Sinai Health System in Chicago recently announced it is entering the due diligence phase of a possible affiliation with Holy Cross Hospital, also in Chicago. Sinai Health System is a private, non-profit organization that has served the west and south sides of Chicago since 1919. With a total of 421 licensed beds and eight physician residency training programs, SHS is comprised of six member organizations including Mount Sinai Hospital and Sinai Children's Hospital. Holy Cross Hospital is a private, Catholic, non-profit organization, serving residents of Chicago's southwest neighborhoods and suburbs with 274 licensed beds.
Officials of both hospitals believe that if Sinai Health System acquires Holy Cross, each hospital will be "elevated and strengthened," because Holy Cross and Sinai Health are complementary in terms of medical staffs, range of services offered and patient populations served. "Each [hospital] could benefit from economies of scale, allowing us to strengthen our mission to improve the health of the individuals and communities that we serve," says Alan Channing, president and CEO of Sinai Health System.
Here Mr. Channing discusses the impetus for Sinai's potential affiliation with Holy Cross Hospital, the due diligence process and the role of the CEO during an affiliation.
Question: Sinai Health System recently announced it is considering an affiliation with Holy Cross Hospital, another Chicago-based hospital. What was behind Sinai Health System's interest in a possible affiliation?
Alan Channing: One of the things that is critical for an affiliation is that there is a good rationale for two organizations to come together. Ultimately, the board of directors guides how a hospital thinks about and prepares for its future, which may include considering an affiliation. For instance, about seven years ago, the planning committee of Sinai Health's board of directors told me they would like me to begin thinking about how to innovatively and effectively deliver healthcare to the west side of Chicago. This was an interesting challenge coming from a board. Over the years, we have tried a couple things with neighboring institutions to create a concept of pre-primary care, meaning how Sinai Health contributes to its community's health status — giving our community better access to emergency services and even primary care physicians.
This mission to deliver greater healthcare to the west side of Chicago came together six to eight months ago when I brought the board Holy Cross' request for a partnership proposal. In assessing their request, we realized there was a substantial overlap between Sinai and Holy Cross missions. Additionally, our service areas overlap and we share some medical staff membership. We realized that it might make sense to respond to the RFP and see where it goes. That started the process.
Q: What additional elements — beyond the overlapping missions, patient populations and physician membership — made Sinai Health see Holy Cross as a valuable potential partner?
AC: I can only speak to Sinai Health's perspective, but for the most part our administration and department executives were interested. We were cautiously intrigued. Once we began evaluating Holy Cross we saw the overlapping mission and population and began to realize it could be a good fit.
We also foresaw that the overlapping elements would help us create and deliver a new model of healthcare to the west side of Chicago. We began to see that an affiliation with Holy Cross might help us extend the idea of a new model of care into the larger Chicago community.
It is an exciting yet challenging time for healthcare. With this affiliation, we think we have an opportunity to explore something creative. We are approaching the affiliation process cautiously, thoroughly and with optimism.
Q: Can you elaborate more on what the new model of care would entail?
AC: It is a little premature to delve into any specific details [of what a new model would look like]. However, what I can say is that Holy Cross' medical staff is strong in the area of primary care, and Sinai is strong in specialty services, so there is a nice synergy there. Additionally, Sinai has two unique elements to its health system — Sinai Community Institute and Sinai Urban Health Institute, both of which are committed to services outside the four walls of the hospital. They have implemented initiatives to support pregnancy and parenting services, workforce development, violence prevention and similar programs. With an affiliation between Sinai and Holy Cross, I believe we would be able to continue those types of community programs to create a healthier community, and that would be the new model of care.
Q: The next steps for Sinai Health and Holy Cross involve due diligence. How will Sinai Health approach that process?
AC: The process for due diligence is very standardized, which Sinai will follow. For us, it will start with the hospital leadership working through an extensive list to understand the status of Holy Cross. The list will include balance sheet issues so everyone understands Holy Cross in terms of financials, medical staff relationships, governance issues, cultural issues and quality performance.
Much of the understanding of the affiliation detail will come from the vice presidents and department heads of both organizations. The process will also require a fair amount of reading and studying — asking questions to make sure that at the end of the day there are no surprises.
Q: Is it important for Sinai Health to educate its community in this phase of the process? If so, what would the community education entail?
AC: We notified many community stakeholders to let them know the potential affiliation was going on. The response has been almost unanimously positive. However, the community education and engagement will be more prevalent in the letter of intent phase. Sinai Health has an audacious vision statement to be an example of a national health model for how urban healthcare is delivered. Due to our mission statement, we think we have good sense of what it means to connect with an urban community, and we will apply that knowledge in the community engagement phase of this potential affiliation.
Q: Sinai Health and Holy Cross are both in the Chicago market, and the Federal Trade Commission seems to be focusing on affiliations and partnerships between hospitals and health systems in one market. Do you think that there could be any issues with FTC review for this affiliation?
AC: As part of the due diligence, we will go through all the appropriate legal reviews and make sure all elements are in accordance with legal and regulatory expectations. However, I do not think our market share is significant enough for the FTC to place a great deal of attention on this potential affiliation.
Q: As CEO of the health system, you have a large role in the due diligence and affiliation process. How do you approach your leadership in this situation?
