State Health Planning Board
Chilton Hospital
FR # 121201-14-01
Page 15
CERTIFICATE OF NEED
Department Staff Project Summary, Analysis & Recommendations
Transfer of Ownership
Name of Facility: Chilton Hospital CN# FR 121201-14-01
Name of Applicant: Atlantic Health System Total Project Cost: 0
Location: Pompton Plains Equity Contribution: 0
Service Area: Morris and Passaic
Applicant’s Project Description:
This application is for the transfer of ownership of Chilton Hospital from Forrest S. Chilton 3rd Memorial Hospital, Inc (FCMH), a New Jersey non profit corporation to Atlantic Health System, Inc. (Atlantic Health), a New Jersey non profit corporation. Atlantic Health, through its subsidiary, AHS Hospital Corporation, would continue to operate and maintain Chilton Hospital as a short-term, acute care general hospital at the same licensed bed complement and service levels previously provided by FCMH.
When the transfer of ownership is completed, the overall acute care bed capacity would remain at 256 beds. Categorically, the bed composition would continue to reflect 204 Medical/Surgical beds, 24 OB/GYN beds, 16 Pediatric beds, 12 Adult ICU/CCU beds, as well as 4 Intermediate bassinets. The hospital’s service complement would include the existing 6 Mixed Operating rooms, 1 Cystoscopy room, 1 Mobile MRI Unit, 1 fixed MRI, Acute Hemodialysis services, Chronic Peritoneal services, 1 Linear Accelerator,1 mobile PET/CT scanner, 1 cardiac catherization laboratory, primary PTCA services (conditional), and 2 Hyperbaric Chambers. Chilton Hospital would also continue to operate Chilton Health Network at 242 West Parkway in Morris County and Chilton Health Network at Pike Drive in Passaic County as hospital based off-site ambulatory care facilities. In addition, the hospital would continue its designations as a Community Perinatal Center - Intermediate and Primary Stroke Center.
This transfer would result in Chilton Hospital being placed under ownership of Atlantic Health, the same non profit corporation that owns and operates Morristown Memorial Hospital (Morris County), Overlook Hospital (Union County) and Newton Memorial Hospital (Sussex County). This transfer would strengthen financial viability of Chilton Hospital as a general acute care hospital and improve the quality and scope of services offered. The hospital would continue to serve its community residents and medically indigent population without any disruption in services.
Applicant’s Justification of Need:
Chilton Hospital and Atlantic Health have been collaborating since 2005.
This merger would represent not only the coalescence of institutional knowledge, but also the integration of missions, visions and values that focus on achieving a service level of excellence for patients and their families. With both institutions sharing the same core values, the consolidation of these two working entities would undoubtedly produce a positive outcome in service delivery. The proposed ownership merger is a conscious effort to adapt, rather than react, to an evolving and uncertain health care environment.
The applicant believes that there are many benefits to having these institutions merge. First and foremost would be the benefit to the patient community. Atlantic Health‘s superior services include Trauma, Heart, Neuroscience, and Pediatrics making these services more readily available to the patient community served by Chilton Hospital. . There are also financial and infrastructure benefits such as reduced costs to both institutions by sharing services such as Information Services, Human Resources and Finance staffing, Patient financial Services, and Strategic Sourcing.
The applicant is confident that this transfer will enhance the delivery of health care services in the region and improve a physician’s ability to track their patients as the region benefits from the Atlantic Health information system structure. The applicant sees the merger engendering greater access to inpatient and outpatient services with the implementation of their electronic health care record keeping system for their hospitals. The coordination of services between these hospitals will result in better organized community screenings and programs as well as clinical trials to reach more segments of the population.
In addition, the applicant anticipates that more patients will choose Chilton Hospital once it becomes part of Atlantic Health based on its reputation and superior levels of services in areas such as Neurosurgery, Trauma, Cardiac Surgery, and Neonatal Critical Care. The newly formed alliance between Atlantic Health and Chilton Hospital would have a greater sustainable impact on accessing specialized health care services for the Chilton Hospital community and provide for more cost savings opportunities to prepare for addressing the mandates set forth in the Affordable Care Act. Atlantic Health intends to increase access at Chilton Hospital by working towards adopting new practices to reduce cultural barriers and improve health literacy, making their services more readily available regardless of a patient’s ethnicity or orientation. This initiative includes implementation of a “health literacy taskforce,” communication training for health professionals, educational materials for patients, and the formation of a diversity council to ensure the delivery of quality care for a diverse patient population.
