Two hospitals travel different regulatory roads [Rep-Am]

July 29, 2014


WATERBURY — Two hospitals. Two proposed for-profit ventures. Two different paths to getting the deals done.

Both Waterbury Hospital and Saint Mary’s Hospital have proposed deals with Tenet Healthcare Corp. of Dallas that would result in the nonprofit facilities becoming for-profit entities. But thanks to timing and a new state law, it appears they will follow different routes to get state approval.

Waterbury Hospital filed a certificate of need application for its for-profit joint venture in May 2013. That venture originally was with Vanguard Health Systems of Nashville, Tenn., but Vanguard was later acquired by Tenet.

The application was stymied, however, because state law at the time did not allow for-profit entities to hire physicians or to own medical practices — and a bill approved by the Legislature to change that was vetoed by Gov. Dannel P. Malloy in July 2013.

Nearly a year later, the Legislature again approved a bill to resolve the issue and establish a process for converting nonprofit hospitals to for-profits. Malloy signed that bill into law on June 3, and much of it took effect with his signature.

A month later, Saint Mary’s announced a deal with Tenet, and filed a determination letter for its certificate of need application with state regulators.

Three other hospitals in the state being acquired by Tenet — Manchester Memorial, Rockville General and Bristol hospitals — also filed letters after the new law took effect.

SO, WHILE SAINT MARY’S and the three other hospitals will follow the new process, Waterbury Hospital will not.

In part, that means it is not required to hold a formal hearing in the city about its proposal. The new law requires partners in a for-profit conversion to conduct a hearing in the municipality where the affected hospital is located within 30 days of filing a determination letter.

Under the old law, once the state Office of Healthcare Access and the state Attorney General’s Office deem Waterbury Hospital’s application complete, they will conduct a public hearing in Hartford as part of a 90-day review of the application. Both agencies are still reviewing supplemental information for the application that Waterbury Hospital and Tenet filed in June.

Darlene Stromstad, the hospital’s president and chief executive officer, said in a statement emailed on Friday that the hospital understands “the high level of interest” the community has in the deal, and has tried to be open about the process.

“We voluntarily hosted a series of forums for a variety of constituents” in the region, including one at the University of Connecticut and another at a downtown church, she said. The hospital has also met with various groups.

In addition to changing the hearing process, the new law allows the commissioner of public health and the attorney general to take three actions with an application — approve it, approve it with conditions, or reject it.

Another change requires the commissioner to take into account any proposed impact on hospital staffing, and to deny an application unless it is determined that, among other things, the affected community is assured of high-quality health care.

The state also now requires a certificate of need application for proposed purchases of medical practices with eight or more physicians.

THE ATTORNEY GENERAL’S OFFICE would not comment when asked whether Waterbury Hospital should be allowed to follow the former law’s process while being allowed to create a for-profit venture that can hire doctors and acquire medical practices under the new law.

“That question could arise and be ruled upon” by the attorney general, said Robert Clark, an assistant attorney general.

Meanwhile, the bipartisan co-sponsors of the new law — Senate Majority Leader Martin M. Looney, D-New Haven, and Senate Minority Leader Leonard A. Fasano, R-North Haven — said the Legislature did not intend to alter existing certificate of need applications.

“The intent was not to affect the conversions already in progress …,” Looney said. “It was to establish a procedure and policy for future conversions.”

Fasano said the new law had two primary goals: to slow the growing number of private medical practices “being gobbled up,” and to gain more control “of how for-profits came into the state, without prohibiting for-profits from coming into the state.”

“If we did nothing, I think we would have been in a lot of trouble,” he said. “By doing something, we’ve got something out there that gives a little speed bump.”

He also agreed that the bill was not intended to halt existing applications. “It’s unfair to reach back,” he said.

ONE GROUP HAS ATTEMPTED to force Waterbury Hospital and Tenet to restart the process under the new law.

Connecticut Health Care Associates, a union representing 400 nurses and 150 technical workers at Waterbury Hospital, sent a letter in July asking the Office of Healthcare Access and the Attorney General’s Office to start over in their review of the proposed joint venture.

The letter, signed by union President Barbara Simonetta, seeks to restart the process because the original application was filed by Waterbury Hospital with Vanguard and not with Tenet, which acquired Vanguard in October 2013.

In the letter, Simonetta said state law does not allow such applications to be transferred or assigned. “Accordingly, … Vanguard’s application should be dismissed since Tenet will, at least in part, be the ultimate holder of such” certificates of need, she wrote.

As of Friday, neither the Attorney General’s Office nor the Office of Healthcare Access had ruled on the request.