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St. Vincent’s Is the Lehman Brothers of Hospitals


In its first full year out of bankruptcy, St. Vincent’s lost $81 million. By the beginning of 2009, after only seventeen months back on its feet, says a former St. Vincent’s executive, “we were living off thin air.” St. Vincent’s new CEO, Henry Amoroso, aggressively shopped St. Vincent’s to hospitals throughout the region, but it was a hard sell. “The plant, the indebtedness—you would have needed to come into that place with a billion dollars,” says the CEO of a major hospital that was approached to rescue St. Vincent’s. “You take risks in this business, but calculated ones. You don’t want to put a knife through your heart.”

In January 2010, when industry insiders knew that St. Vincent’s was on the edge of collapse, the Continuum consortium came forward with an offer to take over the hospital and run it as an outpatient clinic. “I was trying to be a good citizen,” Continuum’s Stanley Brezenoff says. “Everybody else had passed on it—NYU, North Shore, New York–Presbyterian. It didn’t take much to see St. Vincent’s was not salvageable as an inpatient facility.” Continuum’s offer was met with a brief public outcry, and St. Vincent’s was not yet ready to admit defeat. Continuum backed away.

Finally, in March, with only a few weeks of emergency cash remaining in St. Vincent’s till, Mount Sinai showed up with what appeared to be an earnest eleventh-hour takeover offer, sending a team of its top business and medical people to St. Vincent’s to work out the details. St. Vincent’s staff and physicians, a number of whom met with the Sinai team, were convinced a deal was going forward. Within a week, though, Sinai pulled out. Appeals for an explanation to the state’s top hospital regulator, Health Commissioner Richard Daines, were unavailing. Members of St. Vincent’s brass were convinced, as one puts it, that “there was a clear indication from the body language of the state” that Daines disapproved of the takeover and was not ready to provide the transition funds that would have been needed to facilitate the deal. “We were frank all along in saying if your strategy depends on $50 million or $100 million in state funding, we can’t tell you that’s going to be available,” Daines says. One industry insider recalls conversations he had with Daines in 2009 in which the commissioner shared his belief that New York was overbedded, that Manhattanites had become too accustomed to living with hospitals in every neighborhood, and that St. Vincent’s was too debt-ridden ever to make itself a going concern. “Daines might well have been right,” this person says, “but the discussion was never held in public.” Indeed, no hearings were ever convened to consider whether, or how, St. Vincent’s should close. Today, Daines offers only the anodyne consolations of one who refused to intervene. “The Catholic health-care ethic—the commitment to underserved populations—that’s been such a wonderful thing,” he says. “I hope we don’t lose that with St. Vincent’s. I hope that as the nurses and physicians ooze out to other hospitals across the city, they’ll bring some of that Catholic ethic along with them.”

Spend your reserves, cut costs, declare bankruptcy. “That’s the life cycle of a New York hospital.”

It took less than a month to empty St. Vincent’s of its last patients. During that time, the state announced that it was providing Lenox Hill with $9.4 million in state funding to establish an “urgent care” center—essentially a round-the-clock clinic without the specialized staff and technical capacity of an ER—at what was once St. Vincent’s. That plan has not materialized. Across town at Bellevue, the city’s largest public hospital, ER traffic has increased by 2,000 patients per month since St. Vincent’s closed, in what Bellevue’s chief of emergency medicine termed “a significant disaster.”

Back in the Village, St. Vincent’s stands empty. Its windows are boarded with graffiti-scrawled plywood. The awning above the entrance to the ER has been defaced. Recently, a workman with a drill labored to remove a large brass ST. VINCENT’S HOSPITAL AND MEDICAL CENTER nameplate beside the hospital’s main entrance on West 12th Street, leaving behind a rectangle of faded brick.

The way forward seems perfectly, if brutally, clear. With private insurers under pressure to cover more patients yet not hike premiums, with federal and state governments facing record deficits, and in a local industry climate of free-market survivalism, many New York hospitals won’t be able to generate sufficient revenue to restore themselves to financial health. To be economically viable, then, the hospitals of the future will have to evolve into high-performance cost-cutting machines. Increasingly, they will no longer regard inpatient care as their main function and will strive to do as much of their business as possible in less expensive locations outside hospital walls. They will aim to provide more preventive care to keep patients out of hospitals and more follow-up care to keep them from returning. They will try to reduce unnecessary tests and treatments. They will seek to put an end to the expensive free agency of physicians by pressuring private doctors to become hospital employees, as concerned about cost management as care. They will search for ways to combat what many hospital executives describe as the tyranny of insurance companies.


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