The document discusses differing strategies among New York's leading health systems regarding growth and expansion. Some systems like Northwell, Montefiore, and Mt. Sinai favor aggressive expansion through mergers and acquisitions to increase scale and bargaining power. Others like New York-Presbyterian and NYU Langone are more cautious, focusing on ambulatory care and selective partnerships over acquiring additional hospitals. The strategies differ in views on vertical integration, population health management, and whether owning an insurance plan is advantageous.

1. How New York’s
Leading Health Systems
Differ on Growth Strategy
Richard D. Fenton, MBA
Sr.Vice President, Executive Search
Tal Healthcare

2. New York’s leading health care systems have
split into two opposing camps on the question
of preparing for a long-term future in the
industry.

3. Northwell, Montefiore,
Mt. Sinai
One camp, consisting of Northwell, Montefiore and Mt. Sinai,
believes in aggressive up-sizing.
Expansion through mergers with other systems and acquisition
of satellite campuses
• achieving administrative efficiency,
• increasing bargaining power,
• diversifying revenue and
• gaining the ability to act as their own insurers.

4. New York-Presbyterian,
NYU Langone
The other camp, comprised of New York-Presbyterian and NYU
Langone, is more cautious – wary of affiliating with other brick-
and-mortar hospitals in an era of declining utilization rates.
• NYU has shied away from affiliations outside the city
• New York-Presbyterian isn’t affiliating at all. They have instead
made strategic investments and focused on ambulatory care
and their traditional role as teaching hospitals.
• They have steered well clear of the insurance business.

5. House Calls Returning
Providers in New York and across the nation are
bringing back the house call. But it’s not for when a
patient is ill. These 21st century house calls are for
before an exam and after a procedure.
“Your ability to take care of patients when they are not
sitting across from you in the examination room
becomes key,” said Montefiore Medical Center chief
medical officer Dr. Andrew Racine. “We have visiting
nurses out there all the time.”

6. Northwell
(formerly North-Shore LIJ)
• Has been the most aggressively expansionist of all the systems.
• Announced partnerships with The Cleveland Clinic,
• Started its own insurance company (called CareConnect),
• Offered help to other health systems converting to the ICD-10
disease classification system,
• Took over Lenox Hill,
• Turned the former St. Vincent’s into the city’s first freestanding
emergency department,
• Announced a plan to open 50 ambulatory clinics across the state
and
• Finalized an agreement with Phelps Memorial and Northern
Westchester Hospital

7. Mt. Sinai Health System
• The Brooklyn Hospital Center, which earlier
this summer announced it would be affiliated
with Mount Sinai.
• Mount Sinai is also affiliating with Valley
Hospital in New Jersey, which ended its
relationship with Presbyterian at the end of
2014.

8. Mt. Sinai Health System
Kenneth Davis, Mount Sinai’s C.E.O. recently explained his
thinking about the new health care landscape in a controversial
op-ed for the Wall Street Journal.
• “To mitigate that risk, hospitals need to broaden the
populations they serve, and offer services that cover a larger
geographical area.”
• “Without that wide range, there is too great a risk that costs
beyond hospital walls during post-acute care, patients who
are high utilizers of medical services, will unbalance the
scales. Hospitals need a large pool to survive any increased
medical needs and costly care.”

9. Mt. Sinai Health System
Mt. Sinai is beginning to blur the lines between provider and
insurer.
• In October: announced the establishment of a new Medicare
Advantage plan for Manhattan residents co-sponsored with
Healthfirst.
• Beginning 2015, Empire BlueCross BlueShield, the largest
health insurers in New York, and the Mount Sinai Health
System established an accountable care arrangement which
will create individualized health plans to guide Empire’s
48,000 commercial and Medicare lives attributable to Mount
Sinai

10. Montefiore
Medical Center
• Partnering with White Plains hospital in
Westchester and Nyack Hospital in Rockland
County.
• Bought Sound Shore in New Rochelle and
Mount Vernon Hospital in 2013.
• Offering its own insurance product. The
Montefiore Insurance Co., launched in January
2015, will offer coverage to small businesses.

11. Montefiore
Medical Center
The advantage Montefiore has over its competitors is that it has
a long and successful track record of providing care to low-
income patients, having dealt with a payer mix dominated by
the federal government since the creation of Medicare and
Medicaid in the mid-60’s.
• one of 32 health systems across the country to implement
Pioneer Accountable Care Organization as part of the
Affordable Care Act.
• one of a handful of few success stories, achieving costs
savings of 7 percent during the first two years.
• ACOs set payment limits and force hospitals to provide care at
a set cost. They function well with large patient volume.

12. Montefiore
Medical Center
Their gamble is that their success at managing
large populations in the Bronx can be replicated
in the Hudson Valley where the physicians are
independent contractors used to a certain
freedom to practice as they see fit, not direct
employees of Montefiore.

