchester County."
• "Providers are participating in more accountable care agreements, patient-centered medical homes and bundled payment programs. These initiatives include care coordination, which is likely to boost prescription drug adherence among patients. ACOs can result in better healthcare quality and reduced costs, but doing so is not quick or easy. Innovative providers are likely to seek ACOs with multiple payers to enhance their chances at success."

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About Decision Resources Group
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SOURCE Decision Resources Group