Health Quest Systems in Dutchess County announced plans to combine with Western Connecticut Health Network in a deal that if approved by authorities, including the U.S. Federal Trade Commission, would create a new seven-hospital, $2.4 billion enterprise.
The resulting health care network would serve 1.5 million residents across Connecticut and New York. It would be staffed by more than 12,000 employees across a full continuum of care.
As the merger requires approval from multiple governmental entities, the new organization is not expected to launch until sometime in 2019. Until then, both organizations will continue to operate as independent entities. For now, the systems and hospitals will retain their names and corporate offices in Danbury, Connecticut, and LaGrangeville in Dutchess County, respectively.
Once approved, Health Quest President and CEO Robert Friedberg will serve as president and WCHN President and CEO John Murphy will serve as CEO of the newly combined organization. The new system’s board of directors will have equal representation – eight members from Health Quest’s board and eight members from WCHN’s board.
The two organizations said the new network would remain a nonprofit and carry forward its commitment to community health and wellness and continue to provide care to any patient regardless of their ability to pay.
Friedberg told the Business Journal that talks between the two parties began in August 2017, although he said he could not remember which party first brought up the idea of a merger. “It evolved through conversations we were having,” he said.
Speaking separately to the Business Journal, Murphy said the two organizations viewed both the increasingly competitive health care environment and the continued move from the fee-for-service to the value-based model as key factors in acting now.
“This was the right time,” he said. “We both recognized that neither of us would have this sort of chance again.
“Sharing similar missions and values, our organizations are uniting to create an expanded, patient-centered health system that accelerates the change from sick-care to wellness,” Murphy said. “We will remain cornerstones in our communities dedicated to providing compassionate, high-quality care and will have the depth, breadth and talent to advance the health and well-being of those we serve.”
Bringing their services together under one umbrella will result in a “more effective and more efficient” approach to patient care, he added.
Murphy stressed that regulatory approval is not a given. “You can’t just combine forces because you think it’s a good idea,” he said. “The FTC (Federal Trade Commission) has to view this as basically a pro-competition transaction. We don’t really compete with each other. We operate in separate but adjacent markets.”
Friedberg agreed. “This was a unique opportunity to combine systems in two geographic areas that have adjacency but no real overlap in what they do.”
He added that he and Murphy “are very aligned in how we think about how to provide health care to the communities we serve.”
Murphy said “the level of reaction has been very positive so far. People here are very excited about this.”
Health Quest includes Northern Dutchess Hospital in Rhinebeck; Putnam Hospital Center in Carmel; Sharon Hospital in Sharon, Connecticut; and Vassar Brothers Medical Center in Poughkeepsie.
WCHN has hospitals in New Milford, Danbury and Norwalk.
Other affiliates of each system include, Health Quest Medical Practice, The Thompson House, Health Quest Urgent Care, Hudson Valley Cardiovascular Practice P.C, also known as The Heart Center, Western Connecticut Medical Group and Western Connecticut Home Care.
The merger is the latest in several changes in the health care landscape in the Hudson Valley over past few years. Unaffiliated hospitals have become part of large networks such as the Westchester Medical Center Health Network that includes Westchester Medical Center, Maria Fareri Children’s Hospital, Bon Secours Community Hospital, Good Samaritan Hospital, Margaretville Hospital, Mid-Hudson Regional Hospital and St. Anthony Community Hospital.
Mount Vernon, New Rochelle, Nyack, St. Luke’s Cornwall and White Plains hospitals are all part of the Montefiore Health System.
The NewYork-Presbyterian’s health system has added Lawrence Hospital in Bronxville and Hudson Valley Hospital in Cortlandt Manor to its network. Northwell Health, meanwhile, has picked up Phelps Hospital in Sleepy Hollow and Northern Westchester Hospital in Mount Kisco.
The Health Quest announcement came just one day after St. Louis-based Ascension announced it was selling St. Vincent’s Medical Center in Bridgeport to Hartford HealthCare. Financial details of that transaction were not provided.
Hospital and health system mergers rose by 13 percent last year, as medical care providers continued to try and compete with national health insurers and outpatient medical care providers. According to consulting firm Kaufman, Hall & Associates, a record 115 were announced in 2017, with 11 of them involving hospital and health system sellers with $1 billion or more in annual revenues.
The biggest splash of late came in December when CVS Health announced its plans to acquire managed health care company Aetna for $69 billion. That deal is still pending regulatory approval.