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doi: 10.1097/ACM.0b013e3181f65000
Institutional Issues

Failure of the Merger of the Mount Sinai and New York University Hospitals and Medical Schools: Part 1

Kastor, John A. MD

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Author Information

Dr. Kastor is professor of medicine, University of Maryland School of Medicine, Baltimore, Maryland.

Editor's Note: Commentaries on this report by Davis and by Grossman and Berne appear on pages 1815 and 1817.

Correspondence should be addressed to Dr. Kastor, University of Maryland Medical System, 110 South Paca Street, Room 2N-139, Baltimore, MD 21201; telephone: (410) 328-6727; fax: (410) 328-8087; e-mail: jkastor@medicine.umaryland.edu.

First published online September 17, 2010.

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Abstract

This is the first of two articles in this issue of Academic Medicine that, together, report the author's findings from his study of the attempts by the leaders of Mount Sinai and New York University (NYU) academic health centers in New York City to merge their medical schools and hospitals, and the failure of those attempts.

The contemporary and predicted effects of managed care, capitation, and the Balanced Budget Act of 1997 were major factors stimulating this and other mergers at academic health centers. The hospital executives and board members also anticipated saving significant amounts of money by consolidating back-office functions and clinical services.

The leadership at Mount Sinai were the most enthusiastic proponents of the merger. At NYU, many trustees feared that their hospital, which was generating a surplus when the merger was being planned, and its medical school, which operated at a deficit and was dependent on hospital earnings, would, in time, drain the university's endowment if the merger took place. Accordingly, some of the leading trustees favored separating its hospital and medical school from the university and consigning them to a new company with Mount Sinai. Influential members of the NYU faculty strongly opposed this.

The attempt to create a merged entity of the hospitals and medical schools failed after several frustrating months of interinstitutional negotiations. The trustees and executives then attempted to develop a merger of only the hospitals; that process is described in the companion article in this issue of Academic Medicine.

For three years beginning in 1998, an entity known as Mount Sinai NYU Health provided medical care based at the Mount Sinai and New York University (NYU) medical centers* in New York City. Mount Sinai NYU Health was an unstable and short-lived union, and the briefly integrated institutions soon returned to local management. In 2008, the merger was formally dissolved. This article (Part 1) and the one that follows (Part 2) in this issue of Academic Medicine report the findings of my study of the formation and dissolution of the merger attempts. I conducted the study through interviews in person or by telephone or e-mail with 42 individuals, most of whom were associated with one or the other of the two academic health centers. Some were interviewed more than once. Most, but not all, agreed to be identified as study participants (see the acknowledgments at the end of each article). Where I have not given a reference for a quoted phrase or statement, either the person quoted did not wish to be identified or I felt that no reference was needed.

This article (Part 1) focuses on the attempt to combine the medical schools and hospitals of Mount Sinai and NYU medical centers and the failure of that attempt. The next article (Part 2) recounts the effort to develop a merger of those two institutions' hospitals only.

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The Institutions Studied

Below, I briefly describe the characteristics and history of the institutions that were directly or indirectly involved in the merger described later in this article and in the companion article in this issue of Academic Medicine.

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The Mount Sinai Hospital

The Mount Sinai Hospital was founded by a group of leading New York Jewish businessmen, who built a five-story building on West 28th Street between 7th and 8th Avenues in what was then a rural part of the expanding city.1,2 Its first patient entered the hospital for a “fistula” on June 5, 1855—1 of 110 admitted that year to the hospital's 45 beds. Expenses for 1855–1856 were $5,493.

Admission to the “Jews' Hospital,” its first name, was initially sectarian. Except for accident cases, all patients were Jewish. When the board of directors revoked the sectarian restriction during the Civil War, the Jews' Hospital was renamed Mount Sinai Hospital in 1866. In 1872, a larger building was constructed further uptown.

Sinai moved to its current location—which now extends from 98th to 102nd Streets and from 5th Avenue to east of Madison Avenue—in 1904. Mount Sinai Medical Center (its present name) also includes Mount Sinai Queens Hospital, which is a community hospital in Long Island City across the East River from Manhattan.

