Hitting the Landing Zone

John Commins, October 1, 2016

Examining the options
University Hospital in downtown Newark, New Jersey, exemplifies many of the challenges threatening the survival of stand-alone hospitals in an evolving healthcare delivery landscape.

The money-losing, state-owned, 325-staffed-bed academic medical center serving some of the city's poorest neighborhoods controls about 14% of an over-bedded five-hospital market that since 1999 has seen six hospitals close.

A 2015 state-commissioned report found significant duplication of services in a Newark regional market that serves 670,000 people. The report noted that UH and the four other hospitals lost a combined $32 million in 2013 and would lose $190 million by 2019, excluding a state charity care subsidy, under an unsustainable status quo. As the state moves toward a population health model, the report said, action is needed to reduce the number of inpatient beds, consolidate specialty care in certain hospitals, and better coordinate outpatient and primary care.

This is the challenge that John N. Kastanis accepted when he took over as CEO at UH in March 2016. A turnaround specialist, Kastanis was lauded for his leadership at Temple University Hospital in Philadelphia, where, in less than five years, he stanched the red ink at the 722-bed academic medical center and improved quality rankings.

While he expects to face many of the same challenges at UH in the coming months, Kastanis says he doesn't expect a cookie-cutter response as the hospital considers its affiliation options. "You've heard the adage: When you've seen one academic medical center, you've seen one academic medical center. We're all unalike. We all have our separate histories, different traditions, and the cultures vary."

The common factor at Temple University Hospital and Newark's University Hospital is a committed medical staff that understands the link between margin and mission, and is willing to adapt to new care models, he says.

John Commins

John Commins is a senior editor at HealthLeaders Media.

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