Fear Of Job Loss

Anxieties Hospital mergers are becoming a national trend, as institutions from New England to the San Francisco Bay area combine to strengthen their competitive positions in a changing health care market. The phenomenon has now emerged in New York, where the proposed merger between Mount Sinai Medical Center and New York University Medical Center (NYU), announced June 18, appeared to set off a flurry of similar transactions. In addition to combining their two hospitals, the institutions will merge their nationally known medical schools. MOUNTING FEARS : Scientists wonder how the merger of Mount Sinai, shown here, with NYU will affect their careers. The Mount Sinai-NYU marriage may not be blissful for researchers who are concerned about possible job loss and funding issues as formerly competing institutions, sometimes with grants for similar research, become one. However, the experience of two institutions in nearby Philadelphia that have gone through a similar merger proves that such arrangements do not always spell disaster for research scientists. NYU and Mount Sinai are not small potatoes in the New York market. With combined revenues of nearly $2.2 billion annually and more than $90 million in research grants and contracts apiece, this union ranks second in scope to the planned merger between Columbia-Presbyterian Medical Center and New York Hospital-Cornell Medical Center (NYH-CMC). Those two New York behemoths, with annual revenues in excess of $2.5 billion, announced plans to combine their hospitals and create an alliance between their medical school physicians in late July. Their medical schools, however, will remain separate. Another recently announced merger in the New York market involves Beth Israel Medical Center and Long Island Jewish Medical Center in New Hyde Park, with an annual operating budget of $1.3 billion. Both are teaching hospitals for Albert Einstein College of Medicine in Bronx, N.Y. Allegheny University provost Lenoard Ross: "We did offer a package to people -- early retirement or accelerated retirement packages." The NYU-Mount Sinai merger best mirrors the 1993 merger of Philadelphia's Medical College of Pennsylvania (MCP) and Hahnemann University-two medical schools and their affiliated hospitals with joint annual research grants and contracts of about $50 million. This group, now called Allegheny University of the Health Sciences, swallowed Philadelphia-based Graduate Health System early this month. It now includes schools of medicine, nursing, health professions, and public health, and a major conglomerate of hospitals and physician groups reaching from Philadelphia to Pittsburgh, under the umbrella of the Pittsburgh-based Allegheny Health, Education and Research Foundation. "We were consulted both by the Sinai people and the NYU people," says Leonard Ross, Allegheny's provost and former MCP dean. The proposed merger of NYU and Mount Sinai is not unusual. According to Public Citizen, a Washington, D.C.-based consumer group, in 1995 more than 900 community hospitals were involved in some sort of merger, acquisition, or joint venture (M. Gabay, S.M. Wolfe, Who Controls the Local Hospital? The Current Hospital Merger and Acquisition Craze and the Disturbing Trend of Not-for-Profit Hospital Conversions to For-Profit Status, Washington, D.C., Public Citizen Health Research Group, June 1996). University hospitals or hospitals that are part of a university network also are increasingly involved in mergers and acquisitions. And the effects of these mergers and subsequent downsizing on staff morale are so apparent that a Medline search uncovered significant amounts of literature on hospital employee stress in these circumstances. Although officials try to be reassuring-"no closings or layoffs are planned," states the joint New York Hospital-Presbyterian Hospital press release-mergers strike fear into the hearts of researchers and clinicians, who suddenly realize that their jobs potentially are on the line. This particularly is the case in the merger of NYU and Mount Sinai, whose medical schools will join to form the NYU-Mount Sinai School of Medicine. The new entity will have a combined basic science faculty of 809 and a combined student population of 1,650 (including 1,063 M.D. students), although those numbers may dwindle as the merger is completed. The fear that any move could jeopardize one's job is so pervasive that few people at either institution would speak with The Scientist for attribution. Such fears may be founded. In the MCP-Hahnemann merger, the medical school faculty was downsized. According to Ross, "Tenured people were kept. We did offer a package to people-early retirement or accelerated retirement packages." Ross estimates that less than 10 percent of the combined faculty of approximately 900 left voluntarily under that arrangement. "Some of the faculty we reassigned to other roles within the university, for instance, teaching to an expanded allied health program," Ross continues. "We've pretty much pro-ductively used all of the tenured faculty who elected to remain." Indications are, according to an August 7 report in