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Executive Summary The Brooklyn Study: Reshaping the Future of Healthcare Restructuring and investing in healthcare delivery in the communities of central and northeastern Brooklyn This report is driven by a strategic vision for the future of healthcare in Brooklyn. This vision focuses on a sustained commitment to improved health outcomes in quality, safety and service to community residents; embraces health prevention to creatively address the social determinants of health through innovative partnerships with government and community-based organizations; includes the latest advances in medicine; and provides care within a system that is more efficient and requires a significant expansion in access to primary and ambulatory care services to ensure the longer-term viability of these improved medical outcomes for the community. It is a daunting task for any community designated to support projects that will hospital to transform its decades-old clinical transform the organization and delivery model of care, operations and facilities at a of health services as part of a merger, time of rapid marketplace change. It is even consolidation, acquisition or other significant more daunting when the objective is to corporate restructuring intended to create a align the governance, management, clinical more financially sustainable system of care. leadership and cultures of multiple financially struggling, independent hospitals in a new The statute requires the funds to be distributed regional partnership. Through a multi-year to eligible providers serving communities in effort, with objective analysis, informed Brooklyn whose residents are experiencing planning and continued funding, however, significant levels of healthcare disparities this transformation can be achieved. compared to other communities within Kings County. These disparities are evidenced Recognizing the importance of maintaining by a number of specific factors, including healthcare access for the most vulnerable dependency on Medicaid, health status communities of Brooklyn and concerned indicators and socioeconomic determinants of about the long-term sustainability of the health. Providers applying for funds must also independent hospitals serving local residents, demonstrate sustained operating losses as well the State of New York is prepared to make as other specific financial indicators for the past significant capital and operating investments, three years. Additionally, the application must provided that its support is directly linked to a detail the transformation actions that will be long-term solution that would transform care taken by the applicant. in the region, align both strategic investments and operations in a more efficient, effective The communities and hospital providers manner and improve the overall quality of of central and northeastern Brooklyn meet care for the communities served. the requirements of the Transformation Program. These communities are currently In 2015, the New York State Legislature served by the following hospitals: Brookdale authorized the appropriation of $700 million University Hospital and Medical Center as part of the Kings County Health Care Facility (Brookdale), Kingsbrook Jewish Medical Transformation Program (Transformation Center (Kingsbrook), Interfaith Medical Center Program). These capital funds were specifically (Interfaith), Wyckoff Heights Medical Center Northwell Health | Executive Summary: The Brooklyn Study: Reshaping the Future of Healthcare 1 Figure 1 Service Area for Central and 11237 Bushwick Wyckoff Northeastern 11206 Williamsburg 11385 Brooklyn Ridgewood 11221 Bushwick 11216 11238 11233 Interfaith Stuyvesant 11208 New Lots Crown Heights 11207 11213 East New York 11225 11212 Prospect/ Brownsville Leffert Kingsbrook University 11203 Brookdale Hospital Rugby 11226 11236 Flatbush Maimonides Canarsie Wyckoff Woodhull Brooklyn 11210 Hospital Center Midwood Interfaith NY Methodist Kingsbrook Kings County Brookdale Lutheran University Hospital Maimonides MS-Brooklyn NY Comm of Brooklyn Source: SPARCSver2016.05.27adj; Coney Island Based on origin of 75% of inpatient discharges. (Wyckoff ) and University Hospital of of this project was to develop a more robust, Brooklyn (University Hospital or UHB), sustainable organizational framework to help collectively referred to as the study hospitals. the hospital providers better address current (See Figure 1, Service Area for Central and and future operating challenges and focus on Northeastern Brooklyn.) improving the health of the communities they collectively serve. The study was conducted These hospitals function independently of with the participation of hospital leadership one another. In the current fi scal year, the and incorporated the input of healthcare gap between patient revenue and operating professionals, the workforce and its designated expenses will be approximately $500 million, representatives and community stakeholders. which is made up through a combination of State and federal support. Northwell is one of the few health systems in the nation with a proven history of creating The New York State Department of Health multiple, successful partnerships with (DOH) engaged Northwell Health and its community hospitals that have improved business consulting division, Northwell clinical quality outcomes, enhanced access to Ventures, to develop recommendations an expanded array of clinical programs and on how to realize increased value from the services and improved operating performance capital investment provided through the through economies accompanying network transformation of the healthcare delivery scale. Additionally, it has transformed its system for the communities of central and facilities and operations in a respectful and northeastern Brooklyn, as well as funding productive partnership with its workforce, provided by the State for continued operating their union representatives and the support of the hospitals. A major objective communities they serve. 2 Northwell Health | Executive Summary: The Brooklyn Study: Reshaping the Future of Healthcare Service Area Challenges The challenges confronting the provider overwhelming majority of commercially insured community of central and northeastern patients living in the service area choose to Brooklyn have been well documented. Previous receive care elsewhere in Brooklyn or travel to studies have noted that the financial condition Manhattan. The study hospitals are in a very of the most troubled institutions is to a large weak position to negotiate with the insurers of extent a product of an inefficient expense the commercial payers they do treat. structure; revenue challenges associated with declining inpatient admissions and a Hospitals of central and northeastern Brooklyn patient mix that approaches 90 percent public also have to confront a new economic reality payers and charity care; significant liabilities; in which federal and State resources are and an aging or even obsolete physical plant constrained and new payment methodologies that undermines attempts to provide safe, require major transformation of the clinical quality care. and business model of care. Due to advances in medicine, many healthcare services Simply stated, these hospitals have undergone that were once the exclusive domain of a decade of financial and organizational hospitals are now delivered as effectively trauma. Some of the responsibility for the and often more efficiently in an ambulatory circumstances in which they find themselves or home setting. Access to emergency and must be attributed to poor decision making by acute hospital services is still important; prior management. Other New York hospitals however, future facility investments must in similar circumstances addressed their strike a balance between maintaining a safe, challenges through successful partnerships effective inpatient environment and building or mergers. The study hospitals, however, ambulatory care capacity beyond the hospital either chose to remain independent, tried and campus. Organizations such as the study failed to enter into partnerships or mergers or hospitals, which have not developed robust entered into poorly conceived and ultimately and geographically dispersed ambulatory destructive arrangements. Fortunately, at the care networks, are at a disadvantage, time of this study, the hospitals have all taken because the availability of such networks significant steps forward in improving the permits hospitals to offset declining inpatient quality of their leadership teams. revenues with growing ambulatory revenues, which are foundational to success under Government insurance programs such as value-based purchasing. Medicare and Medicaid reimburse these hospitals for services provided at rates that are Not surprisingly, the five study hospitals below the actual costs they incur for delivering report staggering operating deficits with services. The hospitals in this study also have no independent access to capital to invest considerable inpatient or outpatient volume in program and facility transformation. In with Medicare Advantage and Medicaid State Fiscal Year 2017, Brookdale, Interfaith, Managed Care plans, which both apply Kingsbrook and Wyckoff will require over significant denial rates, resulting in effective $300 million in direct State operating payment rates below those of traditional assistance to remain open. (See Figure 2, Medicare and Medicaid. Unlike many other Estimated Hospital Support, SFY 2017.) hospitals, they lack the ability

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