NewYork-Presbyterian Hospital History

Company Perspectives:

It is the mission of NewYork-Presbyterian Hospital to be a leader in the provision of world class patient care, teaching, research, and service to local, state, national, and international communities. The Hospital combines the best clinical and administrative practices of all its divisions to build upon each Center's strengths to become the premier integrated academic health center in the United States.

Key Dates:

1771:

New York Hospital is chartered as the second public hospital in the 13 colonies.

1868:

Founding of Presbyterian Hospital on Manhattan's Upper East Side.

1911:

Columbia University's College of Physicians and Surgeons becomes Presbyterian's affiliate.

1912:

Cornell University Medical College becomes New York Hospital's affiliate.

1927:

Completion of Columbia-Presbyterian Medical Center in upper Manhattan.

1932:

New York Hospital-Cornell Medical Center opens on the Upper East Side.

1991:

Milstein Pavilion replaces the main Columbia-Presbyterian building.

1996:

Columbia-Presbyterian and New York-Cornell agree to merge.

1998:

NewYork-Presbyterian Hospital is formed from this merger.

Company History:

NewYork-Presbyterian Hospital is the biggest hospital in New York City. Its two medical centers, Columbia Presbyterian and NewYork Weill Cornell, are located on Manhattan's West Side and East Side, respectively. The medical colleges of Columbia University and Cornell University are the primary teaching affiliates of the two medical centers. NewYork-Presbyterian describes itself as "the world's first superhospital," with experts for every type of medical condition. It is ranked higher than any other hospital in the New York metropolitan area by the annual survey of U.S. News & World Report. The hospital and the two medical colleges are units of NewYork Healthcare System, Inc., a federation of hospitals, specialty institutes, and continuing care centers in the tristate area.

New York Hospital: 1771-1996

Chartered in 1771 to serve the infirm and poor, New York Hospital is the second oldest hospital in the United States. Established in lower Manhattan the following year, it was unable to function for many years, first because of the Revolutionary War and later because of a riot in opposition to the grave robbing used to procure specimens for autopsies. The hospital first opened to patients in 1791 and was, from its inception, closely linked to Columbia College's College of Physicians and Surgeons. It also received state support until 1866. During this period epidemics of such diseases as yellow fever, smallpox, cholera, and typhus were common problems. New York Hospital also treated the mentally ill in an 1808 building officially named the "Lunatick Asylum." This building quickly filled beyond capacity and the facility was moved uptown in 1821 and to White Plains in 1894.

New York Hospital had 500 beds in 1858. Its preeminence in surgery was put to the test during the Civil War, when it treated nearly 3,000 soldiers. After the main building was demolished in 1870, the hospital's governors decided to erect a new building on West 15th and 16th streets between Fifth and Sixth avenues. This structure opened in 1877. A nurses' home debuted in 1891 and a building for private patients in 1902. The administration building was rebuilt in 1891 to serve outpatients, among other uses. But the neighborhood of the second site of New York Hospital eventually was considered too congested, noisy, and pollution-ridden to be desirable. In 1924 philanthropist Payne Whitney bought a tract of land adjoining the East River between 68th and 70th streets and divided it between the hospital and Cornell University Medical College, which had become its affiliate in 1912. The block to the north was soon purchased as well. Whitney's will also left a trust fund of over $40 million for what became New York Hospital-Cornell Medical Center. Construction began in 1929, and the new medical center opened in 1932, with a 27-story central building for wards, private patients, and living quarters for the resident staff. Adjoining the main structure were buildings devoted to the medical college, the nurses' quarters, and clinics for women, children, and psychiatric patients. The Lying-In Hospital of New York also joined the complex.

Over the next 50 years, New York-Cornell pioneered in Pap tests, L-dopa drug treatment for Parkinson's disease, and the elimination of kidney stones without surgery. The burn center which opened in the 1970s was the largest in the nation. A center at 93rd Street and First Avenue provided service to the community, and special programs were directed toward the elderly, the poor, and teenage mothers. Beginning in 1984, however, New York Hospital's occupancy rate began falling behind that of other major teaching institutions on the East Side, although it had more beds than any other hospital in the city. In addition, the hospital's reputation was shaken by malpractice lawsuits arising from the unexpected deaths of two high-profile patients, one of them the artist Andy Warhol, who expired after routine gallbladder surgery in 1987.

