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April 26, 2023

Yale New Haven Health pitches takeover of 3 Prospect hospitals

PHOTO | GARY LEWIS Chris O'Connor took over as CEO of Yale New Haven Health in late March.
By Liese Klein

Citing its record of financial turnarounds and high-quality care, Yale New Haven Health officials made their case for taking over three hospitals run by for-profit operator Prospect Medical Holdings at a Wednesday hearing.

Waterbury Hospital, Manchester Memorial Hospital and Rockville General Hospital would join Yale New Haven Health’s system if the deal gets approval through the state’s Certificate of Need (CON) process, which evaluates the impact of hospital consolidation.

Run by the state Office of Health Strategy, the CON hearing was live-streamed on Zoom, with a public comment section of the hearing scheduled to start at 3 p.m. Nearly 250 people had joined the hearing as of 10 a.m.

The precarious finances of Prospect’s hospitals will benefit from an acquisition, and clinical services will be both streamlined and enhanced, YNHH CEO Chris O’Connor said. 

“I strongly urge you to move rapidly to approve the application without conditions so that Yale New Haven can get to work revitalizing these hospitals and serving the surrounding communities,” O’Connor said. 

As part of his testimony, O’Connor said that YNHH had agreed to recognize all unions at the acquired hospitals and assume all collective bargaining agreements, in addition to hiring “substantially all employees in good standing.” The system said it would offer benefits packages to workers that would be “at least as generous as those currently offered by Prospect.”

O’Connor cited his own experience as former CEO of the Hospital of Saint Raphael – which was taken over by YNHH in 2012 – as a testament to the benefits of acquisition by the academic medical system. 

The $160 million Saint Raphael’s purchase price was used to pay off debt and pension liabilities, and YNHH was able to absorb most of Saint Raphael's employees, O'Connor said. The cost savings from the deal totaled $638 million by 2020, he added.

“[Saint Raphael’s] was in a very difficult position, and it was clear that it could not continue to survive and thrive in a changing healthcare environment,” O’Connor said. “The transaction proved to be extremely successful for both Saint Raphael’s and Yale New Haven.”

But O’Connor warned that recent financial headwinds in healthcare – which contributed to YNHH’s $240 million operating loss in the last fiscal year – make the outcome of the proposed acquisition uncertain. 

“This is an opportunity to stabilize the Prospect hospitals but it won't be easy,” O’Connor said.  “This is a very difficult time for all Connecticut hospitals in the wake of the COVID-19 pandemic, and Yale New Haven Health is dealing with its own challenges.”

Dr. Thomas Balcezak, chief medical officer at YNHH, said the acquisition of the three hospitals represents an opportunity to improve care and bolster clinical services.  

“I believe there are enormous benefits of bringing community hospitals into the Yale New Haven Health system because of our foundational academic medical center,” Balcezak said, citing patient access to the flagship 1,500-bed hospital and Yale School of Medicine researchers. 

The hearing was scheduled to continue into Wednesday afternoon.

Contact Liese Klein at lklein@newhavenbiz.com.

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