Yale-New Haven eyes affiliation with New London’s Lawrence + Memorial [NHRegister]

June 22, 2015

New Haven Register

NEW HAVEN >> The Yale New Haven Health System is exploring an affiliation with Lawrence + Memorial Healthcare in New London, the first such move since it affiliated with two Connecticut hospitals in the 1990s.

Vincent Petrini, spokesman for Yale-New Haven Hospital, said the arrangement it is considering would be the same as the one now in place for Bridgeport Hospital and Greenwich Hospital.

Lawrence + Memorial Healthcare would continue to be independently run, as opposed to the financially strapped Hospital of St. Raphael, which was merged with Yale-New Haven Hospital in 2012.

This latest deal, if final agreement were reached between the parties and approved by the Office of Health Care Access, would also include Westerly Hospital in Rhode Island, which is now part of Lawrence + Memorial.

“We are still in the conversation phase,” Petrini said.

Workers at L+M were notified by email early Friday afternoon of the talks between the two entities.

The New London-based hospital system has had a number of clinical partnerships and a close working relationship over the years with Yale-New Haven in such areas as radiation oncology, neonatology, telestroke, pediatric emergency medicine, invasive cardiology/angioplasty and vascular surgery, according to Bruce D. Cummings, president and CEO of Lawrence + Memorial Hospital, Westerly Hospital, and L+M Healthcare.

“We also know that the Yale New Haven Health System shares our commitment to serving the community. Therefore, it is appropriate to have a more involved conversation to determine whether and how a deeper relationship might take shape. And while nothing is definite at this point, I felt the time was right to share this preliminary information with all of you,” Cummings wrote in the email to employees.

L+M’s board of directors initiated the discussion around a more formal affiliation, according to Cummings. The discussions will continue over the summer as they both conduct due diligence.

Both Petrini and Cummings stressed that L+M would remain intact with L+M Hospital and Westerly Hospital each maintaining separate licenses, separate wage agreements and their own boards of directors. The medical staffs at both hospitals would also keep their own bylaws, while physician groups with service agreements would stay the same.

Other affiliates of L+M are the Visiting Nurse Association of Southeastern Connecticut and the L+M Medical Group.

Petrini said the proposal is the first since 1998, when Greenwich Hospital was added to its system; Bridgeport was tapped in 1995.

He said the goal is to achieve efficiencies in back-office functions, such as the human resource departments, the legal, finance and marketing divisions, as well as purchasing.

All the state’s hospitals have been fighting changes in Medicaid reimbursements and tax increases by the state approved by lawmakers earlier this month but not yet signed by Gov. Dannel P. Malloy. The increase over last year is $105 million with $58.4 million of that assigned to Yale-New Haven Hospital in the first year alone.

Lawrence + Memorial is facing an increase of $2.5 million in taxes and Medicaid cuts next year, according to the Connecticut Hospital Association.

The proposed affiliation with Lawrence + Memorial Hospital comes at a time when lawmakers have approved a series of bills that look to improve transparency on hospital costs and a more level playing field to keep medical options available to the public.

The hospitals will argue in favor of some form of consolidation, while lawmakers have said the Affordable Care Act mandates coordination, rather than integration that concentrate market share in too few entities.

The hospitals have said the taxes and reductions in state assistance are not sustainable and will result in layoffs and program cuts.

The state Senate leadership points to an increase of profits by 280 percent in the Yale-New Haven System and 277 percent in Hartford HealthCare from 2009 to 2013 that they feel shows they can absorb the changes in state reimbursements in another tough budget year.

State Senate President Pro Tem Martin Looney, D-New Haven, Friday said the announcement by Yale “points out the timeliness of the need for a new regulatory framework,” which was addressed in legislation just adopted this session.

He said the proposal “also indicates the robust health of the Yale New Haven Health System.”

Looney said he was concerned with “potentially another contraction of the market with fewer independent hospitals.”
State Sen. Len Fasano, D-North Haven, hit on similar points in a statement he issued, “There have been rumblings of a potential acquisition by Yale for some time and I suppose they may have been waiting until the end of the legislative session to make this announcement given the attention and focus on the expansive hospital legislation approved this year,” Fasano said.

“I believe this is the tip of the iceberg regarding Yale’s persistent quest to be the only of one or two hospitals in our state. I have significant concerns about this potential acquisition which would give Yale dominance over the entire southern portion of our state. The legislation passed this year will help ensure that some important protections are in place concerning any acquisition of Lawrence + Memorial, but I think many questions will be raised that need to be seriously weighed in this process.” Fasano said.

The hospitals have argued that they need a 4 percent margin to be able to continue to invest in their operations, something few of them achieve.

Lawrence + Memorial has some 800 unionized nurses and technical workers represented by the American Federation of Teachers who went on strike in 2013 over work being shifted to off-site clinics. It was settled after a 20-day lockout by the hospital.

Petrini and Cummings said labor contracts would be honored in any deal struck between the Yale-New Haven Health System and Lawrence + Memorial Healthcare.

The hospitals are lobbying hard to reduce the $315 million in net hospital taxes approved by lawmakers for next year, an increase of $46 million over the current year.

Hartford HealthCare announced this week that it will eliminate 335 full-time equivalent positions impacting 418 workers, starting this month.

Hartford HealthCare has some 17,000 workers and the system includes five major hospitals: Hartford Hospital; William W. Backus Hospital in Norwich; the Hospital of Central Connecticut in New Britain and Southington; MidState Medical Center in Meriden and Windham Hospital.

The Yale-New Haven Health System this week said it would close two clinics and look for positions elsewhere for 31 workers. Petrini said they were looking for redundancies to cut costs in light of the $100 million savings it will have to achieve in the next two years.

The $40.3 billion two-year budget narrowly approved by lawmakers has not been signed by Malloy, who has proposed a reduction of $220 million in taxes impacting businesses after push-back by corporations.

This would result in more budget cuts, likely in the area of social services and education and the hospitals hope they are not negatively impacted further.

Malloy has said the state has done more than its fair share to help hospitals be profitable in recent years, according to NBC News.

The Connecticut Hospital Association is proposing that the state reduce new budget investments in each of the next two years by $100 million to lower the impact of the hospital provider tax. If a portion of that was put into Medicaid, federal reimbursements would reduce the cost to Connecticut to $60 million out of the $100 million, it argued.

Groups representing social service agencies have rallied to stem any further cuts to its programs as lawmakers return to the Capitol on June 29 and June 30 to vote on implementer bills to put the $40.3 billion biennium budget into effect before the start of the next fiscal year on July 1.