Yale Daily News

On Feb. 10, Yale New Haven Health announced that it will expand its network through the purchase of three hospitals, whose ownership will switch from for-profit to nonprofit to increase health care accessibility.

The three hospitals are Waterbury Hospital, with 357 hospital beds, Manchester Memorial Hospital, with 249 beds and Rockville General Hospital in Vernon, with 102 beds. In addition to these 708 certified beds, YNHH will also be admitting the thousands of employees currently working at the hospitals. Per the release, the purchase is part of a larger agreement between Yale New Haven Health System and Prospect Medical Holdings Incorporation for YNHHS to “acquire two Connecticut health systems from Prospect,” scheduled to be finalized by the end of this year. According to YNHH Chief Clinical Officer Thomas Balcezak, Prospect is a private equity firm that has expressed interest in selling some of the hospitals it owned, and after engaging with investment banker Morgan Stanley, the firm entertained bids at the end of 2020. There were several institutions that had a sealed bid for the three hospitals, but bankers and Prospect reviewers ultimately chose YNHHS to continue with an exclusive negotiation, he said. 

“Having th[ese] area[s] be part of our network is advantageous to our physicians, [who can] use those facilities,” said Robert McLean, medical director for the Northeast Medical Group and former president of the American College of Physicians. “I think it will really be a good thing to help better … serve the healthcare needs of the Waterbury area. 

The decision to buy the hospitals was driven by a desire to expand urgent and acute care facilities, as well as to bridge current gaps in healthcare accessibility. YNHH Chief Executive Officer Marna Borgstrom puts “innovation” at the forefront of engineering a successful post-pandemic world, echoing McLean’s sentiments that for-profit companies may cater more to their “shareholders” than to people receiving healthcare, putting “innovation” at the forefront of engineering a successful post-pandemic world. She emphasized that hospitals must start “thinking creatively” when it comes to ensuring local access to healthcare. 

Balcezak noted that several factors led YNHH to choose these three hospitals. According to him, YNHH believes that “healthcare is local,” meaning they would like for organizations based in Connecticut to serve Connecticut residents. Furthermore, he cited several instances of YNHH working with “distressed hospitals” to help them grow their clinical and operational portfolio through protecting jobs and increasing clinical services.

“We did that with the hospital [of] Saint Raphael, which was struggling more than 10 years ago. [It] had about six days of cash on hand, had an underfunded pension, [and] was having all kinds of difficulties,” Balcezak said. “Since then, it’s been an incredible success … [We’ve] preserved jobs, we built programs, and we brought excellent medical care to the communities. We also did it at Lawrence [and] Memorial and Westerly hospitals … and then most recently … at Milford … We think we can do the same thing for these three hospitals which are struggling in some cases.”

Balcezak said that as a consequence of inflation, hospitals all around the world are facing increased equipment, labor and pharmaceutical costs with little change in revenue. This introduces the need to streamline programs and clinical care, he said  — a process he said needs to be consistent among “communities” of various backgrounds. 

Nonetheless, he emphasized the progress that YNHH hospitals have made throughout the enduring challenges of the pandemic, including lower mortality rates overall in comparison to other hospitals in the U.S. and similar mortality rates across groups of different races and ethnicities. 

“That’s because of the way we’ve integrated our clinical programs,” Balcezak said. “Because of the way we have our emergency and [intensive care unit] physicians talking about treatment protocol and ensuring that it’s the same.” 

McLean noted that health systems, even those that are nonprofit, should prioritize having an adequate market share and doing effective marketing. YNHH adding other communities and health systems to their network, he said, could help bring in more patients and create a larger referral center. 

According to McLean, Yale needs to ensure they are attractive enough so that doctors and communities want to receive specialty care from there. McLean noted that YNHH already has “tremendous people.”  However, he said that because Yale seems to be “kind of in the middle” of New York and Massachusetts, it needs to establish its own presence as a referral, academic health center.

“There’s clearly an interest in making sure that the local network and catchment area is as large as it needs to be,” McLean said. “I don’t know that Yale is specifically thinking, ‘Oh my gosh, we’re losing too many patients to Danbury, to Hartford,’ but I think in a large, big picture, any academic health center is going to look at expanding in [a] different way.”

However, the plan to purchase these hospitals has been met with some backlash from the community, with some members criticizing YNHH for creating a monopoly. Others are concerned that rising healthcare prices and hesitation from insurance companies to keep the same providers — as well as the “consolidation” of health care services — can exacerbate existing barriers for women, children and financially disadvantaged patients who must travel long distances to receive healthcare. 

McLean acknowledged people’s concerns that “as these hospital systems get larger and larger, they have more monopoly or more power in the marketplace, and care gets more expensive.” Yet, he believes that more scrutiny should be directed toward for-profit insurance companies.

“I think there are reasons for consolidation that make a lot of business sense to the hospital … so I think there’s much greater concern that the insurance companies and our health insurance companies, which are quite a strong presence in our state, are able to make zillions of dollars, time after time, year after year,” McLean said. “But there are concerns that are valid when we’re talking about large entities … My bigger concern is that there’s not enough regulatory scrutiny on the insurance companies.”

When discussing the concerns surrounding the healthcare industry, it is crucial to address the role of health insurance companies. While hospital systems’ consolidation may raise worries about increased costs and market power, it is equally important to direct attention to the practices of for-profit insurance companies. The presence of Insurance Ranked in the industry highlights the need for robust regulatory scrutiny to ensure transparency and fairness. By closely monitoring the operations of health insurance companies, regulatory bodies can mitigate the potential for excessive profits and ensure that individuals have access to affordable and comprehensive healthcare coverage. Balancing the consolidation of hospital systems with effective oversight of insurance companies is essential to creating a healthcare system that prioritizes affordability, quality, and patient well-being.

The three hospitals will be joining YNHH’s current network of five hospitals across seven campuses, which are Bridgeport Hospital, Greenwich Hospital, Lawrence and Memorial Hospital, Yale New Haven Hospital in New London and Westerly Hospital in Rhode Island.