With patient intake levels pushing maximum capacity, Yale-New Haven Hospital — Connecticut’s largest medical facility — is attempting a twofold approach: increasing the number of beds at its current campus, and finalizing its purchase of the Hospital of Saint Raphael, the state’s fourth-largest hospital.
Yale-New Haven is asking state regulators to approve the addition of 70 beds to its campus over the next two years — an investment of $1.4 million — that will grow the facility’s current 1,008 beds and ease a spike in patient volume, said Vincent Petrini, senior vice president of public affairs at the hospital. But Petrini added that local expansion is only a first step: On Feb. 9, Yale-New Haven and Saint Raphael’s submitted an application to the Department of Public Health’s Office of Health Care Access for regulatory approval of Yale-New Haven’s acquisition of Saint Raphael’s facility on Chapel Street for $160 million. If approved, the acquisition would spare Yale-New Haven from having to construct a fifth patient tower, which Petrini said would cost an estimated $400 million and take five years to build.
The terms of the acquisition would help Yale-New Haven meet excess demand and allow Saint Raphael’s to recover financial stability, Petrini said. According to the Certificate of Need application submitted to the Office of Health Care Access on Feb. 9, Yale needs at least 140 additional patient beds in the next five years to cope with demand. At the same time, Saint Raphael’s future “is uncertain,” as it has experienced significant financial losses for several years — making it impossible for it to survive without outside assistance.
“We have seen a significant increase in patients, and because of the large demand, we need more space,” Petrini said. “The proposal makes perfect sense for our community and growth while stabilizing Saint Raphael’s financial challenges — we’re optimistic about it.”
Saint Raphael’s currently has 511 beds, but only 421 are used, according to the Certificate of Need. Under the proposed agreement, Yale-New Haven would have control over both hospital facilities and could use the 90 unoccupied beds at Saint Raphael’s Hospital, in addition to the 70 additional beds pending approval at the Yale-New Haven campus, to meet future demand.
Within the first five years after the acquisition’s approval, Yale-New Haven Hospital would invest $129.5 million to finance capital improvements, clinical service enhancements and expand its electronic medical records system to Saint Raphael’s Hospital, according to the Certificate of Need. Yale would also assume Saint Raphael’s long-term debt and contribute to its current shortfall in pension funding for hospital staff.
While proponents of the acquisition said the proposal meets the needs of both hospitals — increased capacity at Yale-New Haven and financial stability for Saint Raphael’s Hospital — the deal raises questions about the future of hospital competition within the Elm City. Yale-New Haven and Saint Raphael’s are the only two hospitals in the city and are often considered rivals. An acquisition joining the two facilities as one entity would eliminate competition between the two and could create a single health care option for city residents.
“I don’t know if the acquisition will be approved,” said Robert Alpern, dean of the Yale Medical School. “The Federal Trade Commission is going to have to decide if [the deal creates] a monopoly and if it’s good for the community.”
Petrini said he has not heard any complaints that the proposed acquisition would create a monopoly hospital in the Elm City. He added that Yale-New Haven’s patient base is much broader than just the city of New Haven. He said Yale-New Haven receives patients from several bordering states and is competing with hospitals across Connecticut, New York City and Boston.
In addition to expanding its inpatient care capacity, Yale-New Haven announced plans earlier this week to expand its options for outpatient care — medical services where patients do not stay in a hospital — by developing an outpatient center in North Haven. According to a Feb. 29 press release, Yale-New Haven will purchase a 120,000-square-foot, four-story building formerly owned by AT&T and remodel it to become a walk-in primary care center.
“The concept of a Yale-New Haven ambulatory [outpatient] center has received widespread community support,” said Richard D’Aquila, Yale-New Haven president and chief operating officer. “It will create access to key health services for residents of North Haven, Hamden, Cheshire and other surrounding communities.”
According to Petrini, Yale-New Haven is experiencing a rapid 2 to 3 percent annual patient rate growth while other hospitals in the state have not seen similar rises. He said he attributes this demand to the rising number of transfer patients, about 4,000 a year, that Yale-New Haven received after implementing the “Y Access Line” — a phone line which allows neighboring hospitals to request space at Yale-New Haven for their critical care patients. Petrini said well-known physicians and new facilities, such as the Smilow Cancer Hospital, also contributed to this growth.
Across the state, inpatient volume was flat for several years, and has dropped slightly since 2009, Connecticut Hospital Association spokeswoman Michelle Sharp said. She added that the decline in patient volume is partly due to the loss of insurance that accompanied loss of jobs in the economic recession. But as the state’s population continues to age, these rates are expected to climb higher, she said.
“We expect to see inpatient utilization increase as Connecticut’s population ages, though that increase will likely be tempered some by systems changes resulting from health care reform,” Sharp said.
Alpern said he thinks the acquisition will have a positive effect on the Yale Medical School. Some Saint Raphael’s doctors will form part of the school’s faculty, and Saint Raphael’s facilities will be available for student and resident training, Alpern said.
“We think the acquisition is a really good thing for the community, the hospitals and the Medical School,” Alpern said. “It just makes sense for the two hospitals to work together.”
The Department of Public Health’s Office of Health Care Access has 30 days following the submission of a Certificate of Need application to review the application. By March 10, the department will determine if it needs any additional information to make its decision.
Correction: March 2
A previous version of this article stated that the Department of Public Health’s Office of Health Care Access will announce by March 10 whether Yale-New Haven Hospital’s acquisition of Saint Raphael’s Hospital on Church Street will be permitted. In fact, the Department has until March 10 to review the submitted application and request any additional information, if needed.