Tenet says goodbye to Connecticut plans: Hospital plans abandoned due to state’s conditions

BY MICHAEL C. JULIANO REPUBLICAN-AMERICAN

 

  Waterbury, Saint Mary’s and three other hospitals in the state, including Bristol Hospital, are back to square one in their searches for a for-profit partner.

 

Dallas-based Tenet Healthcare Corp. announced Thursday it has abandoned plans to acquire the five hospitals in response to state regulators issuing draft decisions last week that placed nearly 70 conditions on the Waterbury Hospital deal.

 

The state Office of Health Care Access, or OHCA, imposed 47 conditions on the proposed 80/20 for-profit joint venture between Tenet and Waterbury Hospital, while the attorney general’s office placed 21 conditions on the deal. Both agencies planned to issue a final decision on the Waterbury Hospital deal next week, as well as a preliminary decision on Tenet’s acquisition of Saint Mary’s on Jan. 12.

 

“We respect the role the state regulators have in providing guidance and oversight to the health care industry, and understand the responsibility they take in discharging their duties,” Tenet said in a statement posted on its website. “Nonetheless, the extensive list of proposed conditions to be imposed on the Waterbury Hospital transaction, which is only the first of four transactions for which we’ve made applications, has led us to conclude that the approach to regulatory oversight in Connecticut would not enable Tenet to operate the hospitals successfully for the benefit of all stakeholders.”

 

As a result, Tenet said, it informed OHCA and the attorney general’s office it is withdrawing its applications to acquire Waterbury and Saint Mary’s hospitals, as well as Bristol Hospital and Eastern Connecticut Health Network, or ECHN, which consists of Manchester Memorial and Rockville General hospitals. Tenet had planned to enter into 80/20 joint-venture partnerships with Yale New Haven Health System in its proposed acquisition of both Bristol Hospital and ECHN.

 

Attorney General George C. Jepsen said in a statement he does not believe his conditions, which focused on protecting the hospitals, contributed to Tenet’s decision.

 

“This decision raises substantial and immediate questions about the future of health care delivery in some of our communities,” he said. “Those questions deserve the closest attention of policymakers at the local and state levels.”

 

In public comments submitted earlier this week, Tenet objected to about 25 of the 47 conditions proposed by OHCA, and to another five from Jepsen’s office.

 

Among the OHCA conditions it objected to was a requirement for an independent monitor for five years after the deal closes to ensure Tenet follows the conditions. Tenet, which owns 80 hospitals nationwide, also objected to OHCA prohibiting it from reducing or moving any inpatient or outpatient services for five years.

 

THE CONDITIONS IMPOSED by the attorney general’s office Tenet objected to include that its $55 million capital commitment be spent exclusively on projects related directly to the hospital.

 

Darlene Stromstad, Waterbury Hospital’s president and CEO, said in a statement that it “was always a possibility that obstacles being placed in the way” of the deal might deter Tenet from moving forward with buying hospitals in the state.

 

“However, the conditions placed on the Waterbury transaction … were clearly one obstacle too many,” she said.

 

Stromstad said hospital officials saw Tenet’s departure coming and have been talking with its board of directors about its options.

 

“We are resolute in our commitment to provide sustainable health care services to our community,” she said. “Our board, employees, and physicians remain dedicated to keeping our patients at the center of everything we do.”

 

Carl Contadini, chairman of the board of directors of both Waterbury Hospital and its parent Greater Waterbury Health Network, said in a statement that the board is “sad and disappointed” that two years of working toward a deal with Tenet ended so abruptly.

 

“The proposed joint venture between our hospital and Tenet offered many benefits to our community,” Contadini said.

 

The conditions proposed by OHCA and Jepsen’s office also received written objections from both hospitals and several other organizations, including ECHN, Bristol Hospital, and the Connecticut Hospital Association.

 

In written comments filed Monday with OHCA, Stromstad said the conditions jeopardize her hospital’s future.

 

Waterbury Hospital, she said, is operating at a loss in the current fiscal year. Although the hospital is making plans to cut expenses to remain viable, “there is a point — and it’s very close — when there are no more options,” she said.

 

She also said no other hospital company would partner with a Connecticut hospital if the conditions remain in place.

 

IN WRITTEN COMMENTS to both agencies, Mayor Neil M. O’Leary predicted the conditions “will force Tenet to reconsider its decision to acquire both Waterbury hospitals.”

 

On Thursday, O’Leary said he was “profoundly disappointed” in Tenet’s decision, given the “thousands and thousands of hours” of work spent on the deal.

 

“While I’m deeply saddened about the impact of this decision on Waterbury, I’m certainly disturbed by the conditions by OHCA making it impossible for anyone to do business here in the state of Connecticut,” he said.

 

Rep. Sean J. Williams, R-Watertown, said in his written comments that OHCA’s decision “completely ignores the intent and will” of for-profit conversion legislation approved by the General Assembly earlier this year.

 

Saint Mary’s officials said Thursday they also are disappointed in Tenet’s decision, but the hospital is still in a strong position.

 

“Our recent performance demonstrates that Saint Mary’s is among the top performing hospitals in Connecticut and in many respects the nation,” Chad Wable, the hospital’s president and CEO, said in a statement. “We are going to continue to build upon this momentum as we move ahead. We will continue to provide exceptional care to all those we serve.”

 

This is the second time in two years a Texas-based for-profit company has abruptly abandoned a bid to acquire the two hospitals in Waterbury.

 

In the fall of 2012, LHP Hospital Group of Plano, Texas, withdrew a proposal to merge the two hospitals that would have included constructing a new, state-of-the-art facility in the city. LHP officials, however, pulled out of the venture citing regulatory delays that increased the cost of the project, and an inability to resolve issues related to reproductive health services and the ethical and religious directives of the Catholic Church.