Yale Daily News

The Yale New Haven Health System signed an agreement to acquire three new Connecticut hospitals last week. The signing comes less than a month after a historic deficit triggered a slew of job cuts.

YNHHS gains over 700 more beds via the acquisition agreement. The three hospitals — Rockville General Hospital in Vernon, Manchester Memorial Hospital and Waterbury Hospital — will add roughly 4,400 more employees to YNHHS’s current 29,000. 

While YNHHS promises a smooth transition to stabilize these organizations, some officials in the state are wary of what such an expansion may mean for Connecticut residents seeking healthcare.

“Overall, it could be good, but it’s probably more likely to be a net negative for the families in the state,” said Ted Doolittle, the state’s appointed healthcare advocate. “I say that because the research pretty clearly shows that when hospitals do merge and expand, the end result is that the prices paid by consumers and families and insurance companies tend to go up.” 

The three hospitals are currently operated by the Los Angeles-based Prospect Medical Holdings. 

Will costs go up? 

Yale New Haven Health Vice President Vin Petrini pointed to past integrations — such as the merger with St. Raphael in 2012 and with Bridgeport in 2019 — to demonstrate YNHH’s track record of “stabilizing” the organizations it acquires. 

“We were able to stabilize those hospitals, sustain access to high-quality care in the local community, preserve jobs and do so without negatively impacting prices in the community,” Petrini said. “And that’s our goal.”

Doolittle acknowledged that the “often boasted about” savings that organizations like YNHHS make in announcements of such deals do sometimes materialize. But research shows that these savings don’t always translate to saving patients’ money. 

A September 2018 study in “The Quarterly Journal of Economics” claimed that hospital consolidation was linked with higher patient prices and lower quality care. 

“If there are savings, they wind up being reaped by the hospital system, not by the families and consumers in Connecticut,” Doolittle said.  “Those are some of the dangers lurking out there for families and consumers.” 

According to Petrini, YNHHS has paid special attention to capacity issues at places like Bridgeport Hospital and Yale New Haven Hospital, where demand for services has increased. Creating access for patients in places like Waterbury, Manchester and Rockville will allow the system to “meet those needs” and “manage the volume” across the state, he said.

This will also allow for medical records to be integrated across the broader system, using Epic, their electronic record system. Petrini said that this will allow better quality care, better access to services and more convenience for patients.

“Even as we look to reduce our costs, with respect to the immediate budget challenges … we also need to invest in our future, and this transaction would allow us to continue to grow our services and sustain access to high-quality care,” Petrini said.

Prospect Medical Holdings spokesperson Nina Kruse highlighted technological pushes to streamline medical records for the three hospitals. 

“We would benefit from a unified clinical information system that would provide data that is accessible by patients and providers alike, and an integrated electronic medical record would avoid duplication of tests,” Kruse wrote in an email to the News. 

With streamlined medical records from these hospitals, Doolittle noted there is a fresh opportunity to ensure participation in sharing data with a new state-run project called the Health Information Exchange. 

“Many states are ahead of us on that, but we’re trying to build it in Connecticut,” he explained. “If you have that state-run or state-based health information exchange, then the hospitals can, in a sense, talk to each other through that facility.” 

He said he hopes YNHHS will guarantee their participation in this program with the new hospitals. 

Profit status flip-flops

If YNHHS receives regulatory approval for the transaction, the system will revert the three hospitals to nonprofit status. They had originally been converted from nonprofits to for-profits upon acquisition by Prospect, a for-profit company that was 60-percent-owned by private equity firm Leonard Green & Partners until 2021.

Under the for-profit model, operating money is distributed to shareholders. According to Petrini, reverting to nonprofit status will allow operating money to be reinvested into the local hospitals.

“The wonderful thing about the [nonprofit] model is that we continue to invest directly into the communities that we serve,” Petrini said. “So we’re looking forward to working in each of these communities and developing that relationship.”

According to Petrini, YNHHS is taking a “careful look” at how they can best approach the care delivery at each of those hospitals, as well as create access to high-quality care.

Doolittle noted that he does not typically see any behavioral difference between for-profit hospitals and nonprofit hospitals. 

“You would think that it sounds like it should be lower prices, but it very clearly doesn’t,” Doolittle said. “For the prices and by other measures of quality, there’s very little, if any, difference between for-profit and nonprofit status.” 

There might be an advantage in terms of ownership, however, in that the hospitals are now locally-owned.

“It’s not great to have a faceless profit-driven organization based in L.A. as your ultimate authority for these critical local health facilities,” he said. “So it’s nicer to be able to go to Yale-New Haven to complain or to try to seek change than it is to go to some faceless private equity company.”

What happens next? 

The deal will now be reviewed by the Office of Health Strategy, which is part of the governor’s office.

“I hope and strongly encourage them to take a close look at this proposed merger and in particular, to add some price justification methodologies going forward,” Doolittle said. 

According to Doolittle, there are two “key” areas the Office of Health Strategy can address in their review: price caps and ensured services. 

When Hartford Healthcare planned to acquire St. Vincent’s hospital in Bridgeport in 2019, the Office of Health Strategy approved the acquisition with several conditions. Among those conditions was a price cap the Office of Health Strategy mandated Hartford Healthcare abide by.  

“I hope that the agreement, if it’s approved, is contingent on price justification in perpetuity, not just for a period of two or three years,” Doolittle said. 

Doolittle also advocated for the Office of Health Strategy to set guidelines preventing YNHHS from eliminating specific services. If YNHHS is allowed to freely kill off services — such like OBGYNs, this can hurt patients who may live in more remote areas and ultimately drive up prices for patients seeking care. 

Additionally, before implementation, the deal can be reviewed by the state attorney general’s office or the Department of Justice over antitrust concerns. In 2012 when YNHHS merged with The Hospital of St. Raphael, former Attorney General George Jepsen initiated an antitrust investigation into the deal. He concluded that the merger would not substantially lessen competition for medical services in the greater New Haven region.

Connecticut Attorney General William Tong has not yet commented on whether his office will look into this new deal as an antitrust matter. 

“Without commenting specifically on the merits of this particular acquisition, the Attorney General has previously said that he is concerned about the impact of consolidation in the healthcare industry on patients, providers and employees,” said Elizabeth Benton, spokesperson for the Attorney General’s office. 

According to The American Hospital Directory, there are 51 hospitals operating in Connecticut.