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Marketing Strategy of Continuum Health Partners, Inc.

Marketing Strategy of Continuum Health Partners, Inc.

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Marketing Strategy of Continuum Health Partners, Inc.
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Anjali Khurana
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anjalicutek
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Marketing Strategy of Continuum Health Partners, Inc. - December 16th, 2010

Statistics:
Private Company
Incorporated: 1997
Employees: 16,000
Operating Revenues: $1.92 billion (2002)
NAIC: 622110 General Medical and Surgical Hospitals; 622310 Specialty General Medical and Surgical Hospitals; 551112 Offices of Other Holding Companies


Company Perspectives:
Participation in the Continuum partnership enables each member institution to better fulfill its traditional mission by making available an impressive array of resources for the provision of state-of-the-art and compassionate care. Together, we are superbly equipped to identify and respond to the health-related needs of the populations we serve, in a patient- and physician-friendly environment.


Key Dates:
1858: St. Luke's Hospital opens.
1871: Roosevelt Hospital opens.
1891: Beth Israel Hospital opens.
1964: Beth Israel purchases neighboring Manhattan General Hospital.
1979: St. Luke's and Roosevelt merge to form St. Luke's-Roosevelt Hospital Center.
1988: Beth Israel's network of heroin-treatment clinics is the largest in the United States.
1996: Beth Israel acquires two more hospitals and opens an outpatient center.
1997: Continuum is created in a merger of St. Luke's-Roosevelt and Beth Israel.
1999: Continuum adds Long Island College Hospital and New York Eye and Ear Infirmary.In spite of its money problems, Continuum established an institute for neurology and neurology, expanded efforts in cancer care, and lured department heads from other local hospitals with lucrative contracts. It also added Long Island College Hospital to the corporation in 1998, even though this Brooklyn institution was itself in poor financial health. This hospital was founded in 1858 as a medical college--the Long Island College of Medicine--as well as a hospital. After the medical college became part of the State University of New York system in 1954, it remained the hospital's primary teaching affiliate. Long Island College's addition brought Continuum's ranks to more than 3,000 beds, 3,800 doctors, and 17,000 employees, with an operating budget of $1.8 billion. Continuum again expanded in 1999, when it added New York Eye and Ear Infirmary, a 103-bed hospital on East 14th Street in Manhattan affiliated with New York Medical College. It had been the last specialty hospital in the city to remain independent. Founded in 1820 as a two-room clinic in downtown Manhattan by two graduates of Columbia's College of Physicians and Surgeons, New York Eye and Ear Infirmary was said to be the oldest hospital of its kind in the Western Hemisphere. In recent years, it had contended with the same financial problems as bigger institutions as many of its services shifted to outpatient settings.
By 2000, Continuum's hospitals--like most in New York--were in even worse financial shape than before as a result of reductions in government reimbursements and the growth of cost-conscious managed-care networks. Beth Israel ended 1999 with an operating loss of $46 million and only $41 million in cash on hand--the equivalent of 17 days' worth of expenses. By the following summer, the hospital only had enough cash to fund seven days of expenses, impelling its 80-member board to contribute $26 million to avert a financial crisis. Beth Israel cut employment by 620 with the intention of reducing its payroll by $40 million a year, but its bonds remained ranked below investment grade. Nevertheless, the hospital assumed the management and medical care of 48,000 Health Insurance Plan (HIP) subscribers in a five-year contract with the managed-care group. The agreement was expected to generate $95 million a year for Beth Israel, but the hospital thereby assumed full financial risk. Meanwhile, Continuum closed a unit, run by St. Luke's-Roosevelt, to provide nursing and other home-care services to 1,200 New Yorkers. Continuum also announced in 2000 that it would slash 800 to 900 jobs.
Beth Israel had more beds in 2002 than other hospital in New York City except New York-Presbyterian Hospital. Its operating revenue came to $910.2 million (second only to New York-Presbyterian), while St. Luke-Roosevelt's amounted to $701.3 million, Long Island College's to $261.9 million, and New York Eye and Ear's to $50.7 million.


