Fasano Hopes Regulators Will Take Hard Look at Yale/Lawrence + Memorial Affiliation Proposal [Courant]

July 16, 2015

Hartford Courant

The boards of directors of Lawrence + Memorial Healthcare and Yale New Haven Health System have approved an affiliation agreement under which Yale would invest $300 million.

The link-up would place the 256-bed Lawrence + Memorial Hospital and Westerly Hospital in Rhode Island, as well as the Visiting Nurse Association of Southeastern Connecticut, in the Yale New Haven Health System.

“Yale New Haven is the obvious choice for a partnership for L+M,” L+M Healthcare CEO Bruce Cummings said in a written release issued by the two corporations. That’s true, he and Yale New Haven CEO Marna Borgstrom added, because the two hospital companies already have significant clinical partnerships.

Yale and L+M did not give an exact time line for the $300 million that Yale would invest in eastern Connecticut and western Rhode Island. The capital spending would include a move to the electronic medical record system used in the Yale New Haven Health System, and investments in various clinical specialties and primary care.

Under the deal, L+M would continue to operate as a separate hospital under Yale New Haven, further thinning the ranks of independent hospitals. Among the 29 acute-care hospitals in Connecticut, fewer than half are independent and not publicly seeking affiliations.

Waterbury Hospital and Eastern Connecticut Health Network, which includes Rockville General and Manchester Memorial hospitals, have both signed letters of intent to merge with Los Angeles-based Prospect Medical Holdings, a for-profit chain.

Johnson Memorial Hospital in Stafford is in bankruptcy protection, seeking to have its assets taken over by St. Francis Care, which itself said it plans to become a part of Trinity Health of Livonia, Mich., a large Catholic health care system.

State and federal approval for the Yale New Haven/L+M affiliation could take a year or longer.

“While we are absolutely committed to ensuring the long-term strength and viability of our organization,” Cummings said in an email to the staff, “it has become quite clear that transforming our organization to be successful in the emerging new healthcare world that will be dominated by new concepts — ‘accountable care’ and ‘population health,’ ‘bundled payments’ and ‘personalized medicine’ — would become increasingly difficult, if not impossible, without being part of a larger organization.”

L+M would join Greenwich Hospital, Bridgeport Hospital, Yale-New Haven Hospital and the Northeast Medical Group as part of the Yale New Haven Health System. Yale-New Haven Hospital includes the former St. Raphael’s in New Haven.

Sen. Len Fasano, Republican leader of the Senate and co-sponsor of recently adopted hospital reforms, said he hopes that state regulators take a hard look at the proposal. He said that Yale-New Haven’s system would control from Greenwich to New London.

There are competitors along the shoreline — Milford, Norwalk and St. Vincent’s — but with this affiliation, Yale’s system would clearly be dominant.

Fasano pointed to a Massachusetts judge’s decision to block an expansion of Partners Healthcare from 12 hospitals to 15, in which the judge said the attorney general’s consent decree that would have limited price increases was unenforceable.

“I don’t see much of a difference here,” Fasano said. “I think we have to look at the financial impact to consumers.”

Some studies have shown that prices go up as hospitals consolidate, although the trend is less clear for affiliations among nonprofit hospitals that maintain separate brands.

Fasano said that, already, Yale’s “size has caused a Pac-Man type of effect with other kinds of health care systems, that other guys can’t compete.”

L+M’s Cummings said, “I disagree totally” with Fasano’s suggestion that the affiliation would raise prices or reduce competition.

“In any academic medical center, these are all inherently much more expensive places,” Cummings said, referring to Yale-New Haven’s main campus. “We want to be known, and Yale-New Haven would like us to be known, as the value hospital in their network.”

Cummings said that in the clinical areas where Yale doctors work in L+M buildings, they already charge less than they would if they were working in New Haven.

“We are the only hospital east of the Connecticut River that’s allowed to do angioplasty,” he said — that’s one of the already existing partnerships with Yale. “It’s less expensive to do that at L+M than it is in New Haven.”

Cummings said that Yale does not negotiate contracts with insurers across the entire system, but rather does market-specific contracts. Fasano countered that Yale fought against a provision in a health care reform bill that would have forbidden Yale from negotiating with insurers in concert across its network. That provision did not make it into law.

Cummings said that the affiliation doesn’t end competition in the region — his organization is already competing with Backus Hospital, owned by Hartford Healthcare.

The union contracts at L+M will be unchanged and unions appear to be encouraged by the way the deal has unfolded.

Harry Rodriguez, Stephanie Lancaster Johnson, and Lisa D’Abrosca — presidents of the three locals that represent non-clinical staff; licensed practical nurses and technologists; and registered nurses; respectively — sent a letter to union members Wednesday that said they appreciate that the combination is designed to ensure the long-term viability of the organization.

“We are still in the early stages of a lengthy process that will include opportunities for our members, our patients and our communities to weigh-in on the proposed affiliation,” the union leaders said. “It is critical that we make our voices heard to ensure ‘patients before profits’ at our community hospital and throughout our health network.”

Cummings said the year-or-longer estimate that he made of regulatory oversight was a wild guess because Rhode Island and Connecticut’s health departments, attorneys general and the Federal Trade Commission will all examine the proposal. Some think it could take six months, but others think it could take two years.

Changes to the regulatory process passed in the past legislative session should not be a factor, he said, because they don’t take effect until December, and the filings should be made by the end of the summer.

If the affiliation goes through, Cummings hopes that Southeast Connecticut residents will be traveling less often to hospitals in Hartford or New Haven for advanced care.

“Our mutual vision is that going forward there will be additional services made available here that will be more cost-effective than at Yale-New Haven,” he said.