Sen. Harding: Reform CON process, improve oversight of health care acquisitions

March 19, 2024

Bill aims to hasten sales of hospitals

Deadlines are proposed by state legislators


HARTFORD — State legislators on the Public Health Committee are proposing hard and fast deadlines for regulatory action on hospital sales and certain other health care transactions.

The committee heard testimony Monday on two bills for revamping and expediting the certificate of need process as the state review of the proposed sale of Waterbury Hospital, Manchester Memorial Hospital and Rockville General Hospital from Prospect Medical Holdings Inc. to Yale New Haven Health enters its 14th month.

Representatives of the state Office of Health Strategy, Yale and Prospect have been negotiating over the conditions for a required CON for the transfer of ownership since October. The governor’s office facilitated the negotiations on an agreed settlement after Gov. Ned Lamont grew impatient with the length of the OHS review.

Yale and Prospect announced a $435 million deal for the three hospitals, all related businesses, real estate assets, physician clinic operations and outpatient services on Feb. 10, 2022. The CON application was submitted on Nov. 22, 2022, and OHS deemed it complete on March 14, 2023.

Sen. Jeff Gordon, R-Woodstock, a doctor and a past president of the Connecticut State Medical Society, expressed his frustration over the length of CON review to OHS Executive Director Deidre Gifford. His rural district includes Rockville General Hospital in Vernon.

Rep. Lezlye W. Zupkus, RProspect, later told Gifford that as a legislator who represents the city of Waterbury on the committee that she, too, is frustrated.

A SENATE BILL ON MONDAY’S hearing agenda would set a 30-day deadline after OHS deems a CON application to be complete for a decision, or the CON will be deemed automatically approved. The timetables for actions and submissions leading up to a determination of completeness are unchanged.

The legislation also allows applicants to request an expedited review. If OHS accepts an application for an expedited review, it must make a determination within 14 days. The bill directs OHS to develop a process for approving a request on an expedited timeline.

In addition, OHS would have to meet with any applicant who requests an informational meeting in advance of submitting an application to discuss CON requirements within seven days of receiving a written request for one Deborah Weymouth, the president and CEO of Eastern CT Health Network and Waterbury HEALTH, the parent companies of Manchester Memorial, Rockville General and Waterbury hospitals, supported Senate Bill 440 in written testimony submitted to the committee.

Weymouth stated the legislation streamlines and expedites the CON process and sets what she called efficient timelines. She also singled out the provision for automatic approvals if deadlines are missed. The Connecticut Hospital Association offered similar testimony in support of the legislation.

GIFFORD TESTIFIED THE 30-DAY deadline and other timetables set out in Senate Bill 440 are inadvisable because she contended they would be detrimental to the CON program and undermine it. She cautioned the proposed deadlines and automatic approvals could disadvantage applicants and possibly result in more denials and fewer negotiated settlements.

Gifford said a lack of staffing at the OHS delayed CON process in 2020, 2021, and part of 2022, but the agency has been able to reduce the length of CON reviews with the addition of staff and funding. She said there has been a 60% reduction in some approval time frames.

According to OHS statistics, the only three open CON applications from 2022 are all related to the Yale-Prospect sale. Ten agreed settlements were approved in 2022, three CON applications were approved and four were denied, and three were withdrawn. There were nine required hearings. There were two required hearings.
In 2023, there were 25 CON applications, and OHS approved three agreed settlements and seven CON applications were approved. The remaining ones are still pending.

Gifford told committee members that OHS agrees that CON process needs to be transparent, efficient and effective, and she committed OHS would work with legislators and other stakeholders on expediting CON reviews.

THE LEGISLATION INCREASES SCRUTINY of transactions involving private equity companies, including requiring a CON when a private equity company directly or indirectly acquires a controlling interest of a health care facility or large group practice of 10 or more physicians.

These oversight provisions are a response to national concerns and California based Prospect’s business practices as a private equity company in Connecticut, including selling the buildings and grounds of its three Connecticut hospitals to Medical Properties Trust in August 2019 and then leasing the properties back from the real estate investment trust.

Attorney General William Tong opened an investigation into Prospect last November. He testified with Senate President Martin M. Looney, D-New Haven, in support of the private equity provisions in Senate Bill 440.

Tong told committee members that he could not discuss the ongoing probe, but he did speak to Prospect and how it conducts business, and the challenges of regulating private investment in health care “There has been a lot of frustration around the way that Prospect Medical does business, but the hard truth of that is it is not illegal to invest in a health care institution,” Tong said. “It is not illegal to run a business poorly. It is not illegal, frankly, in some instances not to pay your bills. It can result in lawsuit, and, if you’re in breach of a contract, as lawyers you can litigate that in court, but many of these things they get away with is because they can get away with it. They come up really close to line without stepping over, and when they step over it briefly and we whack them, they just jump back over the line so that they don’t suffer further enforcement.”

Senate Minority Leader Stephen Harding, R-Brookfield, issued a joint statement in support of reforming the CON process and improving state oversight of health care acquisitions with three other GOP senators.