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October 10, 2023

Yale New Haven, Hartford HealthCare continue to dominate market share, while CT health systems record steep financial losses

PHOTO | FILE IMAGE Yale New Haven Hospital.

Connecticut’s two largest health systems continue to dominate market share in the state, and their lead is likely to get even bigger in the weeks or months ahead as Yale New Haven Health tries to finalize its acquisition of three more Connecticut hospitals.

Yale New Haven Health — which owns Bridgeport, Greenwich, Lawrence + Memorial, Yale New Haven and Westerly hospitals — recorded $5.4 billion in operating revenue in fiscal 2022, which was up 5.3% from a year earlier, according to newly released data from the state Office of Health Strategy. That accounted for 32.2% of all operating revenue earned by the 12 major health systems in Connecticut. 

Health systems include parent companies that own individual hospitals as well as subsidiaries such as physician practices, surgery centers and mental health providers.

If Yale New Haven Health completes its proposed acquisition of Manchester Memorial, Rockville General and Waterbury hospitals, it would control about 35.37% of all hospital operating revenue in the state.

That deal, first announced over a year ago, is still awaiting regulatory approval by the Office of Health Strategy. 

Yale New Haven earlier this month also announced it acquired Connecticut-based PhysicianOne Urgent Care, which operates 18 locations in this state and nine more in Massachusetts and New York. That will further add to its operating revenue. 

By comparison, Hartford HealthCare, the other major system in Connecticut, recorded $5.4 billion in operating revenue in fiscal 2022, for about 28.7% of the statewide market share.

Together, Yale and Hartford HealthCare reported $11.5 billion in operating revenue in fiscal 2022, which accounted for about three-fifths of all Connecticut health system operating revenues. 

Losses are steep

Meantime, health systems in Connecticut reported significant losses in fiscal 2022, driven by rising expenses and other challenges.

The state’s 12 major health systems recorded a $719.4 million loss in fiscal 2022, following a $289.1 million loss a year earlier, according to OHS data.

Their overall loss was $839.6 million vs. a $1.2 billion surplus in fiscal 2021, a swing of more than $2 billion, OHS data shows.

Hospital systems in fiscal 2022 saw a 6.5% increase in operating revenues to $18.9 billion, but their expenses rose by a faster rate of 8.8% to $19.6 billion. 

Health systems also recorded a $120.2 million nonoperating loss, largely a result of the stock market’s poor performance in fiscal 2022. 

Eight of the state’s 12 health systems lost money in fiscal 2022, led by the UConn Health Center, which recorded a $443.8 million operating loss, driven in part by high costs associated with teaching and patient services, according to OHS. 

Yale New Haven Health reported a $234 million operating loss in fiscal 2022, compared to an operating surplus of $38 million a year earlier, OHS data shows. 

Hartford HealthCare — which owns The Hospital of Central Connecticut, St. Vincent’s and MidState medical centers, and Backus, Charlotte Hungerford, Hartford and Windham hospitals — had the largest operating gain of $60.7 million, followed by Connecticut Children's Medical Center Corp. ($21.3 million). 

Trinity Health Of New England — parent of St. Francis Hospital in Hartford, Johnson Memorial Hospital in Stafford Springs and St. Mary’s Hospital in Waterbury — reported a $46.7 million operating loss in fiscal 2022 vs. a $34.7 million operating surplus in the year-ago period, OHS data shows. 

Individual hospitals in Connecticut experienced an overall operating loss of $206 million in fiscal year 2022, compared to a gain of $333.1 million in the year-ago period.

Ten of the state’s 27 hospitals were in the red in fiscal 2022, led by Yale New Haven Hospital, which reported a $223.7 million operating loss. 

Stamford Hospital, which is an independent healthcare provider not associated with a major health system, had the highest operating surplus of $70.1 million, OHS data shows. The hospital's parent company, Stamford Health, reported a much smaller operating surplus of $4.9 million. 

In response to the new OHS report, the Connecticut Hospital Association (CHA) said care providers are facing “significant economic headwinds that threaten their financial health and sustainability.”

The CHA called for action to address hospitals’ financial situation, noting how the COVID-19 pandemic is still having lingering effects on the industry.

Rising costs of drugs, contract labor, salaries and wages for medical personnel are among the factors contributing to higher expenses. Hospitals are also spending more on uncompensated care, with insufficient Medicaid and Medicare reimbursements, according to the OHS report.

CHA CEO Jennifer Jackson said the report is further evidence of the “need to advance policies that support care delivery and abandon the pursuit of policies that will increase cost and reduce access to care.”  

“We need to work together on solutions to address underpayment, address root cause drivers of poor health, and reduce administrative burden and bureaucracy that drive up costs,” Jackson said. “Medicaid underfunding not only leads to cost shifts that increase costs for families with private insurance, but it also deprives people who are medically underserved of access to needed care and social supports.”

The Office of Health Strategy indicated in an emailed statement that, while 2022 was a less profitable year for some Connecticut hospitals, over a five-year period, “the majority of hospitals across the state appear stable and financially sound.”

Statewide, hospitals reported $8.2 billion in unrestricted assets for fiscal year 2022, it noted.

“Insurers, hospital systems, pharmacy benefit managers, pharmaceutical manufacturers and all healthcare providers must continue to work to drive down the underlying costs of care so that we can successfully address the affordability crisis facing our Connecticut employers and residents,” OHS said.

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