2020 Economic

Mergers keep small hospitals in and near Delaware open 3 January 7, 2020 | Vol. 7 • No. 1 | $2.00 | DelawareBusinessTimes.com 2020 ECONOMIC Tourism industry looking to build FORECAST on 2019 successes 4 Delaware poised for fintech prominence 6 Sussex's housing growth leads to Dawn of a New Decade new challenge The Point at Cape 8 Henlopen State Park "Byrd of Legislative Hall" and "Delaware Eyewitness" Two memoirs give unflinching look at state government and public policy 27 2 January 7, 2020 DELAWARE BUSINESS TIMES DelawareBusinessTimes.com SAVE THE DATE January 15, 2020 | 7:30 – 10:30 AM The Queen, Downtown Wilmington $40 tickets (includes breakfast) To purchase tickets and sponsorship information, visit: delawarebusinesstimes.com/90ideas Conﬁrmed Speakers Tony Allen Dora Cheatham Ernie Dianastasis Patti Grimes Capt. Lauren Morgens DELAWARE STATE UNIVERSITY AUSTIN MARKETING & OPERATIONS DIR., DESCA THE PRECISIONISTS CARL M. FREEMAN AND JOSHUA M. FREEMAN FOUNDATION KALMAR NYCKEL Dorcas Olatunji Bobby Pancake Chip Rossi Bryan Tracy HS SENIOR, DELAWARE BOARD OF EDUCATION HIGH 5 HOSPITALITY BANK OF AMERICA WHITE DOG LABS, INC. In just 90 minutes, you’ll walk away with the collective wisdom and expert advice from nine proven leaders. Ninety ideas that can help strengthen your business and carry your organization to the next level. Thank you to our sponsors: DelawareBusinessTimes.com DELAWARE BUSINESS TIMES January 7, 2020 3 ECONOMIC FORECAST: RURAL HEALTH CARE Founded 2014 Mergers help save smaller A biweekly newspaper serving Delaware’s business community. Vol. 7, No. 1 dated January 7, 2020 Copyright © 2020 by Today Media, all rights reserved. This newspaper or its trademarks may not be reproduced hospitals in and near Delaware in whole or in part in any form or by any means electronic or mechanical, including photocopying or recording, or by any information storage and retrieval system now known or hereafter invent without written permission from BY JACOB OWENS $6 million in add-on payments annually. the Publisher. For licensing, reprints, e-prints, plaques, DBT Associate Editor Nanticoke Health Services President and CEO Steve e-mail [email protected]. Rose, who will retire later this month, previously told With the start of the new year, two of Delaware’s Delaware Business Times that Nanticoke had been health-care systems merged with peers and avoided looking at potential mergers since 2014. adding to a growing number of hospital closures in “We saw the handwriting on the wall as the health- CEO/President Robert F. Martinelli America. care landscape has changed,” he said in October, noting Publisher ChristianaCare, the state’s largest private employer, that his organization had also explored a merger with an Associate Publisher Fay Steiger signed a Jan. 1 agreement that merges Union Hospital unnamed Delaware-based health system that ultimately in neighboring Cecil County, Maryland, into the wasn’t chosen. Editor Peter Osborne New Castle County-based health-care system. Steve Leonard, president and CEO of Peninsula Associate Editor Jacob Owens e merger increases the operational footprint of Regional Health System, previously told DBT that his Research, Digital, and Mike Rocheleau ChristianaCare, which currently has two hospital organization already gets more than 24% of its revenue Engagement Editor campuses, Wilmington and Christiana, boasting more and 21% of its patients from Delaware, and he believed Copy Editor Al Kemp than 1,200 beds, as well as a freestanding emergency that “health care in the future depends on servicing department in Middletown. It also notably expands a region and taking care of a larger population.” Vice President of Charlie Tomlinson Leonard is probably right in that belief, as the number Business Development ChristianaCare across state lines in terms of hospital services for the rst time – ChristianaCare does operate of rural hospital closures and mergers have risen in the Digital Sales & Karen Martinelli two primary care o ces in southern New Jersey – taking last decade. Marketing Manager on Union’s 72 beds and assorted specialty care programs. Studies by the University of North Carolina’s Cecil G. Multi Media Account Executive Carol Houseal Meanwhile in Sussex County, Nanticoke Health Sheps Center for Health Services Research identied Programs & Event Coordinator Meaghan Daly Services is now a part of the Salisbury, Maryland-based 326 rural hospital mergers between 2005 and 2016, and Peninsula Regional Health System, which will grow 162 rural hospital closures from 2005 to present. Last Production Manager Donna Hill again later this year when the merger of McCready year saw the highest number of closures yet recorded at Art Director Chris Johnson Health based in Criseld, Maryland, is completed. 