the Philadelphia Inquirer (S. Fitzgerald, S. Burling, page A1), the Graduate System's facilities and personnel would be incorporated into Allegheny. "Going into this we don't see we're going to close any of the facilities but we're going to make sure they are fully utilized," said Sherif S. Abdelhak, president and chief executive officer of Allegheny Health, Education, and Research Foundation, in the article. NYU and Mount Sinai, unlike Allegheny, have no other health-related schools to which faculty could be assigned. ANNOUNCEMENT : Mount Sinai president John W. Rowe reportedly reassured tenured faculty A Mount Sinai faculty member, speaking on condition of anonymity, says that when Mount Sinai president John W. Rowe addressed the faculty and staff about the merger, "he said those who have tenure and those who are chairmen don't have to worry [about their jobs]." An NYU staff member, also requesting anonymity, relates that NYU's dean, Saul Farber, "assured faculty that tenured faculty are okay and they would remain at NYU. That sort of was a great relief for everybody to hear." Neither school mentioned nontenured faculty. Mount Sinai's medical school is part of the City University of New York (CUNY), a public institution with its own tenure system. All tenure is not with Mount Sinai but with CUNY-which is not a party to the merger and will lose its medical school. Some on both NYU and Mount Sinai's staffs wonder whether a combined private institution will honor tenure granted by a third party. PROLONGED PROCESS : NYU dean Saul Farber has estimated it may take as long as five years to complete the merger. The questions NYU and Mount Sinai staff ask among themselves are fueled by fear rather than fact. Ross explains that in the MCP-Hahnemann merger, he also dealt with faculty distress. "We had a lot of terrified people here, too, and it took a lot of reassurance to calm them down." Within three weeks of the merger, Ross had named one chairperson for each department. "That was one of the most important things," he recalls. However, neither NYU nor Mount Sinai officials have said anything to staff other than the initial announcement and staff meetings, according to staff members at both New York institutions. The Mount Sinai researcher indicates concern that when its school of medicine is absorbed into the NYU medical school, Mount Sinai staffers may find themselves out of jobs. "Mount Sinai's educators will be in great trouble," the researcher says, pointing out that some on the staff do not have research grants, but devote themselves to teaching. "Most people are going to be left high and dry. At least I'm sending [C.V.'s] out." But the researcher notes that the dean's office is sending signals to researchers looking to leave Mount Sinai that "people shouldn't be running for the lifeboats just yet." Staff members whose salary is paid for by grant or contract funds may not be affected by cutbacks. That is the case with the planned merger between Boston's New England Deaconess Hospital and Beth Israel Hospital, says David Kiszkiss, vice president for research at New England Deaconess. The two institutions, both teaching hospitals for Harvard Medical School, announced a merger in April. In addition to jobs, overlapping programs funded by the National Institutes of Health may be cut. The usual practice is for an institution to submit only one grant application or contract proposal in response to an NIH Request for Proposals (RFP). But NYU and Mount Sinai have duplicate NIH-supported centers. Both have centers for research into Alzheimer's disease funded by the National Institute on Aging (NIA), and both have Environmental Health Sciences Centers supported by the National Institute of Environmental Health Sciences (NIEHS). NIEHS program administrator Allen Dearry explains that the NIEHS-funded centers are supported out of the same pool of money. Having one institution with two identically funded NIH programs is a problem that is new to NIH. Were NYU and Mount Sinai to follow through with their plans to become a single corporate entity, "I would say that would be a topic of discussion" in considering funding of these centers, says Dearry. A way around this is to maintain two corporate identities. This is what NYH-CMC intends to do, according to its director of public affairs, Myrna Manners. Although the physicians at both medical schools will form a clinical alliance, the schools will remain separate corporate and functional entities, each applying for its own NIH grants. If Allegheny is any example of how a merger works, research funds will increase at NYU-Mount Sinai. According to Ross, "Allegheny's research grant portfolio went from $50 million to in excess of $80 million. We've recruited individuals in the last year who collectively brought in another $9 million worth of grants. Clearly, I think we've become a more attractive medical school." CORPORATE SPONSORSHIP :Analyst Marianne-Louise Pierce sees increased role for industry. Management consultant Marianne-Louise Pierce, president of Life Science Associates Ltd. in New York City, sees increased funds but differences in research