Key terms of an agreement between Yeshiva University and Montefiore Health System have finally been reached according to the statement, which was released last week. The merger, an attempt by Yeshiva University to shed its costly medical school, had faltered in early December, after the two parties were unable “to agree on certain material terms,” according to a YU spokesperson.
Moody’s could not comment as to whether this move could cause it to upgrade YU’s debt rating, which it put at the junk grade of B3 in March. “We are aware of the new development but have no change to the rating or outlook at this current time,” a Moody’s representative told The Jewish Week.
A Dec. 9 report by Moody’s affirming YU’s B3 status said the medical school is responsible for two-thirds of the deficit and that the termination of the merger agreement greatly increased “uncertainty” over YU’s financial state by assuring the continuation of “acute losses.”
Einstein Dean Allen Spiegel broke the news at a student rally last Tuesday morning attended by over 200 students, according to one attendee. Students had organized the rally to show support for the merger after hearing that Einstein would endure severe cuts if the agreement with Montefiore failed.
“The Plan B was to destroy the graduate program,” said Dayle Hodge, an M.D.-Ph.D. student and president of the M.D.-Ph.D. student council. Hodge, in his fifth year of an eight-year program, found out that they were planning to fire his advisor, a junior level professor, as well as all other non-tenured faculty. “There would be no guarantee that I could finish my training,” he said.
Plan B also consisted of drastically reducing the salaries of tenured faculty who did not have “active grants” in order to “force out those who weren’t producing,” Hodge said.
The details came out at a Jan. 23 meeting of Einstein’s faculty-student senate, where, according to Jeffrey Segall, Einstein’s senate speaker, members unanimously supported the merger.
There were also plans to rent or sell the Price Center/Block Research Pavilion, a 223,0000-sqaure-foot, five-story, $220 million facility that houses 40 research teams and 400 scientists. When opened in 2008, Einstein described the facility as the “largest and most significant research building to be constructed in the Bronx in half a century.”
“They were going to get rid of most of the faculty in the Price center, move them across the street into vacant labs, and try and rent the building,” said Hodge. “Which is insane — who was going to want to rent out a quarter of a million square feet of state-of-the-art labs in the middle of the Bronx?”
Alvarez & Marsal Holdings LLC, the corporate restructuring company hired by YU in May 2014 to help manage the undergraduate college, was called in to orchestrate the Einstein cuts, said Hodge.
A YU spokesman said the school couldn’t confirm the details of the cuts that were planned after the deal faltered but noted that that the two schools are working together to finalize the details of the merger.
According to Alyssa Casill, a second year Ph.D. student at Einstein and co-chair of the graduate student council, Einstein faculty unanimously took a symbolic vote of “no confidence” in Yeshiva University at the meeting, demonstrating the depth of unease among faculty since the partnership stalled.
“Uncertainty is the right word,” Casill said, describing the mood in the student body after news of the merger’s failure in December. “No one knew exactly what the fallout would be, but everyone was worried.”
Casill was one of the student leaders responsible for organizing the rally on Feb. 3.
“When we realized that the situation was dire, we had to rally the troops,” she said.
Upon hearing the news of the agreement’s revival, Casill said she and her fellow students were “excited and relieved.”
“We hope the deal closes soon,” she said. “Until then, we can’t really rest.”
While the new agreement is still subject to final documentation and regulatory approval, negotiations, begun in July 2014, are hoped to finish by the end of 2015, according to a Montefiore spokesperson.
“Montefiore wants to make sure Einstein remains the preeminent medical institution that it is,” he said. “Montefiore and Einstein have a 50 year relationship — the two are completely integrated,” he said, noting that Montefiore pays for 75 percent of the clinical faculty at Einstein.
President Richard Joel of Yeshiva University first announced the plan to merge in May of 2014. 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.
Montefiore 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