13. New York-Presbyterian
New York-Presbyterian’s recent approach exemplifies the alternative,
consolidationist attitude that has set it apart in recent years from North
Shore-LIJ, Montefiore and Mount Sinai.
• Retrenching, allowing community hospitals to affiliate with other systems
focusing greater attention on core assets such as New York Downtown
Hospital in Manhattan or New York Methodist in Brooklyn.
• That has in turn allowed the people who run New York-Presbyterian to
maintain greater control of all the elements of their system. They aren’t
interested in affiliations; they want asset-based mergers.
• New York-Presbyterian took over Lawrence Hospital Center in Bronxville in
July. And in November, Hudson Valley Hospital Center in Cortlandt
• Divested from its insurance companies SelectHealth in 2012, Community
Health Plan, a Medicaid managed care plan, in 2009.

14. New York-Presbyterian
That gave New York-Presbyterian less of an incentive to branch
out. While it still needs volume and administrative efficiencies, it
doesn’t need a million customers like Montefiore does, because
Presbyterian’s payer mix is so much wealthier, or like LIJ does,
because Presbyterian has no insurance company to peddle.
New York-Presbyterian embarked on a $2 billion capital
campaign, supported by a $100 million gift from businessman-
activist David Koch, to build an ambulatory care center on York
Avenue less than two miles north of NYU Langone, and about
two miles south of Mount Sinai.

15. NYU Langone
NYU Langone has taken a similar tack.
“Hospitals are in no way shape or form the primary strategy,” Brotman said.
“It’s not that you can do without any hospitals but we are extremely selective
in thinking about relationships with hospitals.”
Executives at Langone don’t believe that adding more brick-and-mortar
hospitals to the portfolio will pay off in the long run, they said.
“The need for hospital beds is dropping rapidly and being in a state where it’s
not so easy to close or modify a hospital, and the notion of acquiring X
hospitals and assuming that you are going to be able to take out 50 percent of
the physical assets and repurpose them for something else, we think is a very
expensive, highly risky proposition,”
No interest in operating as an insurer, which means they have one less
incentive to affiliate across the state.

16. NYU Langone
“It’s not our core competence. … What we are interested in is moving the in-
patient setting to the ambulatory setting and we’ve moved rapidly in that
direction.”
• Between 52 percent and 57 percent of NYU Langone’s revenue is now in
ambulatory care.
• Only one-third of NYU’s 42,000 surgeries are classified as in-patient.
• Focus on out-patient ambulatory care centers, and NYU has opened nearly
three dozen during the past few years.
• That explains why NYU Langone was keen to affiliate with Lutheran
Hospital, which has a robust out-patient network, including 28 school-
based health centers and relationships with several federally qualified
health centers.

17. NYU Langone
Part of the hospital systems’ decision-making is guided by the simple
question of how much faith they have in the ability of affiliated doctors and
institutions to act efficiently as brokers.
• NYU Langone, for example, is heavily focused on affiliating with physician
practices and medical groups, and counts on physicians to manage the
primary care and refer patients back to them for anything major. That
gives them the advantage of a referral service without the financial
commitment of a community hospital.
• We think it’s the doctor, not the hospital. So if a doctor in Queens, one of
our doctors, says to a patient, ‘You need a cardiac cath, I want you to go to
NYU,’ or, ‘You have pneumonia, I want you to go to New York Hospital
Queens right down the road,’ we think that patient is going to agree.

18. Northwell
(formerly North-Shore LIJ)
Northwell executives see it a bit differently.
In a payment model that rewards population health
management, they say, vertical integration is crucial.
“The big issue is care coordination,” “The same systems mean
doctors have ways to communicate with each other, share lab
results, imaging.”
For the vast majority of patients it really doesn’t matter whether
they are treated at an LIJ facility. But for a select few—the
chronically ill, co-morbid cases that are the most expensive to
treat—it matters a great deal, and if LIJ isn’t ensuring that these
costliest 5 percent of patients are appropriately treated, their
business will suffer.

19. Northwell
(formerly North-Shore LIJ)
“Many of these conditions require a high degree of care
coordination,” “There is a level of care management and care
coordination that is required to have outcomes that yield a
favorable result.”
The larger health systems can bring the capital, the staff and the
expertise to develop and run programs specifically aimed at
managing costly chronic diseases such as diabetes, or
hypertension.
“The strategy we are talking about is very long in its gestation,”
Racine said. “You can’t really do care management overnight.
You have to spend a long time developing architecture. You make
mistakes along the way.”

20. Necessary Characteristics
for Health System Success
Richard D. Fenton, MBA
Sr.Vice President, Executive Search
Tal Healthcare

21. Necessary Characteristics
for Health System Success
• Market power is key
• Focusing on the total consumer experience is critical
• Constantly improving operations is critical
• Owning practices (a dominant physician network) is critical
• The jury is out on owning an insurance plan
• Bundled payment efforts are growing
• A constant focus on what drives cash flow is very important
• Developing and recruiting great people is critical

22. Necessary Characteristics
for Health System Success
We also believe healthcare systems and their
leadership should define clearly their core overriding
goals. Ideally, the system can move beyond the first
goal and focus on Nos. 2 through 4.
• Financial survival
• Greatness in certain specific areas
• Dominant in a market
• Great international brand. This often starts with first
meeting goals 1, 2 and 3.

