The State University of New York trustees unanimously voted last month to allow Stony Brook University to go forward with merging its hospital with Southampton Hospital, a vote that was the biggest hurdle in a long process that could end with a new hospital being built at the Stony Brook Southampton campus in Shinnecock Hills.
Regulatory approvals are still needed before the merger can be completed, but Southampton Hospital President and CEO Robert Chaloner is confident state agencies are warm to the idea. Such a merger is in line with public policy, he says, and with the recommendations of the Berger Commission’s report on moving New York State’s healthcare facilities into the 21st century.
The next steps include getting the state Department of Health and the attorney general to sign off—Chaloner says all of the necessary approvals may be in hand within 6 to 12 months. The merger will be complete when Southampton and Stony Brook begin to work under the same state operating license.
In addition to Stony Brook setting aside some acres in Shinnecock Hills for a new hospital, the merger has numerous financial and clinical benefits that will improve access to and the quality of healthcare on the South Fork, according to Chaloner.
“We’ve opened a door to the future and it’s going to open up a lot of possibilities,” Chaloner says. “That’s why I’m excited about it. If we were just sitting here trying to survive for the next few years, doors would be closing on us.”
The approval of the SUNY trustees was a long time coming. Chaloner explains that SUNY was hesitant because of another hospital merger that went south. SUNY Downstate Medical Center and Long Island College Hospital, both in Brooklyn, merged, and it turned out to be a catastrophe, with hundreds of millions of dollars lost and Long Island College Hospital shuttering in 2014.
Long Island College Hospital was in dire straits before its merger, while Southampton Hospital has been on an upswing in recent years. “We’ve been climbing up, rather than going off a cliff,” Chaloner says of Southampton.
Nonetheless, the SUNY trustees subjected the Southampton deal to more extensive due diligence than was expected, and that dragged the process out.
Now that the trustees have given the green light, Chaloner is looking forward to Southampton getting access to Stony Brook’s teaching programs and doctors.
“Having teaching going on raises the bar for people’s expertise,” he says. And having access to Stony Brook’s network of residents and its recruiting capability will make it easier to fill openings when doctors leave or retire.
Chaloner hopes that by recruiting more doctors and initiating more programs, Southampton can get back much of the “bread-and-butter” community hospital work that it lost when the hospital had reputation problems and after experts in certain fields were lost. And Stony Brook would appreciate it too, he says. “We can do it for lower cost than they could over there.”
Clinical benefits will also include common record keeping between Stony Brook and Southampton, so patients can transfer between hospitals and doctors’ offices with ease. Financially, Southampton will save on supply and equipment purchasing, because the much larger Stony Brook can negotiate better prices. Medicaid and other governmental reimbursement rates for providing patient services are anticipated to go up. Reimbursement rates from private insurance companies could also improve at Southampton.
“We’ve looked at everything in enough detail to know that we’ll be stronger, financially, working together, but I can’t really say today how much additional revenue,” Chaloner says. He can say Southampton will be secure enough to focus on growth, rather than survival.
The “brass ring” of the merger is positioning Southampton to get a new facility at the college campus, he says.
With the land provided by Stony Brook, the project price for a new hospital is estimated to be between $200 million and $250 million. Southampton Hospital plans to raise $150 million through philanthropy. Having spoken to a number of hospital supporters, Chaloner says, “I don’t think it’s a pipe dream. I really think it’s doable to raise the kind of money we need.” The hospital can also sell its current facility in Southampton Village to raise capital, and some debt may be incurred.