TODAY IT’S HARD TO IMAGINE PRESBYTERIAN HOSPITAL — NOW half of New York-Presbyterian Hospital — as being anything but a formidable teaching hospital, devoted to patient care, education, and research and jostling for space on a hilltop in northern Manhattan with the Columbia College of Physicians & Surgeons. But for 56 years, beginning in 1872 when it stood on a block of land between 70th and 71st streets and Park and Madison avenues, patient care was its only mission.
In 1927, its last full year of operation at that location, Presbyterian Hospital was at 91 percent capacity, with an average of 232 of its 255 beds filled every day. It served 4,458 inpatients that year and handled about 120,000 outpatient visits. Compare those figures with New York-Presbyterian Hospital’s 2,395 beds, about half of them at each campus; 4,717 physicians; 854,496 outpatient visits; and 100,743 discharges in 2002.
How did a small, isolated hospital reinvent itself as a major force in American medicine? A look at its history since 1928 will suggest some answers.

Moving Day
An unusual amount of activity was under way in front of the old Presbyterian Hospital early in the morning of March 26, 1928. About a dozen patients emerged from the building, some on stretchers, some in wheelchairs, and were lifted into six ambulances parked outside. A doctor and a nurse stepped into each vehicle, and the convoy headed north to the new, 554-bed Presbyterian Hospital on West 168th Street. Student nurses welcomed the patients and took them to one of the hospital wards or to private rooms around the corner, in the Harkness Pavilion. This scene repeated itself until all 53 patients had been transferred.
The world’s first academic medical center was open for business. What made the place unique, in addition to the completely new and remarkable facilities, was the 1921 agreement signed by Columbia and the hospital that enabled the university to nominate the hospital’s staff from its P&S faculty. Columbia faculty constituted the hospital’s professional staff and also taught medical students in traditional and hospital settings. The hospital had expanded its mission to include teaching and the medical school had found a reliable source of patients for clinical education. The agreement also described the alliance as a means to provide for “research of the highest type.”

Controlling the Finances
Presbyterian’s management structure at the time was fairly straightforward. A board of managers set policy; a superintendent ran the hospital from day to day. The president of the board, Dean Sage, in 1923 persuaded his old friend John Bush to help him build and run the new hospital.
Bush was an optimist, but he was also a realist. One Sunday in 1927 he and Sage were strolling down Park Avenue. “I said we would probably lose a thousand
dollars a day, at least, before we would have any idea as to where we were going,” Bush wrote in his unpublished “Recollections.” “In fact, [we lost] $1,500 a day before we began to get control of the problem.”
The new hospital, equipment, and move cost nearly $12 million (the equivalent of about $128 million today). Running the hospital during its first year cost $3 million, three times the budget of the old hospital and $1 million more than the hospital’s managers had anticipated.
Bush set up a new accounting system, cut each department’s budget by 10 percent, and streamlined scores of procedures. His reforms pared the hospital’s deficit but failed to eliminate it. In 1929 the hospital spent $128,786 more than it earned.
The drain on the hospital’s budget was free care, which amounted to 45 percent of the year’s operating expenses. The managers refused on principle to deal with the problem. “We conceive it to be our duty,” Dean Sage noted in the hospital’s 1929 annual report, “to continue as heretofore to [care for] the poor of New York without regard to race, creed, or color. We believe that the contributing public agrees with us and will see to it that our service is maintained.” The “contributing public” consisted mostly of donors to the endowment fund, which for a time helped keep the hospital in or near the black, as it does today.

Medical Center Facilities
The J. Bentley Squier Urological Clinic, a 70-bed unit on the 10th floor of the hospital, was up and running when the medical center opened. P&S urology professor J. Bentley Squier had raised the money to build, furnish, and endow it. Other specialized hospitals moved to Washington Heights with Presbyterian. Two of them were the Sloane Hospital for Women and the Vanderbilt Clinic, which had merged with Presbyterian in 1925. Both institutions were founded in 1886, Sloane by the daughter of William Henry Vanderbilt, the clinic by his sons. P&S students trained in both of them. At the medical center, Sloane took over three floors of the new hospital building and was given research space in the clinic. Vanderbilt has been Presbyterian’s outpatient clinic for 75 years.
Two specialty hospitals that had been associated with Presbyterian since 1925 moved to the medical center in 1929. One of them was Babies Hospital, the forebear of the Morgan Stanley Children’s Hospital. The other was the Neurological Institute.

