Upstate, Crouse Health scrap merger plan for now

SYRACUSE, N.Y. — SUNY Upstate Medical University on Thursday said its plan to acquire Crouse Health is “impractical at this time,” and the health systems have instead entered into an affiliation agreement.

Upstate and Crouse announced they will withdraw the current certificate of need (CON) and the certificate of public advantage (COPA) applications they had filed with the New York State Department of Health (NYSDOH) in connection with Upstate’s proposed acquisition of its neighboring health system.

It was 10 months ago that Upstate Medical University had first announced plans to acquire Crouse Health.

Both Upstate and Crouse Health say they still believe that combining the two hospitals would offer “significant opportunities” in terms of enhanced care delivery; increased access to patient care, including care with limited availability in the region; and would “markedly increase” clinical-training opportunities for medical students and other health professionals enrolled at Upstate Medical University.

“However, at this time, withdrawing the CON and COPA is appropriate,” the organizations said, due to the business and operating environment they face.

“This is not the outcome we anticipated when we started down this road, but it is the prudent decision at this time and is a result of the economic and operational headwinds health care is facing, not just here in Syracuse, but nationwide,” Dr. Mantosh Dewan, president of Upstate Medical University, said in the statement. “Should circumstances sufficiently change moving forward, we will consider revising and resubmitting applications for a CON and COPA that would authorize Crouse Health to become a division of SUNY Upstate Medical University. In the meantime we look forward to working with Crouse under the affiliation agreement.”

Last fall, federal antitrust regulators signaled opposition to the Upstate-Crouse merger.

The staff of the Federal Trade Commission (FTC) in October said it believes Upstate Medical University’s proposed acquisition of Crouse Health “would likely lead to higher health care costs, lower quality and less access to care, and depressed wages for area hospital workers.”

FTC staff submitted a comment to NYSDOH opposing a request by Upstate and Crouse to grant a COPA, which could shield the merger from antitrust laws, per the FTC’s Oct. 14 announcement.

Affiliation details

Upstate Medical University and Crouse Health said their strategic affiliation agreement will focus on opportunities to streamline care, reduce costs. and continue to support their joint commitment to providing high-quality, affordable, and accessible health care. Both institutions will continue to operate as separate and independent legal entities governed as they are today. The affiliation will provide a structure for joint initiatives on key patient services, educational programs for health-care providers and provide a platform for future initiatives, Upstate and Crouse said.

“Crouse Health’s mission is to provide the best in patient care and promote community health. We believe this is best accomplished in partnership with Upstate Medical University. Our goal is to utilize the affiliation agreement as an important framework for collaborating for the benefit of the community,” Patrick Mannion, chair of the Crouse Health board of directors, said in a statement. “Crouse remains well positioned and committed to providing vital services to our community with the support of our dedicated medical staff and employees.”