2014 ANNUAL REPORT

Hackensack University Health Network

Leadership Message

At Hackensack University Health Network, we are not daunted by the changes that are remaking that nation’s healthcare system. Rather, we see them as an opportunity—to find better, more comprehensive ways to serve our patients and to take a more proactive and decisive role in shaping the direction of healthcare in New Jersey and the country.

To realize this vision, we have adopted an ambitious regional strategy rooted in such concepts as growth, expansion, quality, value and integration. Given the complexity and the scale of the task we have set for ourselves, we realize that partnerships are absolutely essential if we are to implement this strategy successfully. Our challenge is to find the right partners and the most productive alignment that will enable us to work together as we deliver high-quality medical care to more people and maximize the health of the populations we serve.

Since 2009, we have entered into dozens of alliances and partnerships The impact of the partnerships we formed in 2014, however, has made it a game changing milestone year, both for HackensackUHN and, we believe, for the residents of New Jersey.


Joining Forces with Meridian Health

Three years ago, we determined that if we were to compete successfully in our marketplace under the Affordable Care Act, we needed to become a $3 billion plus organization. This year, we’ve moved forward with Meridian Health in a 50/50 merger. The resulting organization—Hackensack Meridian Health—will comprise nine acute hospitals and two children’s hospitals and 3,181 licensed acute beds. With combined revenue of more than $3.5 billion, it will be the largest health system in New Jersey.

We believe that Meridian is the right partner for our expansion. Under the leadership of John K. Lloyd, Meridian Health has become one of the most dynamic and highly-regarded health systems in the mid-Atlantic. U.S. News and World Report placed two of its hospitals, Jersey Shore University Medical Center and Ocean Medical Center, on its 2014 list of Best Hospitals. Meridian Health was also the first health system in the nation to receive Magnet® Designation for Nursing Excellence from the American Nurses Credentialing Center, the gold standard for nursing care.

The resulting size of this new organization is itself an important advantage. Hackensack Meridian Health will benefit from its greater scale of service to improving and enhancing efficiencies across its operations. This will free resources that will enable us to stay at the cutting-edge of care while fulfilling our charitable core mission to the community.

Thanks to the alignment of its constituent organizations, Hackensack Meridian Health will be able to provide more access to higher-quality, more comprehensive and efficient care to patients across a broad swath of northern New Jersey. We will be able to be part of their care before, during and after an illness or procedure, becoming a true partner and establishing a trusted relationship with each patient.

Most importantly, the merger positions us to help shape the future of healthcare in New Jersey and beyond. Hackensack Meridian Health will have added capacity to introduce the latest advances in care, energize medical education and research, and develop innovative models of care consistent with the evolving healthcare environment and the needs of our patients. We plan to finalize the merger in 2015.


Creating New Jersey’s Only Private Medical School

The nation is facing a looming physician shortage, with a predicted shortfall by 2020 of 2,500 in New Jersey alone. In response, HackensackUHN has partnered with Seton Hall University (SHU) to develop the only private school of medicine in New Jersey. This new school will be located on Hoffmann-La Roche’s former campus that straddles Nutley and Clifton.

Based in South Orange, NJ, SHU is one of the country’s leading Catholic universities; home to nearly 10,000 undergraduate and graduate students. Establishing a school of medicine with the backing of our esteemed institutions will attract the best and brightest to the field of medicine in New Jersey and help curb the critical physician shortage the state and the nation currently face. Integration and training of these multiple disciplines into a single classroom setting is an innovative approach that will mirror how healthcare will be delivered in the future. The first class is expected to begin within the next three years.

We believe the establishment of a school of medicine will also create opportunities for us to expand our research programs, setting the stage for HackensackUHN to introduce new technologies and therapies and help support New Jersey’s biotechnology industry.

This initiative is the culmination of a multiyear effort designed to expand our capacity to deliver a cutting-edge medical education. In 2013, the Georgetown University School of Medicine extended academic appointments to our Emergency Medicine faculty. In July 2014, the program enrolled it's second class of residents, who are trained at HackensackUMC.