Wish List
During the summer of 1930, as the Great Depression settled in, Dean Sage wrote a wish list of services he thought any well-rounded medical center should have. It was a long list. Sage figured he would need $50 million to build everything on it, including the last item: “a separate eye hospital.”
He sent a copy of the list to medical center benefactor Edward Harkness and left on vacation. When Sage returned Harkness asked him what it would cost to build and endow an eye hospital. John Bush worked up the numbers: $1.55 million to construct a 100-bed facility and a $3.45 million endowment to run it. Harkness agreed to deliver the entire $5 million. The Institute of Ophthalmology (later the Edward S. Harkness Eye Institute), housed in a nine-story building with 96 beds, opened in January 1933. It got off to a good start. During its first year a 29-year-old surgeon named Dr. Ramon Castroviejo performed the world’s first successful corneal transplant.
Dr. John M. Wheeler was the institute’s first director. By all reports he was a versatile and extremely confident surgeon. He insisted on operating in sneakers, a quirk that posed a problem one Sunday morning in May 1931 when he was scheduled to remove two cataracts from the eyes of the king of Siam. The OR that morning was rather peculiar — a bathroom on the Westchester estate of one of the king’s wealthy friends. While hanging sheets on the bathroom walls, the nurses realized they had forgotten the sneakers. As Maynard Wheeler (no relation) tells the story in his history of the eye institute, the nurses woke up the only intern with a car, and he raced the footwear to Westchester. The exiled king returned to London with 20/20 vision.

Red Ink
Throughout the 1930s the scarcity of donors, their wealth siphoned off by the Depression, forced Presbyterian’s managers to look elsewhere for support. For a number of reasons — too few semi-private rooms, too many charity beds (determined in part by the needs of the medical school), the hospital’s location, and its policy of turning away patients who could afford local practitioners — Presbyterian had put itself in a bind. “The day of large legacies and gifts is over,” Sage said in 1934, “and more and more the hospital must look to ... private patient occupancy for support.”
The success of the Harkness Pavilion, set aside for private patients, pointed the way to a solution. The facility brought in around $500,000 in 1929. Eventually 80 of the ward beds were converted to semi-private rooms, but this was hardly enough to meet demand. “Pay-ward” patients (paying $4 a day until 1942) and charity cases continued to share the same 55-bed units.
The hospital’s reliance on fee-for-service treatment gradually grew. Medicaid and Medicare later enabled more patients to pay for services, but the hospital was slow to take advantage of a valuable source of income. “There was a certain reluctance to be dependent on government funding,” says Dr. Thomas Morris, who was president of the hospital from 1985 to 1990. “I think the doctors felt the same way.”

The Hospital at War
The hospital played a significant role in World War II: It pioneered blood banks and the mass production of plasma, developments that saved the lives of thousands of soldiers. It staffed the portable, 1,000-bed 2nd General Hospital, which treated soldiers, civilians, and prisoners of war in Britain and France. Presbyterian doctors experimented with penicillin, a drug so new few uses had been found for it, and developed protocols for its use in military medicine.
Back home, a short-handed staff relied on volunteers. At the close of 1943, 365 doctors, 190 nurses, and 243 other hospital workers had joined the military. Busy as they were, surgeons at the Neurological Institute continued to accept challenging cases, in one instance performing a burr biopsy on a giant panda. The operating table collapsed under the bear’s weight, but in the end it didn’t matter. “Diagnosis: encephalitis,” J. Lawrence Pool reported in his history of the institute. “Outcome: autopsy.”

