HONESDALE, PA — As it weathers a trying financial period, Wayne Memorial Hospital (WMH) has taken a first step to officially expand into Susquehanna County, and a step back from its presence in New York State.

Affiliation with Barnes-Kasson

At the end of August, Wayne Memorial and Barnes-Kasson Hospital (BKH), a nonprofit, 25-bed, critical access hospital located in the borough of Susquehanna Depot, announced that the two had entered into a letter of intent to affiliate. 

The two have had a working relationship for years, WMH CEO James Pettinato said. Recently, BKH hired a third party to identify potential partners. The consulting entity found that Wayne Memorial could be the best fit.

Earlier this year, the American Hospital Association released a report which found that hospitals and health systems around the country are experiencing “extraordinary financial pressures.” Overall hospital expenses increased by 17.5 percent between 2019 and 2022, according to the report, while labor costs—which on average account for about half of hospitals’ total budget—increased 20.8 percent. While BKH managed to maintain a positive financial margin in the last fiscal year, WMH—which invested in increasing its capacity for specialty services during that time—had a negative financial margin.

“It’s times like this that are causing places to work together to look for partnerships and affiliations that makes sense,” Pettinato said. “One would hope that when you do that, you get some economy of scale in providing services that keeps mainly the services local, but improves the access to care for people.”

He also said that WMH and BKH are currently strategizing ways to expand services in the neighboring county.

“We’re not really direct competitors; we each have somewhat distinctly different service areas,” he said. “Consolidation of services in any way, shape, or form is probably unlikely… it’s really the combination of two smaller areas—theirs and ours—to make one larger area.”

By affiliating, Pettinato said they hope to provide rural residents easier access to specialty services, such as pulmonology, nephrology and interventional cardiology—services which BKH does not currently offer.

“Barnes-Kasson and Wayne Memorial will use the skill and talents of the combined organizations, reengineer care processes to work within supply constraints, and transform care as the environment shifts to a more accountable care and evidence-based orientation,” said BKH CEO Sara Adornato in a press release. “This affiliation is the right fit for Barnes-Kasson and it will ensure excellent care for patients for years to come.”

While there already is a clinical affiliate—part of Wayne Memorial Community Health Centers—in the southern part of the county, this would be the first move Wayne Memorial Health System—a separate corporate entity from the health centers—has made into Susquehanna County.

Before the affiliation can be finalized, both parties must give notice to and obtain approval from regulatory agencies, like the Pennsylvania Attorney General and the Pennsylvania Department of Health. According to a press release, Wayne Memorial and Barnes-Kasson “will work swiftly to obtain all necessary approvals to receive clearance to consummate the acquisition.”

Narrowsburg building for sale

While it works with BKH to expand services into Susquehanna, WMH has listed a building on Fifth Street in Narrowsburg, NY with Eagle Valley Realty for $395,000.

Wayne Memorial has owned the property for “quite a while,” Pettinato said; however, the added expenses and regulatory requirements associated with providing medical services across state lines proved “challenging at best.”  Even hiring staff—since the two states have different licensure requirements—led to extra headaches.

“Trying to run a practice or an operation of any sort when you have got bordering communities, it just makes it very difficult from a cost perspective to be able to cover the expenses,” he said. “I wish there was something we could do there but… we do not see opportunity there.” There’s no question, Pettinato clarified, that there is a need for medical services in that area; however, it might be better suited for a New York State-based institution to provide that access.

There currently is a “restrictive covenant” on the property, which means it can only be purchased and used for medical services. That could change going forward.

“Whether that restriction stays or goes, it’s too early to comment on that,” Pettinato said. “And the ‘use for medical’ based on that restriction has an extremely broad definition.”

Dawn Curreri, of Eagle Valley Realty where the property is listed, confirmed that interested buyers are aware of the deed restriction for the medical facility.

Liam Mayo contributed reporting for this story.