North Shore LIJ’s acquisition of Lenox Hill Hospital showing positive results

Lenox Hill Hospital recently had its bond rating raised and removed from Moody’s watch list. The upgrade “heavily incorporates an assumption that North Shore will provide the necessary financial and managerial resources” to improve Lenox Hill’s clinical services, increase profitability and make adequate capital investments, notes Moody’s.

The ratings agency says better operational efficiencies, expense containment, improved managed care contract rates and terms, and higher market share in Manhattan and Queens may help Lenox Hill break even by 2012. The hospital had $665 million in operating revenue last year. Lenox Hill is projected to lose $15 million this year.

North Shore LIJ’s affiliation with Lenox Hill represents an opportunity to expand beyond Queens, Long Island, and Staten Island across the bridge into Manhattan for the first time. Approximately 30 percent of Lenox Hill’s patients came from north Brooklyn and western Queens, so the partnership would strengthen North Shore’s position in those neighborhoods as well. Others come from Westchester County and New Jersey.

Lenox Hill benefits from the affiliation because it has been financially disadvantaged in New York’s extremely competitive healthcare market operating as a single facility not affiliated with any other healthcare system. Lenox Hill will also benefit from integrating North Shore LIJ’s electronic medical record system.

Although no layoffs were originally planned, a management shakeup at Lenox Hill is under way. Gladys George, Lenox Hill Hospital’s longtime president and chief executive, will retire at the end of the year. Philip Rosenthal, who had the pre-merger title of executive vice president and chief administrative officer, has acted in the role of executive director for some time since the acquisition, running the hospital.

Lenox Hill has added 126 new employees over the summer, including nurses, nurse educators, maintenance workers and back-office staff. All told, it is adding about 300 jobs.