Peconic Bay Medical Center, Eastern Long Island Hospital in talks to join larger health systems

Two East End hospitals are in talks to affiliate with either Stony Brook University Hospital or the North Shore-LIJ Health System.

The talks come two years after the 125-bed Southampton Hospital -- one of three in the East End Health Alliance -- said it was joining forces with Stony Brook. That deal is still not finalized.

"We are in active discussions with Stony Brook and North Shore-LIJ," said Andrew Mitchell, chief executive of Peconic Bay Medical Center in Riverhead. Mitchell said the 200-bed hospital hoped to reach a decision by the end of this year or the first quarter of next year.

Eileen Solomon, a spokeswoman for Eastern Long Island Hospital in Greenport, confirmed that the 90-bed hospital also was in talks with the two larger health systems, but said a decision wasn't likely until the first quarter of 2015.

The discussions could augur the end of the East End Health Alliance, which serves more than 300,000 residents over nearly 300 square miles. The hospitals, all of which were losing money, entered into the alliance in 2008 after the state's Berger Commission mandated it. In 2013, the three hospitals were in the black.

Kevin Dahill, chief executive of the Nassau-Suffolk Hospital Council, said the alliance "certainly served its purpose for those years between then and now. The hospitals found economies of scale and shared best practices."

But Dahill said health care, prompted by the federal Affordable Care Act, is moving away from "volume-driven care to value-driven care, to looking after the entire needs of patient."

He added, "To do that, you really need to be part of a system. It's going to be all about scale."

The discussions pit two of Long Island's major health care players against each other.

The 603-bed Stony Brook is Suffolk County's only academic medical center and Level 1 trauma center.

Based on net patient revenue, North Shore-Long Island Jewish Health System is the largest such entity in the state, with 17 hospitals including three in Suffolk.

At least two politicians said they thought Stony Brook was the better choice.

"I have long advocated that the Stony Brook Medical Center is the hub of the wheel, and community hospitals are the spokes," said Sen. Kenneth LaValle (R-Port Jefferson).

"From my perspective, the future of community hospitals on the East End are best served if they stick together," said Assemb. Fred Thiele (I-Sag Harbor). "And I think their future is best with Stony Brook."

Details of the talks were scant. Terry Lynam, a spokesman for North Shore-LIJ Health System, would say only that his organization was in discussions with the two East End hospitals "and looking forward to a successful conclusion."

Lynam said that if one or both of the hospitals were to affiliate with North Shore-LIJ, the health system would have to go through state and federal regulatory approval processes, depending on the nature of the final transaction.

Dr. Reuven Pasternak, Stony Brook's chief executive, said, "We are in discussions with the other EEHA hospitals as well as some other institutions that have expressed an interest in closer relationships."

As for finalizing the agreement with Southampton, he said, "There are still a number of standard reviews being done by a number of state agencies that need to take place to ensure a strong alliance for the future."

Dr. Kenneth Kaushansky, dean of Stony Brook's School of Medicine, said any additional hospital affiliations also would need to be approved by SUNY and include assessments by the state Department of Health and Division of the Budget.

"But having been through the process with Southampton gives us a tremendous experience on which we can speed the processes going forward," Kaushansky said. "In fact, we have already begun doing our due diligence along the lines of what SUNY central is expecting and have discussed the affiliations with DOH."