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NYU hospitals

When the merger was being developed, NYU owned the Tisch Hospital (formerly University Hospital) and the Rusk Institute of Rehabilitation Medicine, both at the NYU medical campus on First Avenue. NYU also was the “sponsor” of Downtown Hospital and the Hospital for Joint Diseases, which, in effect, gave the NYU trustees and executives control of these hospitals.3

Tisch Hospital traces its lineage to the New York Post-Graduate Hospital, founded in 1884 to provide clinical experiences for graduate physicians at the New York Post-Graduate Medical School. NYU acquired the hospital and the school, which were renamed University Hospital and NYU Post-Graduate Medical School, in 1948. The current hospital, at 560 First Avenue—where 32nd Street would be if not blocked by buildings—opened in 1963. The NYU School of Medicine absorbed the Post-Graduate Medical School. In January 1989, University Hospital was renamed Tisch Hospital in recognition of a $30 million gift from Laurence and Preston Tisch and their families.4

NYU had built Tisch (then University) Hospital as a home for its clinical faculty in private practice, who owed their university titles to participation in student and resident teaching at Bellevue Hospital, the traditional home of NYU clinical education, and at University. If Tisch made a surplus, the medical school would benefit, and the private patients there could become a valuable source of donations.3

By the 1990s, Tisch Hospital was more than 30 years old, and NYU had invested relatively little in the hospital since it opened. The large amount of money that would be required to renovate and/or replace it loomed over the mergers as a major complication and greatly concerned the university trustees, several of whom were less than enthusiastic about NYU's owning a medical center.

Despite the need for capital improvement, nevertheless, Tisch Hospital had less economic trouble than Mount Sinai, in part because of Sinai's longstanding commitment to treating the residents of East Harlem, including many poor patients with limited or no medical insurance. Tisch provides little indigent care, partly because of its location, and also because the hospital is near Bellevue Hospital, which carries much of that burden.5

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NYU School of Medicine

The NYU School of Medicine is the descendent of two schools. One, Bellevue Hospital Medical College, was founded by the Bellevue Hospital Medical Board in 1860 and was built within the grounds of the hospital. It was a unique union of hospital, dispensary, and medical school, but it had no university affiliation. The other was the older University Medical College, created in 1841 and, like so many medical schools at the time, proprietary and owned by the professors. NYU, founded only nine years earlier, awarded the degrees but exercised little control over the school.

In the 1890s, the NYU chancellor undertook a reform of University Medical College and a union with the Bellevue college.6 This led to the two schools' combining under NYU with the name University and Bellevue Medical College. In 1935, the school's name was changed to the New York University College of Medicine, and its current name was adopted in 1960.7

By the 1950s, the NYU medical school had moved to its current location on First Avenue, where University Hospital would be built in the early 1960s.

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Mount Sinai School of Medicine

Mount Sinai School of Medicine is a relatively recent creation. It admitted its first students in 1968, more than a century after the NYU School of Medicine was founded.

Four factors led to the formation of the Mount Sinai School of Medicine: having an institution that did not discriminate against Jewish applicants, increasing the sophistication of medical research, having the advantage of medical students being on most of the clinical services, and a national shortage of doctors.8–11

Mount Sinai Hospital had long been one of the premiere hospitals where Jewish medical students could obtain internships and residencies. Even the most accomplished Jewish students were infrequently accepted at most leading teaching hospitals for postgraduate training. Obtaining internships at such hospitals seemed to be even more difficult than being admitted to medical school for many Jewish candidates.

By the 1950s, however, anti-Semitism had diminished as a factor in the admission to housestaff positions and medical schools. This welcome change had the paradoxical effect of decreasing the attractiveness of Mount Sinai to the best and the brightest potential house officers, because Jewish medical graduates could now find positions at leading teaching hospitals that in the past had excluded them. If the quality of the housestaff decreased, the trustees were concerned that the same might happen to the medical staff, most of whom had traditionally been Sinai house officers.

Of particular importance to the leaders of Mount Sinai, with its enviable tradition of medical discoveries, were the changes rapidly occurring in how medical research was conducted. The success of much medical research during the late years of the 19th century and the first half of the 20th century depended on talented physicians—of whom Mount Sinai had many—studying human disease at the bedside, recording their clinical observations, reviewing hospital records, and conducting relevant studies in the hospital's pathological and clinical laboratories. However, with the advent of new approaches to research, the absence of basic scientists at Mount Sinai increasingly limited the ability of physicians there to conduct contemporary biomedical research.

Few medical students trained at Mount Sinai. The low number of students didn't matter as much when anti-Semitism prevented top Jewish students from training at medical-school- affiliated teaching hospitals. With Jewish students able to train elsewhere, however, many chose not to come to hospitals like Sinai that had few medical students for house officers to teach and work with in the care of patients.

