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NuHealth/North Shore-LIJ partnership reflects wider health care trend, say experts

North Shore LIJ hospital in Manhasset. (Feb. 7,

North Shore LIJ hospital in Manhasset. (Feb. 7, 2010) Credit: Newsday / Thomas A. Ferrara

Nassau Health Care Corp.'s closer affiliation with North Shore-Long Island Jewish Health System reflects a trend among stand-alone public hospitals seeking better financial footing in a shifting health care environment, experts said.

Despite antitrust objections by the state attorney general, Gov. Andrew M. Cuomo signed a law Oct. 23 that will let Nassau Health Care Corp., a public benefit corporation known as NuHealth that operates the Nassau University Medical Center in East Meadow, partner more closely with the not-for-profit North Shore-LIJ.

The bill, sponsored by state Sen. Kemp Hannon (R-Garden City) and Assemb. Earlene Hooper (D-Hempstead), was passed unanimously by both houses.

The new law clears the way for NuHealth to fully integrate clinically by sharing doctors and services, and, more importantly, to negotiate with commercial insurers alongside North Shore-LIJ.

But state Attorney General Eric T. Schneiderman's office has argued that the law is too broad and could result in rising prices for patients. The law was needed to exempt NuHealth because usually hospitals that are not linked corporately are viewed as competitors and are limited by state and federal antitrust laws to engage in clinical integration and other joint activities.

"The NuHealth bill -- because it is so broad -- grants immunity to a broad swath of conduct," Matt Mittenthal, a spokesman for Schneiderman, said after the law was signed. "This creates a risk that NuHeath and its private partners can enter into collaborations that amount to little more than price-fixing. Now the legislature has already given them advance permission to do so, with no oversight."

Since 2005 NuHealth, which also includes the A. Holly Patterson Extended Care Facility in Uniondale and five community health clinics, has had an affiliation with North Shore-LIJ, one of the largest regional health systems in the country. That affiliation has included North Shore-LIJ doctors running some departments such as cardiology, as well as working with NuHealth to improve patient care.

NuHealth chief executive Arthur Gianelli said that changes in the way that hospitals will be reimbursed make it increasingly difficult for a hospital like NUMC, which primarily serves low-income patients, to stay afloat financially -- in large part because it does not have the negotiating heft with commercial health insurers that a system like North Shore-LIJ does.

"We need to be paid appropriately by commercial payers," Gianelli said. "This will give us some parity."

It will also reduce costs of purchasing and some administrative functions, he said.

Hospital officials said the law goes along with the thrust of the federal Affordable Care Act, which encourages more collaboration and managing the care of large numbers of patients.

"The whole emphasis of health care reform is toward more integration and collaboration and the breaking down of silos," said Kevin Dahill, chief executive of the Nassau-Suffolk Hospital Council.

North Shore-LIJ chief executive Michael Dowling said he didn't "fully understand" the attorney general's objections. "It's kind of ironic," he said. "Every day we are being told to collaborate, and then they say 'Why are you collaborating?' "

Carl Graziano, a spokesman for America's Essential Hospitals, which includes 200 public hospitals, said affiliations are "becoming more common for public/safety-net hospitals." This, he said, is "consistent with incentives in the ACA for development of larger systems."

That was a major reason behind the affiliation announced in May beween Cambridge Health Alliance, which operates three safety-net hospitals, with Beth Israel Deaconess Medical Center in Boston, said Cambridge Health Alliance spokesman David Cecere.

"In a health-care environment that is shifting toward global payments, declining reimbursements and increased competition, it was extremely important that we join forces with a larger system to enhance the care we provide," he said. "Since, by definition, safety-net hospitals have fewer commercial patients and less clout with payers, linking with a stronger contracting organization provides us with an opportunity to negotiate rates more in line with the market."

The attorney general's office said it has no problem with affiliations per se.

"We agree that developing wider, more-efficient health care systems that result in clinical integration and improve health care for patients is a good thing," Mittenthal said. "But health care providers should not be permitted to use these as an excuse for creating market power and raising prices for patients, especially without obtaining any better or more-efficient health outcomes for patients."

But Gianelli said that the affiliation should not just help NuHealth financially, but also help deliver better care by taking advantage of North Shore-LIJ's doctors and clinical practices.

Asked where he thought the relationship would be in five years, he said: "I think we will be as closely aligned as we possibly can be without losing our autonomy."