When Dr. Samuel Skinner became chief executive of New York Hospital in 1987, the institution was losing about $1 million a week. A program of stringent cost-cutting, including streamlining accounts receivable and discharging patients to home healthcare or nursing homes when possible, helped put the institution in the black by 1993, when it recorded an estimated profit of $6 million. Still, it carried a heavy long-term debt and was committed to a six-year, $880 million expansion program, chiefly for the replacement of the aging central structure by the Greenberg Pavilion, jutting over the Franklin D. Roosevelt Drive to the East River. To increase the hospital's market share in patients, Skinner, in 1993, launched NYH Care Network Inc., a medical partnership of ten healthcare facilities in New York City's boroughs and neighboring Westchester County. This network included freestanding satellite centers and specialty arrangements with regional hospitals. After eliminating 150 more positions in 1995, which helped reduce the operating budget by 10 percent, New York Hospital recorded a profit of $13 million for the year.

Presbyterian Hospital and Columbia-Presbyterian Medical Center: 1868-1996

James Lenox founded Presbyterian Hospital in 1868 "for the Poor of New York without regard to Race, Creed, or Color" because his African American servant was refused admittance to several New York hospitals. The hospital opened in 1872 on the site he donated between Park and Madison avenues and East 70th and 71st streets. There were two main buildings, one for wards and private patients, the other for administration. A new building was erected in 1888 to serve as an outpatient dispensary. After the ward building was destroyed by fire in 1889, two new ones were built with a total of 349 beds. A nursing school was established in 1892. In 1911 Columbia University's College of Physicians and Surgeons was affiliated with Presbyterian, and plans were initiated to build a medical center for both. In 1922 Edward Harkness and his mother, Mrs. Stephen Harkness, donated a plot of 22 acres in Washington Heights, a rapidly developing middle-class neighborhood, between Broadway and Fort Washington Avenue and West 165th and 168th streets.

Construction of Columbia-Presbyterian Medical Center began in 1925 and was completed in 1927, with the centerpiece a 21-story building--the first skyscraper hospital--with 554 ward beds. It was connected to the west with the nine-story Harkness Pavilion for private patients. Both buildings made space for the Sloane Hospital for Women, which had served as a clinical hospital for Columbia's medical college, and for Sloane's accompanying outpatient Vanderbilt Clinic, which received an eight-story building to the northeast. These and Babies' Hospital, psychiatric and neurological institutes, a urological clinic, the nursing school, and dental and public health schools all belonged to the medical center. Maxwell Hall, connected to the main hospital building to the north, housed the medical college. A building for an institute for ophthalmology opened in 1933. The city donated a tract in 1935 for a municipal health center, which opened in 1940. A city cancer hospital opened in 1950 and the New York Orthopaedical Hospital moved to the medical center the same year.

Columbia-Presbyterian was considered one of the finest and most prestigious institutions of its kind in the world. After World War II, however, its neighborhood began to fall into decay. Private patients started to gravitate to hospitals in better areas, while Presbyterian found itself called upon to serve increasing numbers of poor people as smaller hospitals in the community closed. The hospital lost $25 million between 1974 and 1976 as the proportion of indigent patients climbed from one-tenth to one-third over a 20-year span.

Instead of accepting a proposal to retrench, Presbyterian completed a new building for Babies' Hospital and committed $10 million to converting the open wards to semiprivate rooms with bathrooms, $5 million for a new obstetrics unit, $5 million for remodeling clinics, another $5 million for updating equipment, and $3 million for emergency rooms. Medical Center physicians with little responsibility for direct patient care were asked to think about what they could do to bring in patients themselves. The hospital began its first program to identify the medical needs of its neighborhood and committed itself to building the Allen Pavilion, a 300-bed community hospital in Inwood, just north of Washington Heights. Completed at a cost of about $100 million, it opened in 1988. Between 1980 and 1988 Presbyterian spent $105 million treating uninsured people.

