SCHENECTADY — Albany-based St. Peter’s Health Partners and Schenectady’s Ellis Medicine are planing to merge.
Ellis, the third-largest health system in the Capital Region, would become part of SPHP, the second-largest, under the plan the two organizations announced Wednesday.
The two have signed a letter of intent, but much more needs to happen before a merger is finalized. It could take another year, in fact. Both boards of directors will take about four months to conduct their due diligence; assuming they go forward from there, state and federal regulatory review will take six to seven months before approval is granted.
The two have a broad framework in mind and intend to pursue it, but many details are unknown at this point, including things as basic as what Ellis’ name would be.
Speaking to reporters Wednesday, Ellis President and CEO Paul Milton and SPHP President and CEO Dr. James Reed noted that the two organizations have been collaborating for six years, directly partnering along the way on alliances to improve community health — efforts to help keep healthy people from needing medical care rather than simply providing medical care to them after they fall ill.
“Our problem is you reach a point when you can’t go any further” as separate entities, Reed said.
They’ve reached that point and they want to go further.
In an era when independent hospitals are increasingly rare, Ellis is one of the few solo operations left in the Capital Region — Albany Med is the largest hospital system, followed by SPHP. Basset Healthcare operates hospitals on the western edge of the Greater Capital Region, as did Ascension Health until recently.
Physician groups also dot the region, led by Community Care Physicians, with 2,000 employees in 80 locations.
As an independent — even a 3,300-employee independent with four large facilities — Ellis enjoyed less leverage in price negotiations than Albany Med and SPHP and lacked the financial resources of a larger network.
For more than two years starting in 2016, Ellis contemplated an affiliation or merger, entertaining proposals from multiple organizations, some local and some not, none of whom it publicly identified.
Ellis entered advanced negotiations with four finalists before announcing in July 2018 that it would remain independent — but open to future collaborations of any stripe.
Asked why the merger is being sought now rather than in 2018, Milton said the circumstances and timing are now right but were not right then.
Those circumstances are not COVID-related — the greatest public health crisis in living memory, and its significant financial impacts on health care providers, are not driving the decision, both CEOs said.
SPHP and Ellis both missed out on large sums of revenue when elective surgeries were banned this spring. But they also cut costs and gained financial assistance through the federal CARES Act.
As a result, Reed said, the financials are not as bad as might be expected, though adjustments are still being made for 2021.
Milton and Reed said the affiliation would give Ellis access to capital, make it easier to recruit physicians and allow it to reap the economies of scale.
SPHP was formed to provide a full continuum of care, Reed said. The merger would expand that continuum by adding the Ellis facilities, and would give Ellis access to that continuum, which currently totals 12,000 employees in more than 170 facilities.
Going forward, Reed said, one of the issues that will be front and center in discussions is SPHP’s affiliation with the Roman Catholic Church and the impact on Ellis.
Some SPHP facilities are Catholic, some are secular. SPHP itself is not Catholic, Reed said, but it is part of Michigan-based Trinity Health, one of the largest Catholic health systems in the nation. So SPHP follows the Ethical and Religious Directives for Catholic Health Care Services dictated by the U.S. Conference of Catholic Bishops.
The ERD, now in its sixth edition, contains 77 specific directives for providing care in accordance with church doctrine.
Directive No. 74 indicates that any facility coming under control of a Catholic institution must be operated in full accord with the moral teaching of the church.
Reed did not directly say what this would mean for Ellis Medicine or its component facilities, such as Bellevue Woman’s Center, which only provides care for women and presumably would be affected by directives banning sterilization under most circumstances and banning abortion or counseling on contraception in all circumstances.
Asked about Bellevue, Reed said preservation of the individual heritage and historic identities of the Ellis facilities would be a priority as the merger discussions continue. Also, he said, the numerous models nationwide for Catholic-secular hospital mergers would be reviewed.
This issue has come up before. In a 2011 news release announcing the formation of SPHP, the organization said a separate entity — Burdett Care Center — would be formed at Samaritan Hospital to replace Samaritan’s maternity services, and would provide sterilization procedures on men and women to ensure these services remained available in Rensselaer County.
Last week, SPHP announced the facility — now called Burdett Birth Center — had been incorporated back into Samaritan effective Oct. 1 for financial reasons. Its web page indicates it no longer performs sterilization procedures on men or women, except in certain medical circumstances.
The American Civil Liberties Union in 2015 sued Trinity Health in federal court in Michigan over its stance on women’s reproductive health care, but saw the case dismissed for lack of cause.
Ellis Medicine was formed more than a decade ago by the state-ordered merger of Ellis, St. Clare’s and Bellevue hospitals. The Ellis and Bellevue campuses remain hospitals, while the former St. Clare’s campus is used for other medical purposes. Ellis also has a large emergency medical care facility in Clifton Park.
SPHP has formed around St. Peter’s Hospital in Albany. It includes Sunnyview Rehabilitation Hospital in Schenectady and Samaritan Hospital in Troy, as well as the former Albany Memorial and St. Mary’s hospitals, both of which are now campuses of Samaritan. It operates numerous other facilities across the region.