In a major move in the local healthcare arena, Health Quest Systems and Western Connecticut Health Network, two healthcare systems serving the Hudson Valley and western Connecticut markets, announced March 28 their intentions to combine. It was a significant announcement. With more than 12,000 employees, the resulting health system, expected to become a done deal some time next year, will create an entity of approximately of a similar magnitude to the Westchester Medical Center Health Network (WMC), which two years ago added Kingston-based HealthAlliance of the Hudson Valley to its system. WMC, which runs nine hospitals, has budgeted for $2.2 billion in revenues in 2018. The HealthQuest-Western Connecticut merger, which will create a system with seven hospitals, anticipates combined revenues of $2.4 billion this year.
The joining together of LaGrangeville-based HealthQuest and Danbury-headquartered Western Connecticut appears a marriage of equals. HealthQuest’s four hospitals, in Poughkeepsie, Rhinebeck, Carmel (Putnam Hospital) and Sharon, have 5800 employees. Western Connecticut’s three hospitals in Danbury, New Milford and Norwalk employ about 6500. Dr. John Murphy of Western Connecticut will be CEO of the combined organization, and Robert Friedberg of HealthQuest will be president.
According to the agreement inked March 26, the new system’s board of directors will consist of eight members of each of the boards. Unlike the Westchester Medical and HealthAlliance tie-up, which gave WMC a controlling “golden share” in case of a tie vote, the governance system for combining HealthQuest and Western Connecticut proposes no such mechanism. Motions of the new board not securing a majority fail, according to Friedberg. The expectation, of course, is that all the trustees will act for the benefit of the joint organization rather than its former constituent parts.
Vassar Brothers Medical Center in Poughkeepsie, presently in the midst of a $545-million, eight-level building expansion, is the anchor hospital of The HealthQuest organization. Its other, smaller hospitals are in Rhinebeck, Carmel and Sharon. Western Connecticut has two substantial hospitals, one in Danbury and the other in Norwalk, plus a smaller one in New Milford a few miles north of Danbury. Both healthcare systems also boast networks of ancillary outreach affiliates. Both have ties to local medical groups and practices.
There’ll be a 90-mile road travel distance between the northern and southern nodes of the as-yet-unnamed combined seven-hospital network, Northern Dutchess Hospital in Rhinebeck and the Norwalk Hospital a couple of miles north of the Long Island Sound.
Last week’s press release announcing the prospective merger touted economies of scale. The combination “will have the depth, breadth and talent to advance the health and well-being of those we serve,” Dr. Murphy was quoted as saying. It is “further expected” that patient outcomes will be enhanced. More money can be re-invested in new clinical programs and services, facilities, advanced technology, new equipment and research.
Isn’t that what they always say?
Both healthcare systems appear to be financially viable, at least in the short term. Wall Street analysts worry, however, about the long-term prospects of small and medium-sized hospital systems in resisting takeover — particularly systems located on the periphery of large metropolitan areas who want to resist being swallowed up by sophisticated and ambitious medical providers with vast financial capabilities. Better to act now. “We were not under any pressure to do it,” Dr. Murphy explained in the Poughkeepsie Journal last Wednesday, “and we think by doing it we solidify our presences in the community and our positions to weather whatever storms may come through the healthcare environment.”
Large and prestigious health systems like Montefiore, New York Presbyterian and Northwell Health have been steadily expanding their metropolitan presences, especially in the lower parts of the Hudson Valley. University hospitals offer relationships beyond the scope of what other institutions can. Disruptive healthcare players come up with surprisingly innovative offers of partnerships. Specialized offerings in tertiary and even quaternary areas of care is becoming more widely accessible.
On February 8, Western Connecticut announced a collaboration with Northwell Health to develop new programs and services. Under that agreement, Northwell, with 23 hospitals New York State’s largest healthcare provider, agreed to provide Western Connecticut “access to its vast network of shared services, including its purchasing channels, data analytics, supply-chain management expertise, and workforce development opportunities.” The two organizations would remain separate. In the Hudson Valley, Northwell’s Phelps Hospital is a few miles away from the HealthQuest hospital in Carmel.
Western Connecticut also runs the Biomedical Research Institute (with an expertise in Lyme disease) and a partnership for cancer care at Norwalk Hospital with Memorial Sloan-Kettering. The latter is believed to be the first time Memorial Sloan Kettering doctors will be leading cancer services within another hospital’s cancer program outside New York State.
As the Hudson Valley’s only certified center for tertiary and quaternary care and as a teaching hospital, Westchester Medical has long claimed that it cares uniquely for the region’s sickest and most critically ill patients. HealthQuest has increasingly claimed that it can provide tertiary care as well as or better than any health system in the Hudson Valley, and it is unlikely that its new tie-up will diminish these claims.
HealthQuest fans were not slow to take up that cudgel. “This historic undertaking will not only improve the quality of lives for county residents, but it will also mark Dutchess County as a leader in the region in patient care,” Dutchess County executive Marcus Molinaro said last week. “We thank HealthQuest for its continued investment in Dutchess County, as well as its compassionate care for our residents, and we look forward to the enhanced services resulting from the new healthcare system.”
Join the family! 
