Yeshiva University’s plan to merge with Montefiore Medical Center in order to shed its costly medical school and reduce its debt has failed.
The proposal to turn Albert Einstein School of Medicine over to Montefiore had been underway since July of this year. A statement written by YU representatives cited the inability “to agree on certain material terms” as the cause of the breakdown. A Yeshiva University representative said the details were “confidential” and declined to comment further, other than to say that “the longstanding affiliation between Yeshiva and Montefiore remains in effect.”
A report by Moody’s Investors Service released yesterday said termination of the plan will extend the “university’s operating challenges.” According to financial consults hired by the university, Einstein accounted for two-thirds of the institution’s annual deficits.
One Einstein employee, who asked to remain anonymous for privacy reasons, described the current mood in the medical school as “tense.”
“People don’t know what to expect in terms of jobs,” she wrote in an email. Einstein employees have not been informed of the merger’s progress over the past couple months, or its collapse this week.
“I found out through your article,” she wrote. “No one knew about it. The news is just now starting to trickle in now, and people are asking questions.”
A Montefiore representative echoed YU’s official comments, saying that “while we have been unable to reach agreement at this time with Yeshiva University, we remain deeply connected to Einstein.” He declined to provide further details about why the plan failed.
One Einstein medical school student, who also asked to remain anonymous, said that rumor on the street is that the failure of the merger “won’t affect the college of medicine much.”
“I’ve heard that those who are most affected are employees of Einstein with respect to things like benefits and such,” he wrote in an online correspondence. “Details aren’t available yet. Everything is very hush-hush.”
President Richard Joel of Yeshiva University announced the plan to merge in May. Under the arrangement, Montefiore would take responsibility for the financial management of Einstein, but YU would remain the degree-granting institution with “a key role in the educational aspects of the entity,” according to a joint statement released in June. The institutions have collaborated on some level for 50 years.
Montefiore Medical Center in the Bronx is the teaching hospital for Einstein. Founded in 1955, Einstein has 734 medical students, 236 doctoral students and 106 students in the combined M.D./Ph.D. program.
The announcement to merge the institutions came two months after a report by Moody’s Investors Service warned that YU was at risk of running out of money by the end of 2015 unless operational changes were made. The report cited equipment upgrades at the Einstein school as one reason for cost overruns.
At the time, Moody’s could not be reached for comment as to whether this move could cause it to upgrade or further downgrade YU’s debt rating, which it put at the junk grade of B3 in March. After the merger’s failure, Moody’s junk grade of B3 remains.