emphasis. "Within the health care industry, most notably pharmaceuticals and biotechnology, research and development spending is the fastest growing cost category," she relates. "The new patient-centered integrated health care system will shift research funding resources toward corporate-sponsored clinical experimentation and investigations. Basic research is disadvantaged in the competition for funds." At present, according to NYU spokesman Peter Ferrara, only a small percentage of NYU's research funding comes from pharmaceutical and medical device companies. No matter what types of corporate entities are formed, mergers are expected to continue. Pierce sees a complex of factors at work affecting decisions of academic medical centers. "In the U.S., federal funds were used to support this mixture of research, education, and patient care," she says. "[This] stimulated the growth of an enormous enterprise that was effectively shielded from external market forces and competition." MERGERS CREATE RESEARCH LEADERS Does a medical center merger promote excellence and the ability to recruit the top researchers? The experience of Allegheny University of the Health Sciences in Philadelphia is that it does. Allegheny's two most recent coups were the recruitment of cellular transplantation specialist Suzanne Ildstad from the University of Pittsburgh to be head of the Allegheny Institute for Cellular Therapeutics, and National Academy of Sciences member biochemist Darwin J. Prockop, from its Philadelphia neighbor, Thomas Jefferson University. Prockop, who had been director of the Jefferson Institute of Molecular Medicine, will direct Allegheny's new Center for Gene Therapy. Ildstad was involved in the recent transplantation of baboon bone marrow into a California man with AIDS (see story on page 1).The recent merger with Philadelphia-based Graduate Health System, which makes Allegheny a $2.3 billion health-care giant, undoubtedly will increase its ability to attract researchers. A staffer at New York's Mount Sinai Medical Center, speaking on condition of anonymity, suggests that with Mount Sinai's new biomedical research and clinical building (slated to open this fall) and NYU's expertise, the newly fused Mount Sinai-NYU Medical Center may be poised to become a major player in New York's growing biotechnology industry. "Hopefully, the merger will provide the kind of institutional support for expanding the technology transfer and licensing function of the combined resources of the institution. The merger will enhance those resources and expand those resources so that the wonderful research going on there will have a better chance of reaching the market to solve the health problems of the population," says Jack Huttner, executive director of the New York Biotechnology Association in Stony Brook. - M.E.W. All that is changing as managed care revolutionizes the health care industry. "Teaching hospitals typically charge more for care than non-teaching hospitals," states Pierce. Health maintenance organizations (HMOs) and insurers once were willing to pay these costs, knowing that they were subsidizing research and education and supporting the development of innovative technology. The current market no longer allows that, observes Pierce. "Today, as the industry is more cost-driven and cost-competitive, group purchasers are less willing-and even unwilling-to pay extra to subsidize research and education." Allegheny's Ross notes that this was the case with the MCP-Hahnemann merger. "The pressures were basically survival. The city of Philadelphia was blessed with five allopathic and one osteopathic medical schools. That's a lot of academic health centers for an area: the Delaware Valley has a population of 4.5 million. And there were tremendous financial pressures on the academic health centers that are competing with one another. Not the least of the pressures is the managed-care market. If you're small, they don't want to talk to you. The bigger you are, the more likely they will sit down at the table and talk to you." That was a major factor in the partnership between Allegheny and Graduate Health System. A week before the merger, Philadelphia insurer Independence Blue Cross announce it was canceling its contract with Graduate over pricing and equipment issues. MANAGED CARE CONCERNS: Stanford dean Eugene Bauer says a merger with UC-San Francisco would appeal to HMOs and MCOs. In an internal memorandum on the proposed merger of Stanford Health Services, the hospital and treatment facilities of Stanford University, and the University of California, San Francisco's clinical "enterprises," Eugene Bauer, dean of Stanford University School of Medicine, wrote, ". . . there is at least anecdotal evidence that the merged clinical entity would be a more attractive partner for health maintenance organizations, such as Kaiser [the California-based regional managed-care organization], and for integrated physician group practices in the community." "Mergers are critical to maintaining a viable medical research agenda in the new marketplace that hospitals are going to be faced with," states Kenneth E. Raske, president