We also have affiliations with Rutgers New Jersey Medical School, St. George’s University School of Medicine and Stevens Institute of Technology. There are currently 135 fellows and residents in a dozen medical specialties from Rutgers rotating through HackensackUMC each month. Forty-eight third-year students from St. George’s are completing their five core rotations here, and 20 to 25 medical students come here to complete monthly electives. We will build on the lessons learned from these programs in establishing a school of medicine.


Welcoming HackensackUMC Palisades

HackensackUMC has a long history of partnering with local hospitals to deliver more advanced medical services to their patients. As these relationships evolved, it has made sense in many instances for these institutions to join HackensackUHN. In 2012, we acquired Mountainside Hospital and received approval to reopen Pascack Valley Hospital (HackensackUMC at Pascack Valley). The communities they serve have benefitted from our subsequent investment in these institutions. This year, for instance, we began a major capital improvements program at HackensackUMC Mountainside that includes an on-campus medical office building, enhancements to the Women’s Services and Emergency Department's and the implementation of electronic medical records.

Our expanding clinical affiliation with Palisades Medical Center, particularly in pediatric and neonatal care, led this institution to join us this year. It comprises 447 hospital and nursing home beds. In addition to extending these affiliations to other specialties, we will open satellite offices of our John Theurer Cancer Center, our Ambulatory Center for Endoscopy and other practices at Palisades’ new 57,000-square-foot Ambulatory Care Center.

HackensackUHN also established a number of strategic relationships to share best practices and to develop state-of-the-art projects in areas like informatics, clinical research and health reform-based care. This year, we established a new partnership with New York-based CityMD to open urgent care centers in northern New Jersey. CityMD currently has more than 40 urgent care centers in the New York metro area, including 23 in New York City. This partnership marks the first expansion into urgent care centers for our Network, and the centers will be located in Bergen, Hudson, Passaic and Essex counties and Rockland County, NY.


Pioneering New Models of Care

One of the main ways the Affordable Care Act seeks to reduce healthcare costs is by encouraging doctors, hospitals and other healthcare providers to form accountable care organizations (ACOs) for patients who receive Medicare. ACOs are a way to move the healthcare system from a fee-for-service model to one that emphasizes care coordination, both to keep patients healthy and to deliver high-quality care more efficiently.

In April 2012, our HackensackAlliance ACO, currently comprised of more than 575 physicians covering almost 40,000 patients, became one of the first selected by the Center for Medicare and Medicaid Services (CMS) to participate in the Medicare Shared Savings Program (MSSP). Its efforts have been successful. This year, CMS announced that the HackensackAlliance ACO generated $10.75 million in savings treating its Medicare patients and is receiving a $5.27 million payment for earned shared savings. Only about a quarter of the 243 ACOs participating in MSSP saved Medicare enough money to earn bonuses – and we were one of three ACOs in New Jersey to receive a cost-savings payment.

HackensackUHN is bringing the lessons learned though the HackensackAlliance ACO in managing population health to its new partnership with Aetna, the Atlantic Health System and Hunterdon Healthcare System. Together, we offer a new, cobranded Medicare Advantage plan in 10 counties in northern New Jersey to provide participants with their Medicare Part A and B benefits. The agreement includes a shared savings program component with similar financial incentives to the MSSP. All HackensackAlliance ACO physician practices are participating in the plan.

These savings extends to all patients, regardless of their age. In March 2014, HackensackAlliance ACO entered into an agreement with the state’s largest health insurer, Horizon Blue Cross Blue Shield of New Jersey, to take on additional accountability for improving the health and patient experience of its members in the ACO and lowering costs. Here again, physicians in the ACO participate in the resulting savings.


Realizing a Better Future for Healthcare

This is a pivotal moment in the of history healthcare. It requires health systems everywhere to dramatically expand their mission and embrace the full continuum of care. At the same time, it demands that they coordinate the delivery of this care more precisely and efficiently.

At HackensackUHN, we embrace the challenge. In 2014, we made great strides in a number of key areas, finding common ground with other institutions even as we reimagine and remake our model of care. This is a highly exacting and complex endeavor, but the rewards are substantial. We are confident that HackensackUHN will rise to the challenge to significantly improve the health of our patients and strengthen the well-being of the communities we serve.

Joseph Simunovich

Chairman
Board of Trustees
Hackensack University Health Network

Robert C. Garrett

President and Chief Executive Officer
Hackensack University Health Network