Tenet, Malloy give up talks on reviving hospital acquisitions

Financially struggling Waterbury Hospital lost its suitor Thursday.

Erin Covey / Waterbury Republican American

Financially struggling Waterbury Hospital lost its suitor Thursday.

Tenet Healthcare and Gov. Dannel P. Malloy announced Wednesday that they are ending discussions about the Texas company’s acquiring Connecticut hospitals.

The company had been poised to become the first large, for-profit hospital chain in the state, with plans to buy Waterbury, Rockville General, Manchester Memorial, Bristol and St. Mary’s hospitals, in partnership with the Yale New Haven Health System.

But Tenet withdrew its applications in December after state regulators proposed a set of strict controls over the staffing, services and pricing that would be required to approve the company’s application to buy Waterbury Hospital.

Some hospital leaders hoped Malloy would help revive the deal. Legislative leaders met with a Tenet official, and Malloy later wrote to the company, telling CEO Trever Fetter in a letter that “we can find a negotiated settlement that will be beneficial to your company as well as to the state of Connecticut, Waterbury residents, and the Waterbury hospitals.”

But that apparently didn’t work out. On Tuesday, Malloy and Tenet released a joint statement saying that, “We believe it is best for the hospitals, their employees and the communities they serve to move forward exploring other options.”

In the statement, Malloy alluded to a complex, fast-changing environment for both hospitals and state government. “Unfortunately, the issues that separated us simply could not be overcome,” he said.

Fetter said, “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.”

Malloy said the administration would work with the hospitals, communities and legislators “to come up with smart, creative solutions that will preserve local access to care for all patients.”

It was not immediately clear what that might mean. The leaders of Bristol and St. Mary’s hospitals have said they can move forward on their own, for now, but Waterbury Hospital has struggled financially. Last month, it announced plans to eliminate 80 positions, close certain services and take other steps to stabilize its finances.

Carl Contadini, chairman of Waterbury Hospital’s board, said in a statement that the announcement was disappointing but not a surprise, and said he appreciated that the process had not been prolonged.

The hospital’s strategy for the future includes “making tough decisions to give the organization financial running room,” strengthening key services and trying to gain back market share.

While hospital leaders and some local officials had viewed a Tenet purchase as a way to bolster the future of small, community hospitals – and, in some cases, to keep struggling facilities afloat – the prospect of a national, for-profit chain coming into the state also drew staunch opposition from unions and some advocacy groups and lawmakers.

Legislators dealt with the question of whether to make it easier for nonprofit hospitals to convert to for-profits during the past two legislative sessions, ending last year with a last-minute compromise that was seen as clearing the way for the Tenet purchases to go forward.

Senate Minority Leader Len Fasano – who was involved in crafting the compromise legislation last year, and who more recently met with a Tenet official to try to revive the deal – blasted the announcement as “a devastating blow to the Waterbury community as well as the entire state.”

“Governor Malloy likes to say Connecticut is ‘Open for Business,’ but here is a prime example where he has slammed that door shut,” Fasano said in a statement. “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.”

Malloy’s chief of staff, Mark Ojakian, the administration’s point person in talks with Tenet, pushed back, saying Fasano hadn’t offered proposals for solving the issues in Waterbury.

“Senator Fasano has become a partisan talking-point machine, heckling from the sidelines instead of actually doing the hard work of governing,” Ojakian said in a statement released by the governor’s press office.

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