Northern Westchester Hospital looks to join North Shore-LIJ

Northern Westchester Hospital in Mount Kisco has followed three other community hospitals formerly in Westchester”™s Stellaris Health Network in pursuing a merger this year with a larger metropolitan health care system.

Trustees of the 1,500-employee, 235-bed hospital unanimously approved a letter of intent to explore joining the North Shore-LIJ Health System, officials at the two hospitals recently announced. Northern Westchester Hospital and North Shore-LIJ, the state”™s largest private employer and its largest integrated health care provider, will begin exclusive negotiations and the due diligence process with a goal of signing a final agreement later this year, hospital officials said.

In the last month, North Shore-LIJ Health System, based in Great Neck, has emerged as a new force in Westchester”™s health care industry as it expands its patient service reach from Long Island into the lower Hudson Valley and southern Connecticut. North Shore and Phelps Memorial Hospital officials in Sleepy Hollow in May announced their intent to begin negotiations to bring Phelps into the North Shore-LIJ system, which includes 17 hospitals and more than 400 outpatient physician practices on Long Island and in New York City. They expect to reach a final agreement by late summer.

Phelps Memorial and Northern Westchester are among four former affiliate hospitals of the Stellaris Health Network that have sought new, well-financed parent companies since leaving Stellaris last year. Another former Stellaris affiliate, White Plains Hospital, expects to seal an agreement this summer to join the Montefiore Health System. Montefiore, based in the Bronx at its academic medical center, last year purchased in a bankruptcy proceeding and took over the operation of two former Sound Shore Health System hospitals in New Rochelle and Mount Vernon.

Lawrence Hospital in Bronxville, another former Stellaris affiliate, received state approval this year of its pending takeover by New York-Presbyterian Hospital, a deal expected to close this summer.

Robert Spolzino, board chairman of Northern Westchester Hospital, in the announcement said trustees “decided that we needed an innovative partner who could provide us with the scale and resources to capitalize on the monumental changes currently underway in the health care industry. As one of the nation”™s largest health systems, North Shore-LIJ recognizes the important role that regional hospitals have in delivering exceptional care for their local communities.”

Northern Westchester Hospital president and CEO Joel Seligman said hospital officials think North Shore-LIJ is “the right partner” to accomplish the community hospital”™s aim to further develop its medical expertise and technology while achieving greater operating efficiencies and reducing costs.

North Shore-LIJ president and CEO Michael J. Dowling in the announcement said the Mount Kisco hospital has been a state leader in “delivering care that is high-quality, technologically advanced and cost-effective. As a teaching hospital for patient-centered care, Northern Westchester has consistently ranked among the top five hospitals in New York state and number one in the Hudson Valley for patient satisfaction. We are excited to be taking this first step toward becoming partners and we look forward to working closely with the hospital”™s leadership team to build upon these strengths and further define our strategy for serving communities throughout the Hudson Valley.”

As it would, too, with Phelps Memorial in Sleepy Hollow, North Shore-LIJ in Mount Kisco would become parent company of an institution in better financial health than many community hospitals in New York. According to its most recent published financial report, Northern Westchester Hospital ended 2012 approximately $7.4 million in the black. That positive revenue balance after expenses was down from approximately $12.7 million in 2011.

The 48,000-employee North Shore-LIJ Health System reported total operating revenue in 2013 of just more than $7 billion. It ended last year with nearly $84 million in excess revenue over expenses. That was down from approximately $97.9 million in excess revenue over expenses in 2011.

The health system last year launched the North Shore-LIJ CareConnect Insurance Co. Inc., creating the first provider-owned health insurer in New York. The company last fall began marketing a range of commercial insurance plans on and off the new state health benefit exchange to individuals, families and small businesses in Long Island, Queens, Staten Island and Manhattan. Within six months, the startup company had 10,000 people enrolled, according to North Shore-LIJ officials.