Hospital Prez: We Kept Our Word

Yale-New Haven Hospital promised to find $65 million in annual cost savings when it took over the Hospital of St. Raphael. Two years later, it has exceeded that goal without cutting the workforce, according to its top exec.

The hospital’s president and chief operating officer, Richard D’Aquila, said this week that Yale-New Haven has realized $73 million in cost-savings this fiscal year as a result of the St. Raphael takeover — while investing new millions in modernizing the former Catholic hospital that had been on the verge of shutting its doors.

D’Aquila cited those and other milestones to argue that New Haven benefited when its two hospitals integrated at 12:01 a.m. on Sept. 12, 2012, to form one large, growing entity, and the nation’s fourth-largest hospital.

In an interview during a tour of what’s now known as the Yale-New Haven ​“St. Raphael Campus” on Chapel Street, D’Aquila and his top hospital-integration deputy, Michael Holmes, argued that two years into its three-year integration plan, the hospital has met its promises to regulators, and then some, offering a counter-narrative in an era of painful hospital consolidations.

“This is bucking the trend,” D’Aquila declared.

“We saved it,” he said of St. Raphael’s, which was struggling amid severe financial pressures at the time of the takeover. ​“We preserved it. Jobs were not lost. Big cuts were not made. This was a great hospital; this was a chance to take a legacy and preserve it and go forward. That’s not how it plays out in health care now. A lot of hospitals are gutted. We maintained services. We maintained jobs. Very little of that is happening nationally. There’s plenty of folks out there that will buy hospitals” and gut them. ​“This is unique. “

Since the takeover, D’Aquila reported:

• The combined hospital has realized the $73 million in cost savings this fiscal year (ending Sept. 30). He projected a saving of $80 million for the new fiscal year. The savings have come largely through salary and wages, and the ability to bargain for lower rates on purchases of pharmaceuticals, hip and knee impacts, cardiac devices, and other supplies. It also saved money by closing a short-term outpatient surgery rehab center, in rented space at the Temple Medical facility, and moving it to unused space at St. Raphael’s Grimes Center. In a required filing this past May to the state Office and Health Care Access, D’Aquila had estimated the 2014 cost savings at $68.4 million. He said this week that, in an updated report to be released after Thanksgiving, the year’s cost savings actually came in at around $73 million. (Click here to read the May report, which details Yale-New Haven’s progress on a three-year integration plan approved at the time of the takeover. Click here to read an updated two-page fact sheet the hospital released last week.)

• The combined hospital has more employees than before, over 12,000. At first 3,497 out of 3,788 St. Raphael employees kept their jobs at the same pay with the same benefits. The hospital has since added another 541 employees. He said the labor savings came from ​“non-essential unfilled” St. Raphael vacancies, some eliminated ​“duplicative” managerial positions, and between 100 and 150 St. Raphael employees who had previously been fired from Yale-New Haven.

• It has been able to boost revenues — in part by filling more beds. Over 350 beds were filled at the St. Raphael campus the other day; before the takeover, the daily census fell as low as 270.

• A single $300 million Epic electronic-records system has been fully implemented.

• Yale-New Haven has invested over $71 million in the St. Raphael campus, including creating an ambitious new musculoskeletal center (read about that here) and a centralized specialty geriatrics care unit, which opened last week. All musculoskeletal and geriatric care is being centralized at the St. Raphael campus along with the Yale midwives-run birth center, while heart surgery, pediatrics and neurosurgery are being shifted to the original Yale-New Haven complex on York Street.

The ​“Integration Team”

You won’t catch D’Aquila or Holmes (pictured) calling that complex the ​“main campus.” They’re careful to say ​“York Street Campus,” as part of a broader effort to integrate the two former staffs and avoid the perception of winners and losers, the feeling that ​“one is taking over the other.” Technically, Yale-New Haven did ​“take over” St. Raphael’s two years ago; in conversation, the pair speak of how the two campuses ​“came together.”

They studied other hospital takeovers and mergers across the country in the quest to avoid mistakes. ​“There are not a lot of really good integrations,” D’Aquila said. To oversee New Haven’s integration, D’Aquila brought in Holmes, who in past gigs at Trinity Health and Ascension Health worked on hospital mergers and takeeovers, including between Catholic and secular institutions. Holmes oversees an ​“Integration Team” that meets often with employees, holds retreats, rolls out initiatives.

Lesson number one from less successful integrations, Holmes said: ​“Pay attention to the culture.” While St. Raphael is no longer run by a Catholic order, Yale-New Haven promised to preserve its religious heritage. Doctors do not perform abortions on the campus. Employees still participate in a daily 8 a.m. silent moment of reflection. A lullaby still comes over the P.A. system when a baby is born. Fairly or not, St. Raphael’s was popularly seen as the warmer, more personal hospital while Yale-New Haven was seen as the more advanced medical center better capable of saving lives. The trick, Holmes said, has been to preserve the strengths while addressing the critiques.