The burden of shouldering a renovation program with huge cost overruns resulted in Presbyterian spending more than $250 million of its $300 million endowment to meet operating costs in the 1980s. Some 500 employees were dismissed between 1987 and 1989. Presbyterian lost $23 million in 1988 and perhaps twice that in 1989, including $30 million on its 135 clinics because Medicaid reimbursements were inadequate and many patients had no insurance at all. In early 1990 Presbyterian's embattled president, Dr. Thomas R. Harris, resigned under pressure.

An administrative reorganization, cost cutting, and higher reimbursement rates from the state cut Presbyterian's losses in 1990. The following year it completed, at a cost of $500 million, the Milstein Pavilion, a 745-bed facility facing the Hudson River that replaced the antiquated main building. During the next four years Presbyterian built several outpatient community clinics, opened a nurse-run clinic, built a regional network of six affiliated hospitals in the suburbs, and negotiated a managed-care agreement with Bronx Health Plan. It sponsored its own Medicaid health maintenance organization to serve its community, which was 40 percent Medicaid-eligible. But after a $50.9 million deficit in 1992, Presbyterian was in technical default of its mortgage. At one point it was days from closing, according to one account. Its chief, Dr. William Speck, eliminated nearly 800 jobs, refinanced the mortgage and short-term loans, and subcontracted many services, reducing the deficit to only $1.9 million in 1995.

NewYork-Presbyterian: 1996-2003

Both New York and Presbyterian were teaching hospitals facing the same basic problems: reduction of government support, loss of market share, excess capacity, too many specialists, and not enough primary-care practitioners. Merger negotiations between the two began in 1993 with the aim of saving $60 million by consolidating services. Completed in 1996, the agreement called for the establishment of NewYork-Presbyterian Healthcare System, Inc. with a 66-member board providing equal representation for both institutions. Skinner was named vice-chairman and chief executive officer, and Speck, president and chief operating officer. No corporate headquarters was created, and top executives shuttled the six miles between the two campuses. For legal and financial reasons, NewYork-Presbyterian Hospital was established as a separate corporation, but the Columbia and Cornell medical schools remained distinct. The merger did not go into effect until the beginning of 1998.

Columbia Presbyterian, in 1998, was in the midst of a ten-year, $1.13 billion construction and renovation of 4.27 million square feet of its complex, including the completion or near completion by the end of that year of a new diabetes center, storefront clinic, pediatric intensive care unit, eye clinic, and orthopaedic research center, and an expansion of the comprehensive cancer center. In addition, the New York State Psychiatric Institute was completed on the campus, and work on a new building for Babies' and Children's Hospital was underway. New York Hospital's Greenberg Pavilion was completed in 1997 at a cost of $810 million. NewYork-Presbyterian's mortgage debt now came to about $1 billion.

NewYork-Presbyterian board members soon grew concerned that the merger of the two institutions was proceeding too slowly, threatening the financial gains foreseen from consolidation. Although the Columbia and Cornell medical schools remained separate, their doctors founded a care unit that by the end of 1999 had contracted with 16 local HMOs, offering discounted fees for service. A few scattered programs were brought together, such as children's heart surgery. However, doctors were generally unwilling to give up power or cede any area of care to the other hospital, and there was little that could be done to make them yield. Often they were not even employed by the corporation but rather had admitting privileges and thus brought in patients--and therefore revenue.

NewYork-Presbyterian's profit fell from $10.4 million in 1997 to $2.5 million in 1998. It had been assumed that Speck would succeed Skinner as chief executive of the corporation when he stepped down in 1999, but as concern grew over the corporation's financial performance, board members questioned whether Speck's personality and managerial skills made him an appropriate choice. Before the end of the year Dr. Herbert Pardes, Columbia University's chief for health sciences, was appointed to the job. Pardes pledged to reconstitute the management team, boost efficiency, cooperation, and productivity, and make the institution friendly for patients and their families and congenial for doctors.

At the beginning of 2000 the NewYork-Presbyterian healthcare network consisted of 32 hospitals, five specialty institutes, 17 nursing homes, 11 home health agencies, and 103 satellite clinics and primary-care centers. That year NewYork-Presbyterian Hospital broke ground for a replacement for the Babies and Children's Hospital, which was to be renovated and turned into an outpatient center. In 2002 NewYork-Presbyterian won long-sought-after approval to build a $250 million biomedical research and cancer-treatment center on its White Plains campus.

