Negotiations over a corporate consolidation between Westchester Medical Center (WMC) and Sound Shore Health System (SSHS) that was expected to financially strengthen and keep open Sound Shore”™s two community hospitals have ended after nearly six months.
The failed negotiations could leave Sound Shore looking outside the county for another  academic medical center partner, most notably Montefiore Medical Center in the Bronx.
The May 7 Â announcement that merger talks had reached a dead end came solely from Westchester Medical Center officials in Valhalla. That was in contrast to the joint announcement last December that the hospitals had begun exclusive talks to explore forging a “formal corporate relationship” to create what WMC President and CEO Michael Israel called “a stronger, more vibrant health care organization.”
“Health care in Westchester just got stronger,” Sound Shore Health System President and CEO John Spicer said after the December agreement was announced.
WMC officials in their brief recent statement described the focus of the negotiations as “a possible acquisition” by WMC of the Sound Shore and Mount Vernon health care facilities.   “WMC was prepared to dedicate enormous resources to the effort to keep these clinical sites open and upgrade them to better serve New Rochelle, Mount Vernon and the surrounding communities,” said WMC spokesman David Billig.
“WMC has now concluded that it has no alternative but to terminate these discussions,” he said. “Sound Shore appears to have a dramatically different view than WMC about how to best balance resources between investment in improving the Sound Shore/Mount Vernon facilities and the obligations that the Sound Shore System has accumulated over the years.
“In keeping with our mission, WMC will be pursuing alternative approaches to ensuring that the people of New Rochelle and Mount Vernon will always have access to the kind of health care facilities they deserve.”
Sound Shore officials in New Rochelle did not respond to a request for comment.
Sound Shore Health System operates the 252-bed Sound Shore Medical Center and the Schaffer Extended Care Center in New Rochelle, the 196-bed Mount Vernon Hospital and the Dorothea Hopfer School of Nursing at the downtown Mount Vernon hospital. The four institutions affiliated in 1997 to create one of the largest private health care systems between New York City and Albany.
Its operating budget last year was about $325 million, Spicer said at the start of consolidation talks. A public benefit corporation, the 643-bed Westchester Medical Center operated on an $871 million budget in 2012.
Both the SSHS hospitals, with about 500 physicians, and WMC, with about 900 physicians, are teaching affiliates of New York Medical College, which shares a Grasslands campus with WMC. Spicer and Israel last winter said that is one of several common elements and shared services between the institutions.
Spicer last winter said finding an academic medical center partner had been part of Sound Shore”™s strategic planning since 2011. Though partnerships with other institutions were explored, “Eventually all roads led to Westchester (Medical Center) for a number of reasons,” he said. “We think it”™s very important for this community that it”™s a Westchester-based hospital.”
Montefiore Medical Center in the Bronx also is said to have expressed interest in partnering with Sound Shore. In the wake of WMC”s decision to end talks, sources in the county said Montefiore was close to reaching an acquisition agreement with Sound Shore.
“As a matter of policy we don’t comment on rumors or speculation,” Mariann Caprino, senior director of media and public relations at  Montefiore, told the Business Journal.
WMC and SSHS “certainly went through extensive due diligence,” Kevin W. Dahill, president and CEO of the Northern Metropolitan Hospital Association and principal of Suburban Hospital Alliance L.L.C., said of the six-month process by the two parties. Dahill said he did not know the reasons why the consolidation talks collapsed.
“These things happen,” he said. In the due diligence stage, “You literally are putting everything out there.”
“They both are trying to pursue strategies and I think they both concluded that they need more scale”¦I think they”™ll both go back and reevaluate their strategies and see what other opportunities are out there.”
Dahill last winter called the merger talks between WMC and SSHS “the tip of the iceberg” and predicted there will be more hospital consolidations over the next one to two years.
WMC and Sound Shore were the first parties to take the due diligence step, he said after negotiations ended. “I think everybody”™s exploring what they need to do over the next few years because of the changes that are coming, but nobody”™s taken it to the level of due diligence.”
“I think it”™s going to be a fluid, dynamic time,” said Dahill, “especially as we go into the summer and fall.”
[Editor’s note: This article was updated May 10.]
Speaking about owning up to financial obligations, what about the enormous debt that the Westchester Medical Center (WMC) has represented to county taxpayers for years with no end in sight?