Fasano on Failed Tenet Negotiations: This is a devastating blow to the Waterbury community as well as the entire state [Courant]

February 5, 2015

Hartford Courant
A final effort to salvage plans by a for-profit hospital chain to buy five nonprofit hospitals in Connecticut fell apart Wednesday afternoon as both Gov. Dannel P. Malloy and Tenet Healthcare Corp. said that they could not reconcile their differences.

“We believe it is best for the hospitals, their employees and the communities they serve to move forward exploring other options,” Malloy and Tenet said in a joint announcement.

The Malloy administration refused to offer details about its negotiations or the timing of the announcement. Meeting with reporters Wednesday afternoon, Malloy repeatedly said variations of “it just didn’t work.”

Tenet, based in Dallas, also declined to comment beyond the public statement.

Executives in charge of the hospitals at stake — Waterbury Hospital, St. Mary’s Hospital in Waterbury, Bristol Hospital, and Eastern Connecticut Health Network, which includes Rockville General Hospital and Manchester Memorial Hospital — said Wednesday that they would look for other options.

The announcement drew fiery remarks from Senate Republican leader Len Fasano of North Haven, who played a key role in bringing Tenet back to the negotiating table after the company withdrew its plans in December. Fasano blamed Malloy for the failed negotiations, although top Senate Democrat Martin Looney said that Malloy had worked hard to reach an agreement.

In December, Tenet said that Connecticut regulators’ list of 47 conditions on its pending purchase of Waterbury Hospital was too restrictive and pulled its plans to buy any hospitals.

In Wednesday’s joint statement, Tenet’s CEO, Trevor Fetter, said simply, “While Tenet is disappointed with the outcome, we wish the hospitals, local community leaders and Governor Malloy the very best in their effort to build a sustainable future for these and other hospitals in the State of Connecticut.”

A leader for hospital unions was not available for comment Wednesday afternoon.

Hospital acquisitions and joint-operating ventures have become increasingly common in the industry to make financially struggling hospitals more efficient. By affiliating with a larger system, hospitals can negotiate better terms with health insurers and buy medical supplies in bulk, among other benefits. Critics of consolidation worry about the quality of patient care, the number of services available, as well as work conditions and compensation for hospital employees.

Waterbury Hospital’s CEO, Darlene Stromstad, has said that the hospital is cutting expenses and its workforce to give the hospital financial “running room.” Stromstad reiterated Wednesday that the hospital is working to strengthen key services and gain back lost market share. “We are actively making plans for our resurgence,” Stromstad said.

Eastern Connecticut Health Network President and CEO Peter J. Karl said the trustees “will continue to actively seek alternative affiliation opportunities to provide a broader spectrum of services, to seek financial stability and investment in our staff and facilities, to strengthen our accessibility of care for our patients, and provide the greatest value for the communities east of the [Connecticut] river.”

Kurt A. Barwis, president and CEO of Bristol Hospital and Health Care Group, said that Bristol Hospital has experienced significant growth, particularly in bariatrics, breast health, orthopedics and wound care, and is expanding its relationship clinical partner Yale New Haven Health System. “Bristol Hospital will remain an independent — high-quality, low-cost — community hospital,” he said.

Chad W. Wable, CEO of St. Mary’s Health System in Waterbury, which includes St. Mary’s Hospital, said that while hospital executives are disappointed with the outcome, they understand and appreciate the perspective of both Malloy and Tenet and would continue to “take care of the Greater Waterbury community.”

‘A Devastating Blow’

After Tenet said in December that it was pulling out of a proposed deal to buy Waterbury Hospital, Fasano tried to get the talks restarted along with Looney, a New Haven Democrat. On Wednesday, Fasano had unusually harsh words for Malloy.

“This is a devastating blow to the Waterbury community as well as the entire state,” Fasano said. “Gov. Malloy had the opportunity to close this deal, and he failed. It is unfortunately consistent with his lack of leadership over the last two years on this issue.”

He added: “It was Gov. Malloy whose executive agency [Office of Health Care Access] proposed conditions that went above and beyond what the legislature previously rejected as too onerous. It was Gov. Malloy who closed the negotiation doors to those who got Tenet to come back to the table.”

“He slammed the door on a private company that was willing to invest nearly half a billion dollars in Connecticut, and he slammed the door on the faces of Waterbury Hospital employees,” Fasano said

Looney, for his part, said, “Gov. Malloy worked hard to reach an agreement which would have ensured that Connecticut residents have access to affordable, quality medical care. I know the governor and legislative leaders will continue to work toward helping our affected hospitals and communities.”

Malloy’s chief of staff, Mark Ojakian, countered Fasano’s criticisms: “Sen. Fasano has become a partisan talking-point machine, heckling from the sidelines instead of actually doing the hard work of governing. The fact is, Len hasn’t offered one serious idea on the hospital issues in Waterbury. Just like he hasn’t offered one serious idea on the budget, or one serious idea on economic development.”

Malloy was asked repeatedly about the Tenet deal by reporters at the state Capitol on Wednesday afternoon.

“It’s not going to work,” Malloy said of the proposed deal. “It doesn’t work. It’s the second time that a for-profit has attempted to do this in the state this way, and it just didn’t work.”

The state Office of Health Care Access in December gave a tentative approval to Tenet’s acquisition of Waterbury Hospital but imposed dozens of conditions. One requirement would have prevented Tenet from cutting the hospital’s workforce, or reducing services, in the first five years.

Tenet then withdrew its offer. Fasano and Looney met with a Tenet executive to revive the deal. On Jan. 12, Malloy wrote a letter to the Tenet chief executive offering to talk things over. In response to Malloy’s letter, the Tenet CEO replied in a letter with Tenet’s own conditions for restarting negotiations.

In that letter, dated Jan. 16, Tenet asked for its acquisition to be treated equally with any other hospital acquisition, whether it be by a for-profit or a nonprofit. Tenet also demanded one approval for all five hospitals and “an opportunity to create an operating model that allows the hospitals to become sustainable and to support their own capital needs.” Waterbury Hospital, for example, has been operating at a net loss.

Malloy said Wednesday: “It just doesn’t work. If you look at the conditions as laid out in their letter that gave rise to an additional round of discussion, you can’t do that. Government can’t sign over all of its responsibilities carte blanche, and for that reason, I suppose, they didn’t want to go forward with the deal, and it doesn’t work that way.”