June 13, 2016

ECHN sale gets final OK; State officials expect end of July completion

PHOTO | Contributed
PHOTO | Contributed
Attorney General George Jepsen and state Office of Health Care Access have OK'd a California company's acquisition of Eastern Connecticut Health Network.

State regulators have decided not to require an independent ombudsman as a condition for approving the $105 million sale of Eastern Connecticut Health Network to a California for-profit company.

That was the only major change announced Friday in the final decision by the state Office of Health Care Access and Attorney General George Jepsen ratifying ECHN's purchase by Prospect Medical Holdings Inc.

The ombudsman had been one of the most important conditions for many area residents.

State regulators agreed instead to allow for two new members selected from the community, with full voting privileges, to sit on an oversight board that includes local doctors, health care workers, and ECHN managers.

State officials expect the sale to be finalized by the end of July, when ECHN would become known as Prospect ECHN Inc.

Regulators announced a proposed final decision in May, imposing more than 20 conditions on the deal to protect charitable funds and endowments, keep staff employed at the same rate of pay and benefits, and keep both Manchester Memorial and Rockville General hospitals open for at least three years.

They also required Prospect to spend $75 million over the next five years on capital projects, regardless of any regulations the General Assembly might impose on for-profit hospitals.

Prospect originally had wanted that paragraph stricken, but Jepsen said it was necessary to prevent those funds from being "held hostage" by future state legislation.

During two days of public hearings last month in both Manchester and Vernon, residents called for appointment of an independent ombudsman to an oversight committee to ensure the communities' interests are served.

OHCA included that request in the draft decision, but the wording was changed in the final decision released Friday.

Rather than an ex-officio, non-voting member, the two new "community representatives" will have voting privileges and be selected in consultation with the mayors of both Manchester and Vernon.

Nina Kruse, an ECHN spokeswoman, said the adjustment "was proposed so that the community could have an enhanced role with full participation on the advisory board with voting rights."

The final decision keeps all other conditions set forth in its proposed decision, requires ECHN's new owners to:

  • Maintain current charity and endowments through a separate foundation, and continue indigent and community volunteer services.
  • Report on inpatient and outpatient services as of the time of the decision, any planned changes for the next three years, and submit notification of any relocation of outpatient or reallocation of inpatient services.
  • Submit a health needs plan to implement a community health needs assessment study.
  • Maintain and enhance current community benefit programs and activities for three years.
  • Operate both hospitals' emergency rooms around the clock, seven days a week, for at least three years.
  • Work towards making cultural and linguistically appropriate services available.
  • Hold a semi-annual joint meeting of the Board of Directors and the local boards that's open to the public to inform about hospital activities and to give residents the ability to ask questions.
  • Submit to state regulators a semi-annual report for three years on cost savings and the effect on clinical quality of care.
  • Submit a three-year plan for any consolidation, reduction, or elimination of services.
  • Submit a semi-annual report to OHCA detailing how the $75 million for capital improvements is being spent.
  • Contract with an independent monitor for compliance with state regulators' conditions and state facilities licensing requirements.

"These decisions come after many months of discussions to identify and carefully select a partner who could commit to investing in the health care services in eastern Connecticut and continue to fulfill the mission of ECHN," Kruse said.

ECHN has been drowning in debt for the past decade, deferring maintenance and capital projects and unable to meet its future pension liabilities, which Prospect will fully fund under the sales agreement.

Prospect plans to implement its "Coordinated Regional Care" model here, using a preferred provider network focused on preventive care and early readmission to reduce emergency visits.

Prospect officials said Friday afternoon that they were still reviewing the final decision and had no immediate comment. Nevertheless, they said, they hope to finalize the sale soon.

The private company owns 13 hospitals, including seven in California, four in Texas, and two in Rhode Island. It also plans to buy Waterbury Hospital as well as acute-care facilities in New Jersey and Pennsylvania.

In California, where Prospect is headquartered, that state's patient advocate has rated many of its programs and services as "poor."

In addition, two of its southern California hospitals in Los Angeles and Culver City are facing federal sanctions because of an "immediate jeopardy" status for unsanitary conditions that caused a surgery to be closed for eight days in order to be properly cleaned and pass inspection.

The company is also facing a labor battle with its nurses and other health care workers in Rhode Island, where contracts are about to expire.

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