Part of the job has entailed merging some aspects of the cultures: All employees now wear the same shade-of-blue uniforms. Top management meetings take place equally on both campuses. The managers hand out $2 certificates (redeemable at the gift shop or cafeteria) to employees spotted performing an ​“act of kindness” or extra effort.

“Happy Transportation Week!” Holmes greeted a passing employee in the corridor during a tour of the campus. ​“I’ll be having pizza with you tomorrow.”

He and D’Aquila stopped by a first-floor ​“Heroes Wall.” It features 16 photos and write-ups about exceptional employees, culled from staff recommendations. Before the merger, the York Street campus had that wall display. Now the hospital hangs the display at both campuses, highlighting an equal number of employees drawn from each.

“What do you want to see on your walls?” D’Aquila remarked. ​“Pictures of buildings? Or your employees who exemplify your core values?”

The New ​“State Of The Art”

On the fourth floor of the Verdi wing, he and Holmes offered a before-and-after look at how Yale-New Haven is carrying out multimillion-dollar improvements promised to regulators.

“This was state of the art in the [19]70s,” Aquilla said, pointing to the east wing’s in-patient rehabilitation unit. ​“This was a very modern building, well built. But the layout is all semi-private rooms, which was standard for the time. The colors are dark. It has an institutional look to it.”

Across the way is the new Robert J. & Lorraine D. Cronin Musculoskeletal Unit —with its softer lighting, synthetic carpets to absorb noise, 17 private rooms, blinds in the door windows so nurses can shut them while keeping a passing eye on patients …

… and alcoves and desk spaces to store equipment so it doesn’t clutter patients’ and staff’s way along the corridors.

The showpiece Verdi-wing unit opened its doors on Election Day: the geriatric unit, aka the Center for Restorative Care for Older Adults (pictured above). Renowned architect Michael Graves designed it -- 10 years after finding himself in a wheelchair. He drew on his personal experience to design a unit that works for older people who can’t see well or get around easily: Stark bright colors to help distinguish between walls and floors and handrails; fall prevention; side sign panels that help staffers know what individual patients need.

In addition to the new physical design, the hospital faced a human challenge — drawing together staffs for the new units from both campuses. Brooke Spadaccino, in charge of the musculoskeletal staff, formed a team of nurses evenly divided between York Street and St. Raphael campus veterans. Catherine Bursey, who began working at Yale-New Haven as a nurse 30 years ago, pulled together a similar team for the geriatric unit, which participated in a four-day retreat. Both women declared that the groups from the two separate locations gelled with no problems.

“No Quality Problem”

One former St. Raphael board trustee, Paul Fortgang, a local doctor in private practice for the past 27 years and former president of the New Haven County Medical Association, said the hospital has kept its takeover promises.

“The patients are happy with it for the most part,” Fortgang said Monday. The main change he has noticed as a doctor: When he calls the St. Raphael campus for a CAT scan or biopsy, rather than speak with a familiar voice, he’ll be transferred to someone he doesn’t know at the York Street campus. ​“They’re good. There’s no problem in terms of the quality,” he said.

“There are people who tell you St. Raphael’s could have been saved. The sense that we got on the board listening to all the numbers, it really couldn’t,” Fortgang said. ​“This [takeover] was the one that made the most sense, even though in a way it’s a monopoly. The loss of the [St. Raphael] hospital to the community would have been a bigger loss. A loss to health care. A loss to employment.”

New Haven State Rep. Toni Walker, co-chair of the legislature’s Appropriations Committee, said she has heard no complaints from constituents during the first two years since the takeover. ​“So far I’ve heard that things are on target and they’ve tried to maintain the staff,” she said.

Yale-New Haven’s takeover has prompted some fears among physicians and labor activists (read about there) of its ability to use its position as a monopoly to raise fees on patients or squeeze independent practices out of business. Yale-New Haven officials have defended the fees and argued that it is keeping alive some practices that might have perished.

Yale-New Haven’s ability to find cost savings in the St. Raphel takeover, including its increased purchasing power, has in fact helped lower health-care costs, D’Aquila argued. ​“The argument of getting too big is such a bad argument. The biggest way to save money is to centralize.”

Yale-New Haven, growing fast, needed more beds two years ago, D’Aquila recalled. ​“We didn’t have six years to build a new building” at York Street. That’s one reason, he said, Yale-New Haven was in a position to invest in an underused hospital and avoid cuts in services and jobs in the deal.