Skyway bridges were constructed over Fort Washington Avenue to connect the new Milstein Hospital Building with the existing Presbyterian Hospital and P&S buildings.
A Changing of the Guard
In 1943 Dean Sage died on a fishing trip. The Board of Managers elected Charles Cooper, a trustee of the Neurological Institute, as the board’s ninth president. Cooper brought Presbyterian, Babies Hospital, and the Neurological Institute under the same administrative roof. Each became a separate part of a new corporation called Presbyterian Hospital in the City of New York.
In 1945 the New York Orthopaedic Hospital merged with Presbyterian. It moved to Washington Heights in 1950 and later became Presbyterian’s orthopedic surgery service.

Coasting
Presbyterian neglected to modernize its plant during these years. “The hospital was written up shortly after World War II, I think in Newsweek,” says Dr. Morris. “The article highlighted how sophisticated it was, how grand the facilities were, how superb the X-ray facilities were. And I think candidly we sort of rested on our laurels for a while.”
Paying patients turned their backs on Presbyterian. In the late 1960s 15 percent to 20 percent of the patients who went to Presbyterian lived on the east side of Manhattan. As time went on, these patients began to go elsewhere.
During the presidency of Felix E. Demartini, president and CEO from 1977 to 1984, the hospital launched a program called Priority Projects to patch up the deteriorating plant. It wasn’t enough. “As those temporary renovations went on,” says Dr. Morris, “we saw we were going to need a new facility.”
The result was the 10-story, 745-bed Milstein Hospital Building, named for brothers Seymour and Paul Milstein and their sister, Gloria Milstein Flanzer, whose foundation donated $25 million toward its construction. Seymour Milstein became chairman of the hospital’s trustees.
“You’ve got to give a lot of credit to the Milsteins for being willing to risk association with a hospital that was in terrible shape,” says Dr. Herbert Pardes, president and CEO since 2000. “It was very critical in the turnaround.” The new building opened in 1989.

All Together Now
By the 1990s, Dr. William T. Speck, the hospital’s president and CEO from 1993 to 1998, decided the hospital needed a partner to survive. By cutting costs, increasing revenues, and luring back more paying patients, Dr. Speck had cut the hospital’s losses from $50 million in 1992 to $2 million in 1994. But the future looked bleak. The hospital was losing its clout with HMOs, which were sending patients to the hospitals with the lowest prices. “I thought that the marketplace was becoming increasingly competitive and that we were going to have to negotiate rates with payers,” says Dr. Speck. “I didn’t want to end up with a war with New York Hospital. They were a major competitor.”
And so in 1996 Drs. Speck and David Skinner, president of New York Hospital, engineered a merger. “Now we could come together, share information, and negotiate common rates,” says Dr. Speck. “Also, we could reduce our costs by integrating support services.”
Effective on Dec. 31, 1997, the merger created one of the nation’s largest not-for-profit hospitals. It also created the New York-Presbyterian Healthcare System, a network of more than 20 affiliates in the tri-state area. “The merger made a complete difference,” says Dr. Pardes. “It’s like night and day. We now are a dominant institution in the city. We have a far stronger program. We learn best practices from each other. We stripped out tens of millions of dollars in costs.”
Gradually Presbyterian became more attractive to patients. “More people want to come here,” Dr. Pardes says. “Since the merger, 15,000 more people are staying in the hospital every year. If you multiply 15,000 by an average revenue of about $12,000, you have about $180 million coming into this place that wasn’t there before.”

Looking Ahead
What does the future hold? “We’ve still got a good way to go in terms of people, service, and places we want to recruit and build,” says Dr. Pardes. He wants patients to recognize that New York-Presbyterian is on the cutting edge of medicine and that it is their advocate. “But you know what?” Dr. Pardes adds, “The whole thing means nothing unless it results in something terrific for the patients. I want to have as strong a culture of patient-centered, friendly care as you can find anywhere in the country.”

Eric Oatman, a free-lance writer based in New York,
was born at Presbyterian Hospital and was sent back for repairs (a successful pyloromyotomy) six weeks later.

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