AMSTERDAM -- After 18 years as a member of the Ascension nonprofit healthcare system, St. Mary’s Healthcare announced Wednesday it is returning to being an independent organization.
St. Mary’s Healthcare CEO Vic Giulianelli said his organization will once again be controlled by a local board of directors effective June 30. He said being a member of Ascension, which controls 150 hospitals throughout the U.S., does include some advantages, such as access to best practices models from larger hospitals in other parts of the country and assisted protocols for delivering care. However, the local hospital's board of directors determined that it was putting more money into the Ascension system than it was getting back in terms of benefits since at least 2015.
“When you belong to a system, there are system expenses, and upstate New York hospitals, like St. Mary’s, are among the least expensive in the country and that gets back to where we reside and to where we deliver care, and the cost here has to be lower, because the [Medicare and Medicaid] reimbursements here are not stellar,” he said.
Giulianelli said the federal Medicare reimbursement formulas for the Capital Region are among the lowest in the U.S., which forces St. Mary’s Healthcare to be “a low cost provider.”
“And when you’re in that kind of mode, when that’s the nature of your operations, there’s just less ability for a national system to create bigger financial benefits, when you’re already the lowest expense hospital in that system — that’s only logical,” he said.
The bottom line being, St. Mary’s Healthcare, which has included the former Amsterdam Memorial Healthcare since 2008, has about $190 million in annual revenue, and stands to save millions of dollars annually, somewhere in the “mid-seven figure range” by splitting off from Ascension, Giulianelli said.
“There are about 166 hospitals operating in New York state, down from over 220 some years ago, but of the 166 there are only five that are a part of a national healthcare system, meanwhile I think almost every hospital in New York state is part of some regional system of care,” Giulianelli said.
St. Mary’s joined Ascension in 2002, when the Sisters of St. Joseph of Carondelet added their Carondelet Health System to the national healthcare system. Giulianelli, who has worked at the hospital since 1980, was the hospital’s chief operating officer at the time. He’s served as CEO since 2005.
“The St. Mary’s board now will be to its original purpose and position of being the governing board and it will make decisions about any future relationships that will occur for St. Mary’s Healthcare,” Giulianelli said.
St. Mary’s issued a news release Tuesday with statements from both Ascension and St. Mary’s Board Chairwoman Sister Mary Anne Heenan.
“As we implement this change, St. Mary’s will continue to be a mission-inspired, vibrant Catholic ministry, continuing to identify and to meet the changing needs of those we serve, especially persons who are poor and vulnerable,” Heenan said.
Ascension Executive Vice President and Chief Operating Officer Craig Cordola stated in the news release that Ascension agreed to allow its subsidiary St. Mary’s Healthcare to separate.
“We believe this is the best approach for the individuals and communities St. Mary’s serves as well as for its dedicated and compassionate associates, providers and volunteers,” Cordola stated in the release.
Giulianelli said in order to break away from Ascension it had to demonstrate to Ascension’s board that the Amsterdam hospital, founded in 1903, would be better off returning to its origin as an independent provider of healthcare.
“There is a certain reverence to this process,” he said. “We provided them the information. They asked the questions. We engaged in dialog, and came to the same conclusion that the path to independence was the best path forward.”
Giulianelli said as a faith-based nonprofit Ascension has the same mission as St. Mary’s, and ultimately did not want to unfairly use the hospital.
“Their mission is not to bleed us ... if that was their business, they wouldn’t have let us go,” he said. “Did we have leverage? They were a member of St. Mary’s. In the not-for-profit world, when you are a member of a corporation, that can’t really amount to ownership. So, essentially, they did not just have to allow this to happen, they had to agree and let us separate, and they did.”
Resuming local control will mean some changes at St. Mary’s.
“Without getting into some specifics, we might have decided a few years back to participate in a different regional relationship, and that didn’t happen, and that was probably one of the few times that we at the home office differed from the [Ascension] system,” he said. “Now, this board will decide. It’ll be up to the board of directors, and they don’t have any interest in losing that independence any time soon.”
Giulianelli said it will take a full year for St. Mary’s Healthcare to take over some 16 different hospital systems currently provided to it by Ascension or companies affiliated with Ascension.
“Our website will now be operated locally — we’ll have to go out to bid for that — it’s going to look different, and all of the references on our website, letterhead, signage, that references Ascension and St. Mary’s, all have to be redone,” he said. “We’re also looking at a brand new computer system that we’re in the beginning stages of planning for. It’s going to be a state-of-the-art system, and I think when the staff hears about that they’re going to be more and more excited.”
Giulianelli said about 1,600 people work for St. Mary’s currently, with another 150 employees outsourced to other companies, most of whom will now be hired to work directly for the hospital. He said of those approximately 1,750 employees about 1,500 are full time workers.
With that workforce, St. Mary’s Healthcare takes care of about 430,000 outpatient visits per year and a 150-bed nursing home.