Company History:

Continuum Health Partners, Inc. is the holding corporation for four New York City hospitals: Beth Israel Medical Center, St. Luke's-Roosevelt Hospital Center, Long Island College Hospital, and New York Eye and Ear Infirmary. Founded in 1997, Continuum is attempting to coordinate the operations of its members in such a way as to control costs and keep the hospitals financially solvent in an era of increased competition for patients and for payments by government programs and managed-care organizations.

St. Luke's and Roosevelt: 1850-1997

Founded in 1850 by an Episcopalian minister, Rev. William Augustus Muhlenberg, St. Luke's Hospital is the oldest of the Continuum hospitals. It opened in 1858 on Fifth Avenue between 54th and 55th streets. A school of nursing was added in 1888. St. Luke's moved in 1896 to the rapidly developing neighborhood of Morningside Heights in upper Manhattan, where a building had been constructed on the block between West 113th and 114th streets and between Amsterdam Avenue and Morningside Drive, just north of the site where the Episcopalians were building the Cathedral of St. John the Divine, the world's largest cathedral. A new wing, or pavilion, completed in 1906, provided space for additional wards as well as private rooms for the 30 percent of St. Luke's patients able to pay in full for their care. By 1930, seven pavilions had been added to original French Renaissance building.

St. Luke's merged with nearby Women's Hospital in 1952, thereby providing obstetrical services for the first time. New buildings were completed in 1954 and 1957, and another opened in 1965 for Women's Hospital, filling in the last space available on St. Luke's city block. By this time, St. Luke's was a teaching hospital for Columbia University's College of Physicians and Surgeons.

Roosevelt Hospital was established by the bequest of James Henry Roosevelt, a wealthy New Yorker who died in 1869 and left an estate of close to $1 million. It opened in 1871 on the block bordered by West 58th and 59th Streets and Ninth and Tenth Avenues in Manhattan. Many of the early staff of Roosevelt Hospital held faculty appointments at Columbia's medical school, which for a time was located across the street from the hospital. Roosevelt Hospital established an ambulance service in 1877 and an outpatient department in 1881. The Syms Operating Pavilion, highly advanced for the time, was completed in 1892. In the 19th century, hospitals were generally regarded as only fit for the poor, and it was quite common even to perform operations in the home. Roosevelt's Private Patients' Pavilion, erected in 1896, was established to provide service equivalent to the finest hotels of the day, together with the advantage of full hospital facilities. It proved highly lucrative for Roosevelt. By 1951, only the four-story administration building of 1871 and its annex remained from the early complex. The nine-story Tower Building, with its entrance on Ninth Avenue, opened in 1953. It connected with the nine-story Ward Building, opened in 1923.

Mired in deep financial trouble, Roosevelt merged in 1979 with St. Luke's--which had lost $4 million the previous year--to form St. Luke's-Roosevelt Hospital Center. Like other metropolitan hospitals, the two were suffering from overcapacity. The consolidation was intended to drop 100 beds from the total of more than 1,300, achieve economies of scale, and unify more than 1,100 physicians, 1,000 nurses, and about 4,000 other employees under an administration serving an area of nearly 500,000 people on Manhattan's West Side, parts of which were classified by federal and state health agencies as medically under-served. In addition, the new hospital center also authorized large sums for the largest hospital development project in the United States, completed in the early 1990s at a cost of about $500 million. A new hospital on the Roosevelt campus replaced the antiquated facilities on Ninth Avenue. Uptown, St. Luke's built a facility north of its complex and extensively renovated its existing buildings.

One way that St. Luke's-Roosevelt planned to save money was by consolidating duplicated services, such as shifting St. Luke's obstetrics, pediatrics, and neonatal intensive care to Roosevelt. The change was opposed by uptown community activists and only partially effected. St. Luke's-Roosevelt lost $12 million in 1993 and $12.5 million in 1994. The hospital shed 450 of its 7,150 jobs in 1995 and began to cast eyes on a merger with Beth Israel Hospital Center, which had a reputation for superior financial management.

