Upper East Side Hospital Rebounds From Financial Woes
By E.B. SOLOMONT, Staff Reporter of the Sun | July 21, 2008
Mount Sinai Medical Center has quietly raised $320 million and will soon move into the public phase of a $1 billion capital campaign.
According to hospital leaders, the campaign is a signal that the Upper East Side hospital — which five years ago was hemorrhaging millions of dollars each year — has not only rebounded from its financial troubles, but is pressing forward with the next phase of its strategic plan. That plan hinges on recruiting top doctors and updating the hospital’s facilities, including the construction of a $475 million building that is key to Mount Sinai’s renewed focus on “translational medicine,” the integration of research and clinical practice.
“We’ve always had a major focus on research, so I think what we’re trying to do now on the research side is enhance our emphasis on disease-oriented research,” the medical center’s president and CEO, Dr. Kenneth Davis, said in a recent interview in his office.
“To really facilitate translational research requires some change in the facilities,” he said.
Certain indicators show the plan is working. The medical center, which includes the hospital and the Mount Sinai School of Medicine, recently attracted a new member of its boards of trustees, Lawrence Summers, the former secretary of the Treasury and president of Harvard University, Dr. Davis said. Its endowment has reached $1.1 billion, and despite an economic downturn, the capital campaign has picked up in recent months. “The process is much farther along than it was five months ago,” Mount Sinai’s senior vice president for development, Mark Kostegan, said.
Last year, the hospital raised a record of $147 million in philanthropy, and hospital leaders said that, given the economic climate, they are focusing on a long-term fund-raising plan. “As I look to future philanthropy, we don’t have to approach some of our donors and say, ‘Well, we have to have something in 2008.’ It’s fine for me to discuss a gift in 2008 that might not happen until 2010, or until things recover,” Dr. Davis said. Analysts who rate Mount Sinai’s bonds credit Dr. Davis and his management team for turning things around. “If you’re not meeting your numbers, they ask you why,” an analyst at Moody’s Investors Services, Pamela Federbusch, said.
In 2007, the hospital’s operating revenue was $1.37 billion and its operating profit was $53.3 million, according to Moody’s. The year before, its operating revenue was $1.28 billion and operating profit was $25.5 million, according to Moody’s.
Earlier this month, Moody’s upgraded Mount Sinai’s bonds to A3, up from Baa1. “They are doing great,” Ms. Federbusch said. “Their financial performance is terrific, their cash collections are terrific, they’re not heavily leveraged with debt, they are able to put money into their facility.”
Dr. Davis, a psychiatrist who has never taken a business course, said his leadership style stems from research he conducted early in his career, when he studied group psychotherapy. “I learned how some groups can be effective and some groups can’t be effective,” he said. When he took the helm in 2003, he ultimately changed the entire management team.
In the past two years, Dr. Davis has also recruited new faculty members. In May, at the hospital’s annual Crystal Ball gala — where tickets cost between $1,000 and $5,000 a plate — 1,500 guests received a journal that included biographies for 19 top physicians and new recruits.
Among them was the new head of Mount Sinai’s cancer institute, Dr. Steven Burakoff, who was recruited in November from NYU Langone Medical Center, where he served as director of its cancer institute for seven years. Earlier this year, Mount Sinai also recruited a urologic oncologist from NewYork-Presbyterian Hospital, Dr. David Samadi, who now heads Mount Sinai’s division of robotics and minimally invasive surgery.
Dr. Samadi recently said he was courted by leading hospitals inthe city, including Memorial Sloan-Kettering Cancer Center, but he decided to move to Mount Sinai after meeting with Dr. Davis.
“When I met him, the first dinner, I’ll never forget, he already had the information about my numbers and the kind of cases I do,” Dr. Samadi recalled. “After the first 15 minutes, the deal was already done.”
Ultimately, the hospital purchased a $2 million robot for Dr. Samadi, the da Vinci S HD Surgical System, which is used for surgery on the prostate gland. The vast majority of Dr. Samadi’s patients, about 2,000 individuals, followed him to Mount Sinai. “If Sinai is going to give me what I need,” he said, “then that’s the institution I want to be in.”
Dr. Davis said that, in order to accommodate its recruits and growing patient volume, the medical center is renovating and expanding. Last month, the medical center opened a 150,000-square-foot Center for Advanced Medicine on East 102nd Street. It is also planning a $475 million translational medicine building, which is expected to open in 2012 on Madison Avenue between at East 103rd Street and East 102nd Street.
The construction will enlarge Mount Sinai’s footprint on the East Side of Manhattan, home to at least five other major academic medical centers. “If that isn’t competition, I don’t know what is,” Dr. Davis said.
He said Mount Sinai — which merged with and then divorced NYU several years ago — is not planning to merge with another institution in the near future. But he said stronger ties with community hospitals are part of Mount Sinai’s plan to attract patients and complex cases.
Currently, the hospital is negotiating a plan to become a “passive parent” to Harlem’s North General Hospital. Under the agreement, Mount Sinai would provide administrative oversight to North General, but it would not assume any financial responsibility.
In April, Mount Sinai entered a clinical affiliation with Lutheran Medical Center in Sunset Park, Brooklyn. Under the agreement — which is similar to one Mount Sinai has with St. John’s Hospital in Yonkers, N.Y. — Mount Sinai is responsible for running the cardiac catheterization laboratory at Lutheran, which refers complicated cases to Mount Sinai.
“All these hospitals, at the end of the day, will have patients that are so complex that they need surgeries or procedures that can only be done at a place like Mount Sinai,” Dr. Davis said.