NewYork-Presbyterian Hospital was the biggest one in the New York metropolitan area in 2002, with 2,369 certified beds, 96,423 inpatient discharges, 995,796 outpatient and emergency visits, and total revenues of $1.85 billion. The annual U.S. News & World Report survey of U.S. hospitals for 2003 ranked it 11th, higher than any other area hospital. NewYork-Presbyterian was considered especially strong in psychiatry (second), neurology and neurosurgery (fourth), and pediatrics (fourth). An annual survey published in America's Top Doctors named more physicians from NewYork-Presbyterian Hospital than from any other hospital in the nation.

Principal Competitors: Beth Israel Medical Center; Mount Sinai Medical Center; New York University Medical Center; St. Luke's-Roosevelt Hospital Center.

Further Reading:

• Agovino, Theresa, "City Hospitals Curing Many Financial Ills," Crain's New York Business, July 15, 1991, pp. 1, 22.
• ------, "Columbia-Presbyterian Begins Big Layoff," Crain's New York Business, February 6, 1989, p. 2.
• ------, "Embattled Hospital Chief Quits," Crain's New York Business, February 5, 1990, pp. 1, 25.
• ------, "N.Y. Hospital Cuts Deficit, Moves on to New Programs," Crain's New York Business, July 30, 1990, p. 5.
• ------, "N.Y. Hospital Runs to Staunch Flow of Red Ink," Crain's New York Business, August 29, 1988, pp. 1, 34.
• "America's Best Hospitals," U.S. News & World Report, July 28-August 4, 2003, pp. 47-96.
• Benson, Barbara, "How One Hospital Plans to Survive," Crain's New York Business, November 21, 1994, p. 20.
• ------, "NYP's Internal Medicine," Crain's New York Business, January 3, 2000, p. 19.
• Brenner, Elsa, "NewYork-Presbyterian Wins Right to Develop Its Land," New York Times, August 17, 2002, Sec. 14 (Westchester), p. 3.
• Dunlap, David W., "A Medical Center Works on Its Health," New York Times, October 4, 1998, Sec. 10, pp. 1, 24.
• ------, "NYH Builds Managed Care Sans HMO," Crain's New York Business, July 24, 1995, p. 9.
• Farber, M.A., and Lawrence R. Altman, "A Great Hospital in Crisis," New York Times Magazine, January 24, 1988, pp. 14-17, 36, 40, 57.
• Hopkins, A.A., "Hospital Luxury for Rich or Poor," Scientific American, December 1932, pp. 340-41.
• Kamen, Robin, "New York Hospital Says: Bill, We Are Ready," Crain's New York Business, September 27, 1993, pp. 3, 52.
• Kastor, John A., Mergers of Teaching Hospitals, Ann Arbor: University of Michigan Press, 2001, pp. 113-258.
• Lamb, Albert R., The Presbyterian Hospital and the Columbia-Presbyterian Medical Center 1868-1943, New York: Columbia University Press, 1959.
• Larrabee, Eric, The Benevolent and Necessary Institution: The New York Hospital 1771-1971, Garden City, N.Y.: Doubleday, 1971.
• "Medical Center," Fortune, June 1944, pp. 148+.
• "New York's Academic Medicine World Goes Ape," Modern Healthcare, August 28, 1995, pp. 34-36, 40.
• Rosenthal, Elisabeth, "2 More Hospitals Decide to Merge in New York City," New York Times, July 24, 1996, pp. A1, B3.
• Steinhauser, Jennifer, "Hospital Mergers Stumbling As Marriages of Convenience," New York Times, March 14, 2001, pp. A1, B4.
• ------, "NewYork-Presbyterian Begins Work on Hospital for Children," New York Times, November 17, 2000, p. B2.
• Sullivan, Ronald, "New York Hospitals Learning Economic Lessons," New York Times, August 7, 1978, pp. A1, B2.
• Yalof, Ina, Life and Death: The Story of a Hospital, New York: Ballantine, 1988.

Source: International Directory of Company Histories, Vol.59. St. James Press, 2004.

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