Despite last week’s executive order signed by Gov. Dannel Malloy halting the proposed affiliation between the Yale-New Haven Health System and the Lawrence+Memorial Hospital in New London, Connecticut, both hospitals remain committed to the affiliation.
The proposed affiliation would incorporate L+M Hospital within the Yale-New Haven Health System, which currently includes Bridgeport, Greenwich and Yale-New Haven Hospitals. The executive order, which was signed on Feb. 25, has postponed the affiliation until at least January 2017. Malloy asked that the Office of Health Care Access and the state Department of Social Services postpone the decision in order to give a newly appointed state task force the opportunity to conduct a review of the decision-making process concerning affiliations and acquisitions between hospitals. However, the executive order requires that OHCA forbid affiliations between hospitals whose joint operating revenue would exceed 20 percent of the total operating revenue of all hospitals in the state. According to OHCA’s website, YNHHS had operating revenues in excess of $3.4 billion in 2014 — over 27 percent of the total operating revenue of all hospitals in the state.
Malloy said the mandated review will ensure that consumers statewide receive equitable access to transparent and competitive health care that contributes to economic development. According to a release announcing the executive order, having a small number of hospitals control the market would negatively affect health care in the state.
“With continuing changes in the health care industry, it is critical that our state laws ensure that all hospitals continue to thrive, and the deck is not stacked in favor of fewer than a handful that dominate the marketplace,” Malloy said in the press release. “Fewer health care systems mean fewer choices for consumers and that can drastically affect both the quality of care and costs.”
Director of Communications and Marketing for L+M Hospital Michael O’Farrell told the News that in spite of the executive order, L+M remains committed to the proposed affiliation with YNHHS.
In a press release from L+M, O’Farrell said the new affiliation would enhance the accessibility, efficiency and quality of care provided by their hospitals. He added that the affiliation would deliver sophisticated care across a wide spectrum of primary and specialty services. It further forms an integrated network to deliver health care for the entire Connecticut region. The affiliation will also make both hospitals capable of managing the changes associated with national health care reform initiatives, he added.
The executive order to postpone the decision was an “ill-advised and unnecessary step,” because OHCA has the resources to decide on the affiliation now, O’Farrell said. He expressed frustration with the governor’s decision to postpone the affiliation, accusing Malloy’s administration of bringing about the very conditions which have made the affiliation necessary.
“Federal health reform, Medicaid cuts, Medicare cuts and especially Connecticut’s notorious hospital tax are why many of our state’s community hospitals are not thriving and therefore have either already allied themselves — or need to ally themselves — with larger organizations in order to achieve scale, access capital and preserve access to locally available services,” O’Farrell said.
O’Farrell went on to note that in 2015, L+M will pay $18 million in hospital taxes to the state — resources he claimed would otherwise be used on technology updates, program development and facility improvements at the hospital.
Senior Vice President of Public Affairs at Yale-New Haven Hospital Vin Petrini said Yale-New Haven also remains committed to the affiliation and that he believes the partnership will provide access to quality care in the most cost-efficient way possible for the hospitals. He added that the proposed relationship between the hospital systems is not a merger and that, as a result, each will retain its existing board.
“We do remain committed [to the affiliation],” Petrini said. “We recognize that this is best way to achieve efficiency and to drive high-quality care in the most effective way possible. It makes complete sense.”
Yale Medical Group Chief Medical Officer Ronald Vender said he was surprised by the governor’s decision, adding that the process for evaluating proposals such as the affiliation between Yale-New Haven and L+M is well-defined and that the governor has intervened in an “unusual manner.”
Vender said the greatest impact will be felt by the hospitals because it is increasingly hard for smaller hospitals to remain financially viable. He added that while the governor appears to be strongly opposed to the expansion of YNHHS, he does not seem to be holding other hospitals in the state, including the Hartford HealthCare system, accountable in the same way.
“Hartford HealthCare is expanding into areas that have traditionally been aligned with Yale, Trinity has purchased St. Francis — and [is] attempting to purchase St. Mary’s — and Prospect is attempting to purchase [Eastern Connecticut Health Network] and Waterbury,” he said. “In addition, New York hospitals have moved into Fairfield County, Boston hospitals have moved into New London and Westchester, New York. All of these alliances, a number of which are with for-profit organizations, will clearly impact the referrals that are required to maintain the sophisticated tertiary and quaternary practices of [Yale Medical Group].”
The committee which will investigate the decision-making process behind hospital mergers and acquisitions will be chaired by Lt. Gov. Nancy Wyman.