Applicant’s Statement of Compliance with Statutory & Regulatory Requirements:
The applicant has stated the following to demonstrate its compliance with the statutory criteria contained in the Health Care Facilities Planning Act, as amended at, N.J.S.A. 26:2H-1 et seq. and N.J.A.C. 8:33-1.1 et seq. as follows:
1. the availability of facilities or services which may serve as alternatives or substitutes:
According to the Applicant:
There are other hospitals providing similar services to those provided at Chilton Hospital that treat residents residing in Chilton Hospital’s primary service area such as St. Joseph’s Wayne Hospital, St. Joseph’s Regional Medical Center, Hackensack Mountainside, St. Mary’s Hospital, St. Clare’s Hospital/Denville, Clara Mass Medical Center, Morristown Memorial Hospital, Hackensack University Medical Center, Valley Hospital, Saint Barnabas Medical Center, Bergen Regional Medical Center, Holy Name Hospital, Englewood Hospital, Overlook Hospital and UMDNJ. There are also other out of state hospitals providing health services for this area, which include NY Presbyterian, Sloan Kettering, Mount Sinai, St. Anthony, Hospital for Special Surgery, NY Presbyterian/Columbia University, NYU and Good Samaritan. These hospitals could serve as alternatives or substitutes for Chilton Hospital but Morris and Passaic County residents would likely experience a substantial reduction in healthcare services if Chilton Hospital were to close or significantly downsize. This merger ensures the current level of services available at Chilton Hospital remains the same and provides a coordinated network for medically complex cases to be transferred to Morristown Memorial.
2. the need for special equipment and services in the area:
According to the Applicant:
This proposed transfer of ownership does not involve special equipment or services in the area. The applicant states that all current services would continue to be offered at Chilton Hospital and easier access would occur to the specialized services at Morristown Memorial Hospital, which includes Neurosurgical, Trauma, Cardiac Surgery, and Neonatal Critical Care, as well as its physicians when the merger is completed for those patients utilizing Chilton Hospital.
3. the adequacy of financial resources and sources of present and future revenues:
According to the Applicant:
One of the main reasons for this transfer of ownership is to help ensure the financial viability of Chilton Hospital. The cost savings associated with this transfer of ownership are expected to result from the implementation of shared services in several departments, including Finance, Human Resources, Information Technology, Patient Financial Services and Purchasing. This merger is a proactive step on behalf of these hospitals to assure adequate financial resources and revenues are available in anticipation of the reduction of payments from Medicare and Medicaid under the National Health Care Reform Act. The integration of these hospitals will ultimately produce a more cost effective operating environment to deliver the health care services at Chilton Hospital.
4. the availability of sufficient manpower in the several professional disciplines:
According to the Applicant:
Sufficient staffing and manpower in the professional disciplines would need to remain within the same existing ratios in order to provide the same high quality care that both Atlantic Health and Chilton Hospital demands. The applicant does not expect any difficultly in continuing to employ qualified personnel to staff all of its hospitals. After this transfer of ownership is approved, Atlantic Health will employ 98-99% of 1,400 employees currently employed at Chilton Hospital. This would translate into 1,386 to 1,372 of the 1,400 employees continuing employment.
5. will not have an adverse economic or financial impact on the delivery of health care services in the region or statewide and will contribute to the orderly development of adequate and effective health care services:
According to the Applicant:
In accordance with the general criteria for Certificate of Need approval at
N.J.S. A. 26:2H-8, specifically that this will not have an adverse economic or financial impact on the delivery of health care services in the region or statewide, the applicant anticipates that the merger will have the opposite impact; namely that the transfer of ownership will enhance the delivery of health care services in the region and have a positive impact on the economics of the region. This merger will offer the region the opportunity to benefit from the service, clinical excellence and demonstrated quality that Atlantic Health would bring to the region. This merger will improve a physician’s ability to track their patients as the region benefits from the Atlantic Health’s information system structure and will contribute to the orderly development of adequate and effective health care services.