of the Greater New York Hospital Association in New York. The problem facing medical education now is to maintain education and research funding in this cost-conscious environment. "In the past," says Deaconess' Kiszkiss, "most academic hospitals have provided about 15 percent of their overall research budget from internal sources. These sources include fund-raising, excess operating revenue from patient care, and investment income. I think that will be a real challenge to maintain that. That's the problem the mergers won't solve for research." New York, according to Raske, is dealing with the issue of finding funds for medical education and research in a creative way. The state has "a special pool for medical education to the tune of $1.385 billion to help fund medical education and keep it outside of the competitive, price-cutting process of HMOs and hospitals," he explains. Approved as part of New York's 1997 fiscal year budget, the money for medical education will be found from a new source: taxing health insurance premiums and hospital services. On a federal level, Sen. Daniel Patrick Moynihan (D-N.Y.) introduced the Medical Education Trust Fund Act of 1996 to finance graduate medical education through transfers from Medicare trust funds, MARKETPLACE REALITIES: Hospital association president Kenneth Raske calls mergers critical. Medicaid, and taxing insurance premiums. The bill would have ensured that medical education was paid for by public monies, but the bill died before it got to the Senate floor. Moynihan sums up medical school troubles-and New York's specific problems-in a recent letter in the New York Times (Aug. 6, 1996, page A16): "Teaching hospitals can't compete in a world of HMOs. Absent teaching hospitals, you can't have medical schools. Absent medical schools, the heroic age of medical discovery, with its epi- center in New York City, comes to an end." Until medical school and research funding problems are solved, more mergers affecting medical schools-either directly or indirectly-are bound to occur. Tufts University School of Medicine is financially "solid," according to Rosemarie Van Camp, Tufts University's director of communications and public relations. But its teaching hospital, New England Medical Center, a private corporation that is not part of Tufts, "has been looking for a partner for more than a year," writes Tufts' medical dean ad interim, John T. Harrington, in the latest issue of its medical school alumni newsletter. In April, Connecticut's Hartford Health Care Corp. and the University of Connecticut Health Center in Farmington agreed to form a strategic alliance. Kiszkiss foresees that the ability to share facilities, services, and research space will be beneficial for research at the new Beth Israel Deaconess Medical Center. "One of the reasons behind all these mergers is cost efficiency and better use of resources," he states. Stanford's Bauer expects that "the proposed merger would provide an increased patient population base, a single information system, and integrated faculty clinical services. This enhances the institutions' ability to create a world-class center for clinical research." The proposed NYU-Mount Sinai merger may lead to more efficient clinical trials because the two organizations have such different strengths, according to the NYU staffer. "If you combine the clinical resources of Sinai and NYU, you can conduct clinical trials so much more efficiently; you can recruit so much quicker." The two institutions have been cooperating or planning to cooperate in research, even without a merger. The NYU staff member relates, "They have a PET [positron emission tomography] scanner, which is a very powerful research tool. We would never have that here . . . because we thought we could collaborate with Mount Sinai." SHARE AND SHARE ALIKE : New England Deaconess' David Kiszkiss says shared resouces will benefit from research. But before the merger is complete-something Dean Farber has suggested may take as long as five years, according to an NYU source-the kinks need to be worked out: policies, overlapping programs and offices, finances, funding, personnel, and so forth. Yet there is skepticism, and even alarm. Health policy specialist Arthur Levin, director of the Center for Medical Consumers, a nonprofit organization in New York, is doubtful about the future. "I think [that] to academics and to researchers that basically have found their employ in academic medical centers, these institutions, as they become more and more competitive in the marketplace, will be less and less able to sustain that activity [research]," he tells The Scientist. On August 5, he wrote in a letter to the New York Times (page A16): "The result [of the mergers], advocates worry, will be fierce competition for 'covered [insured] lives' resulting in layoffs of thousands of skilled medical and support personnel and a frightening erosion of quality standards." Myrna E. Watanabe is a science writer based in Yonkers, N.Y.

Fear Of Job Loss

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August 1996

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