19, and those statistics only count hospitals not located Graphic Designers Eric Bolis at move adds Nanticoke Memorial Hospital’s 99 in metropolitan areas, meaning high-prole closures Rosalinda Rocco beds, outpatient services, Level III trauma center, and like Hahnemann University Hospital in Philadelphia Director of Digital Strategy Greg Mathias specialty programs in stroke, interventional cardiology are not included. and cancer care to Peninsula Regional Medical Center’s Among the reasons that researchers cited the rising Founding Publisher Sam Waltz 266 beds, outpatient services, a Level III trauma center, number of mergers were capital resources, risk-bearing Today Media, A Martinelli Holdings LLC and specialty programs in neurosurgery, cardiothoracic capabilities, care continuum, diversied operations, President Robert F. Martinelli surgery, cancer care and more. and brand presence. Secretary-Treasurer Richard Martinelli In both cases, the smaller hospital systems had tried In the case of Union Hospital, reimbursement rates In Memoriam to navigate the choppy waters of independence in the played a part in its di culties to endure independently Chairman Angelo R. Martinelli (1927-2018) health-care marketplace, only to end up choosing to as it had for more than a century. Vice President Ralph A. Martinelli (1962-2019) merge with a larger partner for greater nancial security. Former Union Hospital President and CEO Dr. Advertising Information ChristianaCare, which breaks its organization into Richard Szumel, who now serves as president of [email protected] several tax-exempt organizations, produced a net revenue ChristianaCare, Cecil County, told the Cecil Whig 302.504.1276 of more than $210 million in scal 2017, according to newspaper last year that its 2018 merger attempt Subscription Information publicly available audits. e organization as a whole with Baltimore-based LifeBridge Health was scuttled DelawareBusinessTimes.com/Subscribe held more than $2.3 billion in net assets. after the Maryland Health Services Cost Review 800.849.8751 On the other hand, Union Hospital has endured a Commission began a review of Union’s total cost of care. To submit press releases or story ideas rough stretch over the last few years, and produced a net Maryland has long operated the nation’s only all-payer [email protected] revenue loss of $5.8 million in scal 2019 – although hospital rate regulation system, overseen by the HSCRC, Daily Newsletter that was down considerably from the previous scal year which is allowed under a decades-old Medicare waiver Sign up for our daily newsletter, delivered to your e-mail inbox at DelawareBusinessTimes.com/Newsletter when it had a net operating loss of about $12 million, from the federal system. Under that waiver, all third- according to Maryland state audit records. It holds party payers — Medicare, Medicaid or private insurance Events The Delaware Business Times hosts a number of events about $82 million in net assets as of June 30. — pay the same rate. each year. View the schedule and register for events e situation was similar to the south, where While the state’s current regulation model notably at DelawareBusinessTimes.com/Events Peninsula Regional produced a net operating revenue seeks to dissuade hospitals from running up services of more than $38 million and held total assets of more for fees by placing an annual cap on revenues, in Union than $1 billion across three tax-exempt organizations in Hospital’s case it is having a di¥erent e¥ect. As a low- scal 2018, according to federal lings. In comparison, volume, high-cost provider, HSCRC regulators were Delaware Business Times (USPS 21760, ISSN 2639-8087), Nanticoke produced a net operating revenue of $8 reportedly reviewing whether to reduce the hospital’s Vol. 7, No. 1 dated January 7, 2020 is printed 26 times per year by Today million and held more than $95 million in net assets reimbursement rate. Media, 3301 Lancaster Pike Suite 5C, Wilmington DE 19805 and is available by subscription for $39 per year. Periodicals postage paid in FY 2018. It too had endured, following a more than Following news of that review and the failed at Wilmington, DE and additional mailing offices. Single copy/back 50% drop in annual net revenue from its largest revenue LifeBridge merger, Union o cials worked to increase issues are available at the cover price of $2 plus $2 shipping and creator, Nanticoke Memorial Hospital, from just three patient volume, and add more surgeons and physicians. handling. Attention Postmaster: Send address changes to Delaware Business Times, PO Box 460516, Escondido, CA 92046-9808. years ago. Ultimately, they also continued shopping the hospital Delaware

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