The proposed merger of Yale-New Haven Hospital and the Hospital of Saint Raphael solves problems for each of the hospitals: Yale needs at least 140 new patient beds in the next five years, and St. Raphael’s is facing a projected $8 million shortfall in 2013, according to the Certificate of Need application filed with the state this month.
The application, received by the Office of Health Care Access (OHCA) Feb. 9, lays out an ambitious merger plan that would spare Yale-New Haven the expense of constructing a fifth “bed tower,” estimated to take five years and cost about $400 million. It also would provide St. Raphael’s with both financial stability and the retention of its Catholic directives for reproductive services and end-of-life care.
According to the application, certain medical specialties would be consolidated at one of the two New Haven campuses, while others would be offered at both. Among the specialties proposed for the St. Raphael campus are urology, geriatric surgery and low-risk obstetrics; Yale could become a hub for inpatient oncology, pediatrics, high-risk obstetrics and trauma, the application says.
The merger is expected to save $300 million over five years by combining “clinical and business operational (costs),” according to the application. Yale-New Haven would assume St. Raphael’s long-term debt, contribute to a shortfall in pension funding, and address capital needs. In the first five years, Yale would invest $129.5 million in capital improvements, clinical service enhancements, and a fully integrated electronic medical record system.
“The proposal represents a unique opportunity for two hospitals in close proximity to integrate functions and services to achieve cost and operational efficiencies, enhance access and improve quality of care,” the presidents of both hospitals—Marna P. Borgstrom of Yale, and Christopher O’Connor of St. Raphael’s—wrote in letters to the state. OHCA must approve the merger plan.
The proposal says Yale-New Haven needs the extra beds to resolve “considerable capacity constraints,” especially in medical and surgical areas. The hospital has had to convert some double rooms to triples, hold patients in “overflow areas” until a bed become available, and leave patients who need acute-care or ICU beds in the emergency department for extended periods of time. While the hospital said it was working to reduce “length of stay” rates, it still projects a shortage of beds in each of the next five years.
The Hospital of St. Raphael, meanwhile, has become “increasingly dependent on government reimbursement,” with more than 70 percent of its revenue coming from Medicare and Medicaid. Although the hospital cut costs, postponed renovations and purchases, and made other adjustments, “it became clear that HSR’s mission to serve the poor, elderly and underserved and its heavy dependence on non-negotiable government reimbursement would prevent it from being able to achieve financial stability and prosper in the future,” the proposal says.
Yale could avoid building a new bed tower by taking over 90 beds at St. Raphael’s that are currently not in use. Yale now has 1,008 beds; St. Raphael’s has 511.
Under the proposed agreement, Yale would agree to appoint a Catholic Heritage Committee to ensure that reproductive treatment and other clinical services at St. Raphael’s are consistent with religious directives.
Besides state regulatory agencies and the Federal Trade Commission, the Archdiocese of Hartford and the Vatican must also sign-off on the merger.