Finally, the creation of the Mount Sinai school coincided with a time when leaders in academic medicine were responding to a perceived shortage of doctors. This led to increasing the number of students admitted to many existing medical schools and the creation of new ones. From 1960 to 1970, while the new Mount Sinai medical school was being developed, the number of U.S. medical schools that were being formed or accredited grew from 86 to 101. The addition of new schools continued during the next decade. As of this writing (August 2010), there are 133 accredited MD-degree-granting schools in the United States.12

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Reasons for the Merger

Contemporary and predicted financial problems were the principal forces driving the merger of Mount Sinai and the NYU hospitals. Costs of medical care were rising faster than the rate of general inflation. Managed care and capitation, now of increasingly distant memory, had arrived to reduce the cost of medical care, which translated into less money for hospitals and doctors. Managed care pressured doctors to treat patients in outpatient offices and clinics, which cost less than hospitalization. Insurers, including the large government programs of Medicare and Medicaid, had begun limiting the amount they paid for the care of patients through a variety of techniques, including those in the Balanced Budget Act of 1997, which significantly reduced Medicare payments to hospitals.13

To contain costs, it was predicted that the merger of the two hospitals into Mount Sinai/NYU Health would combine administrative and financial activities, integrate similar clinical programs, and give the combined hospitals greater clout with the insurers than either alone could exercise. Thereby, economic synergies, a favorite buzzword at the time, would develop.

Although managed care temporarily reduced the annual inflation of medical expenses, its long-term effects were less salutary. What is relevant for this study is that in the 1990s, when all health care providers had to contend with managed care, the leaders of some academic health centers used mergers with other centers and community hospitals as one technique to respond to its anticipated effects.

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Responses to the Merger at NYU and Mount Sinai

The merger was the creation of John (“Jack”) Wallis Rowe, MD, president of the Mount Sinai Medical Center from 1988 to 1998 and for the next two years president and CEO of Mount Sinai NYU Health. “People viewed him as the best hospital CEO in New York City, and he could do it [the merger],” said an NYU trustee.14 Rowe's initial plan to merge both the medical schools and the hospitals into one organization with one governance and one management was announced on June 17, 1996.15 (I refer to the attempt to combine the medical schools and hospitals as “merger one.” “Merger two,” to combine only the two hospitals, is described in the companion article that follows this one.)

Although merging teaching hospitals was to become a not-infrequent occurrence (see the companion article), from that time to the present, few medical schools have merged. (One example is the union of the Hahnemann medical school and the Medical College of Pennsylvania in Philadelphia in 1993. The merged school became the Drexel University College of Medicine in 2002.16) Many members of the faculty at NYU energetically opposed merger one, the attempt to combine the Mount Sinai and NYU medical schools and hospitals.17–20 They considered their school superior to Mount Sinai's school, which at the time was only 30 years old, whereas more than 150 years had passed since one of the precursors of the NYU school had opened. The NYU school's faculty felt that they had chairmen and faculty superior to those at Mount Sinai.17–20

Because it was proposed that administration of tenure be vested in a new corporation of the two schools, and no longer at the NYU school, that school's faculty feared that they might lose their tenure rights that included both their titles and salaries. Sinai tenured title and what one senior Sinai administrator called “minimum salary in rank.” Many were concerned about the productive time that would be lost as the students and faculty shuttled back and forth the more than 60 blocks between the schools and hospitals through Manhattan traffic.21,22

To many at the NYU medical school, the voice of the institution was Saul Joseph Farber, MD, dean of the School of Medicine, provost of the medical center—including authority over Tisch Hospital—and chairman of the Department of Medicine. Dr. Farber did not like what Jack Rowe was selling. Nor did many members of the NYU faculty who worked with Rowe on the merger. Rowe “frightened” them, said one department chairman. “Jack just didn't understand our culture. He wasn't aware that Tisch had very few Medicaid patients.”

Under pressure from the NYU central administration and trustees not to oppose merger one, “Saul never spoke out strongly,” according to one of his colleagues in the Department of Medicine. Farber's demeanor was described as “enigmatic and nonparticipatory.” He said it was a fait accompli, according to another faculty member. Moreover, he “transmitted no enthusiasm [for merger one] to the faculty. He felt negotiations were dishonest, that deals were being made.” He told those outside his inner circle of advisors, “Keep your powder dry,” and to a few insiders, “It'll never happen.” Farber saw merging with Sinai as “merging down.”

Jack Rowe would become the senior officer of both entities, and consequently, Farber would lose authority over Tisch and would probably lose his deanship, because Rowe planned to recruit a dean to lead the combined medical school. Because the new dean would have the power to appoint the chairman of medicine, Farber would presumably lose that position, too. Most painful to Farber, several individuals told me, would be loss of the power that he had exercised for decades at NYU—others denied that this was true—and with it destruction of his legacy at the medical school.

