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Rural hospitals Jones Memorial, Noyes Health join UR Medicine

Rochester Business Journal
November 10, 2015

The boards of Jones Memorial Hospital and Noyes Health have made the rural hospitals’ long-laid plans to join the University of Rochester Medical Center’s UR Medicine health system official, URMC said Tuesday.

The announcements come as no surprise. The addition of Jones Memorial in Allegany County and Noyes Health’s Nicholas H. Noyes Memorial Hospital in Dansville, Livingston County to URMC’s growing regional network have been in the works for some 12 months.

The folding of the rural community hospitals into the URMC system mirrors a national trend that is seeing financially stressed and underused outlying U.S. community hospitals either come under the wing of better financed and better staffed urban systems or go under.

In a parallel trend, as private and government third-party payers increasingly pressure health care providers to deliver care more efficiently, growing number of physicians are either choosing to work for systems rather than practicing privately or joining health systems as employees after systems acquire their practice group.   

Locally, such consolidations have increasingly put health care delivery in the hands of one of two ever more sprawling systems, URMC’s or the also expanding Rochester Regional Health’s.

The Jones Memorial  and Noyes Health affiliations will make UR Medicine, which currently includes Rochester’s Strong Memorial and Highland hospitals and Thompson Health in Canandaigua, Ontario County, into a five-hospital system spanning four counties.

URMC also took over the former Lakeside Memorial Hospital facility after the Brockport hospital closed, turning the facility into Strong West, a freestanding emergency department and ambulatory surgery center operating under Strong Memorial’s license. 

A sixth candidate to further swell UR Medicine’s regional network—St. James Mercy Hospital in Hornell, Steuben County—is on the horizon.

URMC physicians have provided services at the 259-bed Hornell hospital for several years and officials are currently working with St. James Mercy to secure state funding for a new facility that would largely provide outpatient care but would also include 15 inpatient beds.

“I’m optimistic that those efforts…will make possible a similar affiliation between St. James and UR Medicine,” said Hornell Mayor Shawn Hogan, a member of St. James Mercy’s board.

In 2014, Unity Health System and Rochester General Health System merged to form Rochester Regional Health.

That system initially was officially a three-hospital system made up of Rochester General and, Unity hospitals in Monroe County and Wayne County’s Newark-Wayne Community Hospital, which had joined Rochester General in the late 1990s.

Rochester Regional Health this year added United Memorial Health System in Batavia, Genesee County and Ontario County’s Clifton Springs Hospital and Clinic, making it into a five-hospital system spanning four counties.

Given the current unsettled state of U.S. health care, the shape the relationship between the region’s dominant systems will ultimately take is not easy to determine at this point, URMC CEO Mark Taubman M.D. said.

Too many factors are in play, he said. Some argue for competition; others for cooperation.

For local communities, affiliations with larger systems can help stabilize the community organizations’ finances while improving locally delivered care, Taubman said. URMC provides services and support for affiliates but leaves local governing boards in place, a feature that leaves outlying communities as much as possible in charge of their hometown institutions. 

Ties with smaller, outlying hospitals also can help the larger systems, Taubman added.

RRH and URMC compete and each seeks to keep referrals within its own system. But each system is also financially cushioned by the fact that its Monroe County hospitals are as a rule 100 percent or more occupied, Taubman said.

High occupancies create congestion and logistical problems but insure revenues sufficient to more than keep the hospitals financially sound.

By keeping care that might otherwise have come to Strong, RGH, Highland or Unity closer to patients’ homes, URMC and RRH can relieve congestion in their Monroe County hospitals, Taubman said.

Ideally, affiliations will boost rural institutions’ bottom lines while not significantly cutting into the larger systems’ surpluses, keeping relations among local actors stable and collegial. 

URMC, meanwhile, is hedging its financial risk.

URMC and its affiliates including Highland and Thompson are legally but not entirely financially conjoined, Taubman said. Affiliates’ liabilities go on URMC’s balance sheet but URMC is not legally bound to pay their debts.

“Our creditors see the liabilities,” he said. “And ethically, I believe we are responsible for them.”

(c) 2015 Rochester Business Journal. To obtain permission to reprint this article, call 585-546-8303 or e-mail service@rbj.net.
 



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