AC: During an affiliation, part of the CEO role is to help describe what the future of the hospital — after the affiliation — might look like to the constituents. In this case, the constituents include Sinai Health's board of directors, the medical staff, caregivers, community partners and even the broader base of elected officials. In addition to that, I oversee the whole due diligence process. At the end of the day, I have to stand up to my board and show them that this step will bring the goal they had in mind seven years ago to reality.
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Officials of both hospitals believe that if Sinai Health System acquires Holy Cross, each hospital will be "elevated and strengthened," because Holy Cross and Sinai Health are complementary in terms of medical staffs, range of services offered and patient populations served. "Each [hospital] could benefit from economies of scale, allowing us to strengthen our mission to improve the health of the individuals and communities that we serve," says Alan Channing, president and CEO of Sinai Health System.
Here Mr. Channing discusses the impetus for Sinai's potential affiliation with Holy Cross Hospital, the due diligence process and the role of the CEO during an affiliation.
Question: Sinai Health System recently announced it is considering an affiliation with Holy Cross Hospital, another Chicago-based hospital. What was behind Sinai Health System's interest in a possible affiliation?
Alan Channing: One of the things that is critical for an affiliation is that there is a good rationale for two organizations to come together. Ultimately, the board of directors guides how a hospital thinks about and prepares for its future, which may include considering an affiliation. For instance, about seven years ago, the planning committee of Sinai Health's board of directors told me they would like me to begin thinking about how to innovatively and effectively deliver healthcare to the west side of Chicago. This was an interesting challenge coming from a board. Over the years, we have tried a couple things with neighboring institutions to create a concept of pre-primary care, meaning how Sinai Health contributes to its community's health status — giving our community better access to emergency services and even primary care physicians.
This mission to deliver greater healthcare to the west side of Chicago came together six to eight months ago when I brought the board Holy Cross' request for a partnership proposal. In assessing their request, we realized there was a substantial overlap between Sinai and Holy Cross missions. Additionally, our service areas overlap and we share some medical staff membership. We realized that it might make sense to respond to the RFP and see where it goes. That started the process.
Q: What additional elements — beyond the overlapping missions, patient populations and physician membership — made Sinai Health see Holy Cross as a valuable potential partner?
AC: I can only speak to Sinai Health's perspective, but for the most part our administration and department executives were interested. We were cautiously intrigued. Once we began evaluating Holy Cross we saw the overlapping mission and population and began to realize it could be a good fit.
We also foresaw that the overlapping elements would help us create and deliver a new model of healthcare to the west side of Chicago. We began to see that an affiliation with Holy Cross might help us extend the idea of a new model of care into the larger Chicago community.
It is an exciting yet challenging time for healthcare. With this affiliation, we think we have an opportunity to explore something creative. We are approaching the affiliation process cautiously, thoroughly and with optimism.
Q: Can you elaborate more on what the new model of care would entail?
AC: It is a little premature to delve into any specific details [of what a new model would look like]. However, what I can say is that Holy Cross' medical staff is strong in the area of primary care, and Sinai is strong in specialty services, so there is a nice synergy there. Additionally, Sinai has two unique elements to its health system — Sinai Community Institute and Sinai Urban Health Institute, both of which are committed to services outside the four walls of the hospital. They have implemented initiatives to support pregnancy and parenting services, workforce development, violence prevention and similar programs. With an affiliation between Sinai and Holy Cross, I believe we would be able to continue those types of community programs to create a healthier community, and that would be the new model of care.
Q: The next steps for Sinai Health and Holy Cross involve due diligence. How will Sinai Health approach that process?
AC: The process for due diligence is very standardized, which Sinai will follow. For us, it will start with the hospital leadership working through an extensive list to understand the status of Holy Cross. The list will include balance sheet issues so everyone understands Holy Cross in terms of financials, medical staff relationships, governance issues, cultural issues and quality performance.
Much of the understanding of the affiliation detail will come from the vice presidents and department heads of both organizations. The process will also require a fair amount of reading and studying — asking questions to make sure that at the end of the day there are no surprises.
Q: Is it important for Sinai Health to educate its community in this phase of the process? If so, what would the community education entail?
AC: We notified many community stakeholders to let them know the potential affiliation was going on. The response has been almost unanimously positive. However, the community education and engagement will be more prevalent in the letter of intent phase. Sinai Health has an audacious vision statement to be an example of a national health model for how urban healthcare is delivered. Due to our mission statement, we think we have good sense of what it means to connect with an urban community, and we will apply that knowledge in the community engagement phase of this potential affiliation.
Q: Sinai Health and Holy Cross are both in the Chicago market, and the Federal Trade Commission seems to be focusing on affiliations and partnerships between hospitals and health systems in one market. Do you think that there could be any issues with FTC review for this affiliation?
AC: As part of the due diligence, we will go through all the appropriate legal reviews and make sure all elements are in accordance with legal and regulatory expectations. However, I do not think our market share is significant enough for the FTC to place a great deal of attention on this potential affiliation.
Q: As CEO of the health system, you have a large role in the due diligence and affiliation process. How do you approach your leadership in this situation?
AC: During an affiliation, part of the CEO role is to help describe what the future of the hospital — after the affiliation — might look like to the constituents. In this case, the constituents include Sinai Health's board of directors, the medical staff, caregivers, community partners and even the broader base of elected officials. In addition to that, I oversee the whole due diligence process. At the end of the day, I have to stand up to my board and show them that this step will bring the goal they had in mind seven years ago to reality.
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