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December 10, 2014

Tenet, Waterbury Hospital: Regulatory conditions could scuttle deal

Photo | Contributed Waterbury Hospital

Draft conditions state regulators have placed on Tenet Healthcare Corp.’s proposed acquisition of Waterbury Hospital could kill the deal as well as future Connecticut acquisitions by the for-profit hospital operator, the parties said in public comments filed this week.

Tenet said the conditions, which include the appointment of an independent monitor, the freezing of pricing and staff levels for five or more years, the filing of strategic spending and hiring plans, and various other oversight and disclosures, would treat the acquired entity differently than other hospitals in the state.

“In general, Tenet believes it should not be held to higher standards with regard to outcomes or reporting than the other acute care hospitals serving communities in Connecticut,” Tenet’s attorneys wrote.

Greater Waterbury Health Network CEO Darlene Stromstad said Waterbury Hospital is running out of time. It’s operating in the red this fiscal year due to $9.7 million in reimbursement reductions.

“There is a point – and it is very close – when there are no more options,” Stromstad wrote.

The conditions carry broader ramifications, she added.

“If these conditions remain in place, no other hospital company will come forward to partner in Connecticut,” she said.

Similar arguments were included in comments filed by Yale New Haven Health system — which has partnered with Tenet— as well as by executives of Eastern Connecticut Health Network and St. Mary’s Hospital, which Tenet also hopes to acquire.

Marna P. Borgstrom, president and CEO of YNNH, said no hospital, for-profit or nonprofit, could operate under the terms.

“The imposition of many of these conditions would impact severely the ability of any healthcare system to operate hospitals in a way that would support long-term operational and financial viability,” Borgstrom wrote.

Also weighing in against the conditions were the Connecticut Hospital Association, Stamford Hospitals, and the mayors of Waterbury and Manchester.

Several labor unions, Sen. Martin Looney, and others filed comments praising the conditions.

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