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April 27, 2023

Yale New Haven Health presents case for acquisition of three CT hospitals

ERIN COVEY / REPUBLICAN-AMERICAN Waterbury Hospital.
By Katy Golvala, CT Mirror

The Office of Health Strategy held a public hearing for Yale New Haven Health’s application to acquire Waterbury, Manchester Memorial and Rockville General hospitals, currently owned by Prospect Medical Holdings.

“This acquisition offers the opportunity to financially stabilize the hospitals so that they can continue to provide needed services to their communities and an opportunity to enhance quality of available care,” read a presentation by Christopher O’Connor, chief executive officer of Yale New Haven, the largest hospital system in Connecticut by revenue. 

O’Connor and chief clinical officer Thomas Balcezak said Yale ownership would benefit the hospitals’ patients by giving them access to Yale physicians closer to home, enhanced quality of care and more generous financial assistance policies. 

The deal would do right by the employees of Prospect’s hospitals as well, according to Yale representatives, who said that the health system has agreed to recognize all unions and collective bargaining agreements, as well as retain all employees at the acquired hospitals.

Officials from OHS pressed executives for details on how the acquisition would impact price of care and access to services. Studies show that health care consolidation — the trend of big health systems buying up hospitals — leads to higher prices and cuts to critical services.

But O’Connor said Yale’s track record proves it provides benefits to the hospitals it acquires.

“I would take issue … with the assumption that acquisition leads to increased cost. That has not been our experience, and we don’t believe it would be going forward,” he said. 

Yale has acquired three hospitals: the Hospital of Saint Raphael, now a campus of Yale New Haven; Lawrence + Memorial; and Milford Hospital, now a campus of Bridgeport Hospital. In every instance, according to O’Connor, those hospitals experienced increased utilization, expanded services and cost savings.

Yale New Haven does have plans to consolidate some inpatient services between Manchester Memorial and Rockville General, which has experienced extremely low patient volumes in recent years, with an estimated 26 inpatient discharges in 2022. 

“It’s not safe,” said Balcezak. 

Yale New Haven, which originally announced the proposed acquisition in February 2022, would spend $435 million to purchase the hospitals, along with imaging equipment and the hospitals’ equity interests in certain joint ventures. The hospital system will finance the transaction with cash. 

If it’s approved, Yale New Haven and Hartford HealthCare would own more than half of the 27 hospitals in the state. 

A fresh start

Even with concerns of higher prices and service cuts that hospital acquisitions bring, members of the public testified overwhelmingly in support of the proposed deal, saying that Yale’s resources would provide much-needed stability and high quality care. 

In submitted written testimony, several employees raised issues about Prospect as an organization.

“It is obvious that Waterbury Hospital and its affiliates are suffering at the hands of Prospect Medical Holdings. PMH has a record of preying on poorly managed and underfunded hospitals, as well as some questionable business practices. On a daily basis, we witness the negative impacts that these poor business practices have on patient care, employee retention and morale,” wrote Analisa DeMartino, who works in the medical lab at Waterbury Hospital.

“Yale is going to be a blessing for this community,” said Sen. Saud Anwar, D-South Windsor, who added that he gets constant calls from thrilled constituents asking when Yale is coming to town. 

Anwar, a physician who’s affiliated with Eastern Connecticut Health Network, which operates both Manchester and Rockville hospitals, also pointed to issues presented by Prospect’s business model, saying that private equity and medicine do not mix. 

The company was, until recently, owned in part by private equity firm Leonard Green & Partners.

A ProPublica investigation published in 2020 found systemic financial mismanagement and patient safety violations across the entire network. 

According to the investigation, the company’s founders built the business by acquiring small hospitals in predominantly low-income neighborhoods and then convincing health care providers to “feed Medicaid and Medicare patients” to those facilities. They also slashed costs, often at the expense of staff and patient safety, ProPublica reported.

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