October 10, 2013
The Boards of Directors for Faxton St. Luke’s Healthcare (FSLH) and St. Elizabeth Medical Center (SEMC) have unanimously voted to move forward with an affiliation agreement and the submission of a Certificate of Need (CON) application to the New York State Department of Health (DOH). The boards signed a Memorandum of Understanding to affiliate the two organizations in December 2012.
“For the past year, we have been working through a number of steps including the review of legal and financial due diligence for the hospitals, meetings with a number of agencies within the Department of Health as well as representatives from the Federal Trade Commission,” stated Scott H. Perra, FACHE, president/CEO of Faxton St. Luke’s Healthcare. “We are pleased that we can now move to the next step, having our application reviewed by the DOH.”
The hospitals submitted the application on Friday, October 4, 2013 and are waiting to hear from the DOH about when the proposed CON will be on the agenda of the New York State Public Health and Health Planning Council. They are hoping it could be as early as December of this year.
The name of the proposed “parent organization” that will govern the two facilities is Mohawk Valley Health System. The proposed parent organization will be governed by a new Board of Directors comprised of 18 members with equal members from the FSLH board and the SEMC board. Each hospital will still maintain a separate board, which will have significant overlap of members with the parent board. One CEO, Scott H. Perra of FSLH, will oversee the management team for both organizations.
“Another step in the process is to file a notification with the Department of Justice under the Hart-Scott-Rodino Act. These types of affiliations are reviewed from an antitrust perspective,” Perra explained. “We anticipate that filing will take place by mid-October.”
The Hart- Scott-Rodino Act, signed into law in 1976 by President Ford, requires large companies to file a report with the Federal Trade Commission and Department of Justice before completing a merger, acquisition or transfers of securities or assets. Under the provision, government regulators determine whether the transaction would violate antitrust laws.
The CEOs anticipate that the next steps will take between three to six months to finalize and, if all approvals fall into place, they are looking toward spring 2014 to complete the affiliation process.
“I wish to commend both boards and our employees, medical staff and volunteers for their incredible patience and understanding,” said Richard Ketcham, FACHE, president/CEO of St. Elizabeth Medical Center. “We have been working on this since December 2011 when our boards first agreed to explore the concept of affiliation. Throughout this process, the Sisters of St. Francis of the Neumann Communities and the Syracuse Diocese have been very supportive of our efforts, and involved with every step.”
Consolidation and joint partnerships are not new for the organizations. Faxton Hospital and St. Luke’s-Memorial consolidated their services in 2000. Both SEMC and FSLH jointly sponsor the Mohawk Valley Heart Institute and have a collaborative agreement for the Central New York Diabetes Education Program.
The two organizations employ nearly 4,500 employees and have combined operating budgets of more than $500 million.