Farber's longevity in his leadership positions owed much to support from influential members of the NYU board and its board for the medical center, and particularly, it was said, to chairman Laurence Tisch. Nevertheless, many NYU trustees saw Farber's opposition to merging with Sinai as a serious barrier to their desire to rid the university of the medical center or at least of the hospital and its potential financial problems.18

The response of the faculty and officials at Mount Sinai to the proposed merger of the hospitals and medical schools was more positive than at NYU.23 Arthur Rubenstein, dean of the Mount Sinai School of Medicine from 1997 to 2001, saw this point of view as “conceptual rather than factual. People at Sinai didn't see the downside of the merger, whereas those at NYU didn't see the upside.“23

The combined schools would have, as one Sinai observer put it, “more academic clout.” For example, merging the schools would consolidate the listing of federal grants from the National Institutes of Health (NIH) and, thereby, raise the comparative standing of the combined NYU–Sinai school, it was hoped, “into the top 10.” Many at Sinai saw an affiliation with NYU as more attractive than their school's current affiliation with City University of New York.

However, Sinai faculty members also had their own reservations about NYU. “We were on the way up. They were on the way down,” one senior Sinai faculty member said. “Our faculty is younger and more diverse. NYU's is older, more traditional, more European, and not as dynamic as ours.” (When the mergers were being developed, the rankings of the two schools by the NIH, on the basis of the value of research support received, were almost identical. In fiscal year 1996, Sinai stood at 30, NYU at 28. However by 2005, the last year the NIH officially ranked the schools, Sinai was 20, NYU, 36.) When asked to compare the schools when merger one was being considered, one of the Sinai trustees said, “We felt Sinai was a finer medical school and had better finances, so we'd be the controlling partner. Our hospital built the medical school, like Mayo. So we never had turf battles between university and hospital.”

Although no one at Mount Sinai with the authority of Saul Farber at NYU discouraged the merger, support was not universal. Some feared that “NYU would take us over,” that Sinai might “lose its independence.” Faculty members and administrators wondered how much financial support the combined hospital would give to the new medical school.

More than one influential trustee opposed it. Some Sinai trustees and senior executives disliked the inevitable breakup of the single, unified governmental structure at Sinai that included the hospital and medical school. The separation of the financial management, in particular, troubled several trustees.

Despite the members of the Sinai board being “very hands-on,” according to one informed observer—“they must agree or nothing gets done”24—Rowe convinced most, though not all, members to support the merger. More than one source commented that the trustees at Mount Sinai took a much more active role in supporting, guiding, and developing their hospital and the merger than did the NYU trustees, including those on its medical center board.

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Failure of Merger One

On February 13, 1997, Mount Sinai and NYU announced that the attempt to merge both schools and hospitals had failed.25 The institutions said in a joint statement that “despite extraordinary efforts of our trustees and senior management over the past seven months, we could not find the appropriate way to combine the academic components of the two institutions.” The New York Daily News reported that, according to a senior Mount Sinai official, NYU officials “saw themselves as the predominant members … not equal partners.” An NYU official complained that Mount Sinai insisted that its “hospital administration have control over the medical school.”25

The merger enthusiasts, however, did not give up. Several months after merger one failed, they produced a plan to merge just the hospitals. What came of this effort is described in the report of the second part of this study in the next article in this issue of Academic Medicine.26

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Acknowledgments:

The author thanks the following persons who were interviewed for this report and those who read and advised about the manuscript. (A few wished to remain anonymous.) About Mount Sinai: Kenneth L. Berns, Kenneth L. Davis, Joel S. Ehrenkrantz, Blaine V. Fogg, Kurt Hirschhorn, Larry H. Hollier, Paul E. Klotman, Peter W. May, Barbara J. Niss, Kristjan T. Ragnarsson, Richard Ravitch, Gary Rosenberg, Arthur H. Rubenstein, Donald Scanlon, James S. Tisch. About NYU: Martin J. Blaser, Coleen R. Bradley-Sanders, Robert J. Cohen, Noel L. Cohen, Richard R. Crater, John M. Deeley, Richard J. Donoghue, Doris B. Farber, Arthur C. Fox, Roberta M. Goldring, Anthony J. Grieco, Robert I. Grossman, Rochelle Hirschhorn, Kenneth G. Langone, Martin Lipton, Richard I. Levin, Rodolfo R. Llinas, Charles J. Lockwood, Jerome Lowenstein, L. Jay Oliva, William E. Paul, Herbert H. Samuels, Michael L. Shelanski, David S. Scotch, Frank C. Spencer, Herman Turndorf, Gerald Weissmann. About both: Herbert Pardes, Bruce C. Vladeck.

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Funding/Support:

None.

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Other disclosures:

None.

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Ethical approval:

Not applicable.