23. Necessary Characteristics
for Health System Success
An article breaks down strategy and certain core observations as follows:
• Market Power Wins.
• Know Your Business; Double Down on Cash Cows; Test New Areas.
• No Single Strategy; No Static Solution.
• There Will Still be a lot of Fee-For-Service. Bundled Payments are a Type of
Fee-For-Service.
• Owning an Insurance Product Requires a Great Deal of Market Position
and Risk Tolerance.
• Most Systems Must Own Practices.
• Consumer-Driven Healthcare.
• Talent Management.

24. AAMC Increases Estimate of
Physician Shortage:
What to Know
Richard D. Fenton, MBA
Sr. Vice President, Executive Search
Tal Healthcare

25. Physician Shortage:
What to Know
• The U.S. faces a shortage of physicians ranging
between 61,700 and 94,700 over the next
decade, according to a new report from the
American Association of Medical Colleges.
• This report updates a 2015 projection that
estimated the nation would need between
46,100 and 90,400 physicians by 2025, though
it is still below a 2010 estimate that projected
a shortage of 130,600 physicians by 2025.

26. Physician Shortage:
What to Know
Perhaps most striking is the addition of an analysis on the needs
of underserved Americans that shows how many more
physicians the country would need if these patients were able to
fully utilize healthcare. These numbers are not included in the
overall projections because they only provide estimates for 2014
levels of care.
"These updated projections confirm that the physician shortage
is real, it's significant, and the nation must begin to train more
doctors now if patients are going to be able to receive the care
they need when they need it in the near future."

27. Physician Shortage:
What to Know
• The overall physician shortage of 61,700 to 94,700
physicians by 2025, no matter the scenario, is in line
with 2015 estimates, according to the AAMC.
• Primary care shortages are expected to range 14,900
to 35,600 by 2025.
• Non-primary care specialties are expected to need
between 37,400 and 60,300 additional providers by
2025.

28. Physician Shortage:
What to Know
• Surgical specialists comprise the only category of
physicians that is expected to decline by 2025.
• In all other categories, the number of physicians is
growing, but demand is outpacing supply.
• Surgical specialties that will be affected include
ophthalmology and urology. AAMC estimates the
shortfall for these physicians to range 25,200 to
33,200 by 2025.

29. Physician Shortage:
What to Know
From 2014 to 2025, the U.S. population is expected to increase
by about 8.6 percent
the population aged 65 and over is expected to grow 41 percent
in that time.
It follows that the demand for healthcare services that seniors
need will be higher than the demand for pediatric services.
• Due to the large numbers of aging physicians, retirement
decisions are expected to have the single greatest impact on
supply.
• More than one-third of physicians will be 65 or older in the
next decade, according to AAMC.
• Increasing demand can be traced to population growth and
aging.

30. Physician Shortage:
What to Know
The effects of the Affordable Care Act on
physician demand are small:
The AAMC expects this will only increase
demand by about 10,000 to 11,000 physicians,
or 1.2 percent.

31. Physician Shortage:
What to Know
If barriers to care were removed for currently
underserved populations and these populations
had similar patterns of use to the rest of the
population, the AAMC found the nation would
have needed as many as 96,200 additional
physicians in 2014.

32. Comparing Cost of Care:
MD vs. NP
Richard D. Fenton, MBA
Sr. Vice President, Executive Search
Tal Healthcare

33. Comparing Cost of Care:
MD vs. NP
Increasing the use of nurse practitioners to meet
the growing demand for primary care services
for Medicare beneficiaries may actually
• reduce costs for the government program
• while still providing beneficiaries with high-
quality care, payments to PCPs and NPs

34. Comparing Cost of Care:
MD vs. NP
PCP NP Difference
Inpatient services $22,898 $20,380 -11 percent
Part B services $2,955 $2,433 -18 percent
Outpatient evaluation and management $705 $498 -29 percent
Adjusted work relative value $1,911 $1,629 -15 percent
Evaluation and management relative
value unit
$713 $585 -18 percent

35. Comparing Cost of Care:
MD vs. NP
• NPs may be providing excellent, efficient care at a lower price,
as the average number of Medicare beneficiaries seen by
each PCP was double that seen by each NP (367 beneficiaries
compared with 183, respectively).
• While it is possible PCPs work more quickly, it is likely that
NPs spend more time with each patient to provide more in-
depth care, which in turn enhances quality, efficiency and
better outcomes.
• On the other hand, shorter, more rushed visits may result in
more diagnostic tests ordered, more medications prescribed
and more referral requests.

36. New York Metro Market
Work Place Environments
• Large, Academic Medical Systems
• Faculty Practice Organizations
• Community Medical Centers
• Federally Qualified Health Centers
• Neighborhood Health Centers
• Private Practices
• Other…