April 3, 2019

CT regulator greenlights WCHN merger, with cost cap

Photo | Contributed
Photo | Contributed
The Whittingham Cancer Center at Norwalk Hospital.

State overseers on Tuesday approved a proposed merger between Western Connecticut Health Network and New York-based Health Quest Systems.

WCHN assets in the deal include the two-campus Danbury Hospital and Norwalk Hospital. Health Quest hospitals include Sharon Hospital, which it acquired in 2017, as well as three New York Hospitals -- Carmel-based Putnam Hospital Center, Rhinebeck-based Northern Dutchess Hospital and Poughkeepsie's Vassar Brothers Medical Center.

In all, the seven hospitals contain 1,449 licensed beds, 758 of which are spread across the WCHN properties. They will operate under a new, not-for-profit system named Nuvance Health. The name was announced Tuesday afternoon.

Also included is Western Connecticut Medical Group, which employs approximately 350 doctors, and a variety of other holdings.

The approval, from Office of Health Strategy Executive Director Vicki Veltri, comes almost exactly one year after the parties announced their intent to merge.

Veltri noted that the decision contains a provision capping healthcare cost growth at the involved facilities -- a first for a transfer-of-ownership approval in Connecticut.

The provision ties cost-growth rates to the consumer price index.

"Healthcare expenses are growing at a faster pace than overall consumer costs -- they have a significant impact on consumers and our economy and OHS is taking note," Veltri said in a statement.

The cap, she added, "helps address a major issue brought to us by consumers and addresses a challenge that faces Connecticut and the nation."

Nuvance will be governed by an 18-member board of trustees and led by WCHN CEO Dr. John Murphy and Health Quest's Robert Friedberg as president (he was president and CEO of Health Quest).

The merger is projected to save the WCHN and Sharon Hospital more than $100 million over the next three years, achieved through "standardization of health reimbursements, improved contracting for pharmaceuticals and supplies, and consolidation of administrative and back office functions."

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