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Disclaimer:

The contents of this article are solely the responsibility of the author and do not necessarily represent the official views of the University of Maryland or of the institutions discussed in the text.

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References

1Hirsh J, Doherty B. The First Hundred Years of the Mount Sinai Hospital of New York. New York, NY: Random House; 1952.

2Aufses AH, Niss BJ. The House of Noble Deeds. The Mount Sinai Hospital, 1852–2002. New York, NY: New York University Press; 2002.

3Richard J. Donoghue, senior vice president for strategy and business development, NYU Langone Medical Center, New York; personal communications, November 6, 2009 and November 25, 2009.

4Teltsch K. Tisch family gives $30 million to N.Y.U. New York Times. January 25, 1989.

5Perez-Pena R. For hospitals seeking split, debt is glue. New York Times. July 4, 2003.

6Walsh JJ. History of Medicine in New York. Three Centuries of Medical Progress. New York, NY: National Americana Society, Inc.; 1919:779–781.

7Colleen Bradley-Sanders, archivist, New York University Medical Center Archives; personal communications, January 20, 2010 and March 1, 2009.

8Niss BJ, Kase NG. An overview of the history of the Mount Sinai School of Medicine of the City University of New York 1963–1988. Mt Sinai J Med. 1989;56:356–366.

9Ludmerer KM. The origins of Mount Sinai School of Medicine. J Hist Med Allied Sci. 1990;45:469–489.

10Sokoloff L. The rise and decline of the Jewish quota in medical school admissions. Bull N Y Acad Med. 1992;68:497–518.

11Niss BJ, Aufses AH. The history of the school. In: Teaching Tomorrow's Medicine Today. The Mount Sinai School of Medicine 1963–2003. New York, NY: New York University Press; 2005:3–73.

12Association of American Medical Colleges. Membership. Available at: http://aamc.org/about/membership.htm. Accessed August 1, 2010.

13Kastor JA. Introduction. In: Mergers of Teaching Hospitals in Boston, New York and Northern California. Ann Arbor, Mich: University of Michigan Press; 2001:1–13.

14Martin Lipton, chairman, Board of Trustees, New York University; personal communication, October 23, 2009.

15Nicholson J. Mt. Sinai, NYU merge. New York Daily News. June 18, 1996.

16Drexel University College of Medicine. History. Available at: http://www.drexelmed.edu/Home/AboutTheCollege/History.aspx. Accessed August 2, 2010.

17Arthur C. Fox, MD, professor of medicine, New York University School of Medicine; personal communication, June 10, 2009.

18Herbert H. Samuels, MD, Helen and Milton Kimmelman Professor of Pharmacology, New York University School of Medicine; personal communications, June 24, 2009, October 7, 2009, October 14, 2009, and October 20, 2009.

19Kurt Hirschhorn, MD, professor emeritus of pediatrics, genetics and genomic sciences, and medicine, and chairman emeritus, Department of Pediatrics, Mount Sinai School of Medicine; personal communication, June 17, 2009.

20Rodolfo R. Llinas, MD, PhD, Thomas and Suzanne Murphy Professor of Neuroscience, New York University School of Medicine; personal communication, September 30, 2009.

21Roberta M. Goldring, MD, professor of medicine, New York University School of Medicine; personal communication, November 13, 2009.

22Frank C. Spencer, MD, professor of surgery, New York University School of Medicine; personal communication, June 22, 2009.

23Arthur H. Rubenstein, MB BCH, executive vice president, University of Pennsylvania for the Health System; dean, University of Pennsylvania School of Medicine, Philadelphia; and dean, Mount Sinai School of Medicine 1997–2001; personal communication, October 30, 2009.

24Barbara J. Niss, archivist, Mount Sinai Medical Center, New York; personal communications, June 9, 2009 and November 5, 2009.

25Nicholson J. Mt. Sinai, NYU merger flops. New York Daily News. February 15, 1997.

26Kastor JA. Failure of the merger of the Mount Sinai and NYU hospitals and medical schools: Part 2 [published online ahead of print September 17, 2010]. Acad Med. 2010;85:1828–1832. doi:10.1097/ACM.0b013e3181f65019.

*Disclosure: I am a graduate of the NYU School of Medicine and of its residency training program in medicine.

Barbara Niss, archivist at the Levy Library, Mount Sinai Medical Center, reports that her only source for the reason Mount Sinai became part of the hospital name comes from a 1938 interview with the son of a founder who was there. He said that name was chosen “from the words spoken to Moses on the way to Mount Sinai, ‘I, the Lord, am thy healer.'”. Cited Here...

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This article has been cited 3 time(s).

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