Beth Israel: 1890-1997

Beth Israel Hospital Association was incorporated in 1890 by Orthodox Jews, with each of the 40 founders contributing 25 cents. "They did it because the city hospitals at the time wouldn't take patients who hadn't been residents for over a year," Beth Israel's director told Nicholas Pileggi of New York in 1983. "Also the newly arrived Russian- and Polish-Jewish immigrants of that day didn't feel welcome uptown at the German-Jewish ... Mount Sinai Hospital." Not yet able to support a hospital, they opened a storefront dispensary on Manhattan's Lower East Side, the center of immigrant Jewish life. Within a year, Beth Israel Hospital had opened, with accommodations for 20 patients. It was the only Manhattan hospital conducted in accordance with Orthodox Jewish religious principles. The building leased quickly proved too small, and in 1892 the association rented two buildings from the Hebrew Free School.

Beth Israel was able to move into its own newly erected building in 1902, with 115 beds. Nevertheless, many people had to be turned away for lack of space. In 1929, a new 13-story building, with about 500 beds, opened adjacent to Stuyvesant Square at East 16th Street. It grew into a complex that included a school of nursing, a clinic building, and a pavilion for private and semi-private patients and stretched from First to Second Avenues between East 15th and 18th Streets. Beth Israel purchased Manhattan General Hospital, its neighbor across Stuyvesant Square, in 1964, and changed its name to Beth Israel Medical Center the following year.

By the 1980s, Beth Israel long had ceased to be a hospital for predominantly Jewish patients and was serving, in southern Manhattan, one of the most ethnically diverse communities in the world. The 174-bed Bernstein Institute had been serving as a detoxification hospital for alcoholics and drug addicts since 1961, when it was still part of Manhattan General Hospital. By 1988, Beth Israel was operating the largest network of heroin-treatment clinics in the United States, with nearly 7,500 patients and 23 facilities. It was also a pioneer in care for AIDS patients, many of them heroin addicts infected by dirty needles. At about the same time, it became the first nonprofit hospital in New York to advertise on television, dramatizing its alcohol- and drug-treatment services for private clients at Stuyvesant Square.

Beth Israel acquired Doctors Hospital on the Upper East Side in the early 1990s; bought DOCS Physicians, a major suburban network of primary-care clinics, in 1993; expanded to Brooklyn by purchasing Kings Highway Hospital Center in 1995; and opened an outpatient center on Union Square, not far from Stuyvesant Square. Its health-care system now included two long term care institutions and four primary care and physicians' groups, presiding over an extensive system of clinics, doctors' offices, and affiliate hospitals in an untiring hunt for patients. DOCS, for example, was serving more than 150,000 patients who were now referred almost exclusively to Beth Israel for surgery or other advanced care. Beth Israel welcomed doctors with high-volume practices and delivered more babies than any other hospital in New York. It also expanded its programs in a number of fields, including neurosurgery, pain medicine, and cardiology in a bid for recognition as one of New York's elite teaching hospitals.

Continuum Health Partners: 1997-2003

The merger of St. Luke's-Roosevelt and Beth Israel in 1997 united the main Manhattan West Side medical institution with one on the borough's East Side. It also eased pressure on both parties because Beth Israel was thought able to shoulder St. Luke's-Roosevelt's heavy debt load, while the latter had a wealth of space to relieve the former's cramped operation. A holding company, Continuum Health Partners, Inc., was established to govern both hospitals, but it had no assets of its own. Beth Israel received six of Continuum's ten board seats and was given management of joint finances. St. Luke's-Roosevelt remained a major teaching hospital for Columbia University's medical college, while Beth Israel retained its primary affiliation with the Albert Einstein College of Medicine, a unit of Yeshiva University.

The new alliance ran into financial difficulties from the outset, with St. Luke's-Roosevelt nearly doubling its operating loss, to $27.7 million, in 1997 and Beth Israel's operating profit turning into a $2.2-million loss in the same year. Continuum sustained these losses even though the merger saved $33 million by integrating 13 administrative functions and eliminating hundreds of physicians. St. Luke's-Roosevelt and Beth Israel agreed on a single chairman of radiology, and Beth Israel agreed to surrender most of its pediatric services to St. Luke's. Continuum also established HealthWorks as a purchasing subsidiary to buy supplies for its member hospitals in the belief that such a group could apply significant leverage on prices. HealthWorks also began inviting other hospitals in the region to join, promising them lower prices, cheaper delivery, and the ability to sell medical and personal-care products directly to patients through catalogues distributed in each member facility.
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