Public Hearing:
A public hearing was held at Pequannock Library in Pompton Plains on July 16, 2013 from 6:00 pm to 8:00 pm. Thirty two people attended the hearing with twelve commenting on the application. All twelve speakers were in favor of the application citing the benefits and opportunities associated for a smaller, stand alone hospital to merge with larger well established hospital system. All of the commenters believed the approval of this application would greatly benefit Chilton Hospital and the population of the area. They emphasized how the merging of these institutions would provide greater access to more complex care and technological advances for Chilton Hospital patients as well as how the sharing of services and the investment of capital into Chilton Hospital will reduce operational costs.
It is also noted in the application that Chilton Hospital provided letters of support from state, county and local elected government officials, including Senator Kevin J. O’Toole, Senator Thomas H. Kean, Jr, Senator Anthony R. Bucco, Senator Joe Pennacchio, Senator Steven V. Oroho, Assemblywoman Alison Littell McHose, Assemblyman Gary R, Chiusano, Assemblyman Jon M. Bramnick, Assemblywoman BettyLou DeCroce. Assemblyman Jay Webber, Morris County Freeholder William J. Chegwidden, and Christopher Versano, Mayor of the Township of Wayne. Additional letters were of support were filed by Cedar Crest and the Jewish Family Service of North Jersey.
Department Staff Analysis:
Department staff concluded that the applicant, Atlantic Health, has adequately documented compliance with the applicable certificate of need rules (N.J.A.C. 8:33-1.1 et, seq.) and general statutory standards (N.J.S.A. 26:2H-1 et seq.). For the purposes of this review, this application is considered a transfer of ownership of a licensed facility currently offering health care services and not a reduction, elimination, or relocation of health care services. Department staff reviewed the applicant’s certificate of need and determined that the applicant’s rationale to transfer the ownership of Chilton Hospital is a realistic assessment of Chilton Hospital’s service area and the health care services environment for Morris and Passaic counties and the region. Considering that once transferred, Atlantic Health is committing to operate Chilton Hospital not only at the same bed capacity levels but also with the same outpatient service levels, the transfer proposed by Atlantic Health’s governing authority and management appears to be a feasible option for ensuring that Chilton Hospital continues to provide quality health care services to the community. Overall operating costs and reduced patient volume at Chilton account for Chilton Hospital’s decision to transfer their ownership to Atlantic Health. For Chilton Hospital to continue operating as a small scale independent community hospital would exert significant financial pressure on their limited resources increasing their budgeted losses from operations, possibly leading to either a significant reduction of community health services or an unplanned closure.
The application indicates that the focus of this transfer of ownership is to strengthen and improve the existing health care delivery system at Chilton Hospital. Atlantic Health states that its highest priority is improving the quality and availability of health care services to the patient community at Chilton Hospital. Atlantic Health intends to direct its efforts to provide greater access to inpatient and outpatient care. For example, Atlantic Health will invest monies in the development and implementation of an electronic health record system at Chilton Hospital, a strategic plan to improve patient quality and safety through structured, evidence based measurement process and to provide opportunities for participation in research and clinical trials.
Atlantic Health’s business model for Chilton Hospital includes an emphasis on shared services not limited to information technology but also human resources management, financial management, patient billing services and purchasing. Chilton Hospital would benefit from the experience gained at Atlantic Health in these functional areas as well as their wide array of clinical expertise in such areas as Trauma, Heart, Neuroscience and Pediatrics. The merger of these two hospitals would create a more complete and structured system for Atlantic Health with a greater outreach for both physicians and patients. Patients at Chilton Hospital would be able to access the specialists at Atlantic Health’s facilities more expeditiously and be transferred to their facilities with fewer administrative barriers.
The objective of this transfer is to promote a higher standard of care at Chilton Hospital and reduce their operating costs without any disruption in the continuity of services for patient care. Atlantic Health states that it intends to accomplish these objectives by directing its efforts through operational support, capital and enhanced organizational approaches to the delivery of care, and name recognition for its excellence in patient care. The primary purpose of this transfer is not necessarily to increase volume at Chilton, but build a more stable operational environment for all the hospitals involved to administer health care and assure their collective futures.
Table 1 - Licensed Beds