For-profit hospital deal gets done. Then, doubts behind the scenes

Late Wednesday night, lawmakers managed to accomplish something many doubted would be possible: Crafting a compromise that could clear the way for four Connecticut hospitals to be acquired by a for-profit company, in a way that would mollify both unions critical of the transactions and hospitals wary of additional state oversight.

The measure cleared the House and Senate by wide margins. Union leaders supported the deal. Hospital lobbyists looked pleased.

But for some legislators key to the deal, any sense of celebration after the deal was short-lived.

Their concern: The response to the bill by Tenet Healthcare and the Yale New Haven Health System, which are partnering to acquire Waterbury, Bristol, Manchester Memorial and Rockville General hospitals.

“If this bill becomes law there is clearly a chance that there will be some unintended consequences — ones that could make it extremely difficult for us to partner with hospitals in Connecticut to provide quality patient care,” Yale New Haven Health System Senior Vice President Vin Petrini and Tenet Senior Vice President Trip Pilgrim said in a statement released shortly before midnight Wednesday.

They added that they think the existing process for converting nonprofit hospitals to for-profits, which the bill expands, already contains “sufficient safeguards.”

Was it a sign that the companies were backing away from the deal? Or poor word choice?

Republican legislators believed it was the former, even though, they said, the compromise largely catered to the requests of Yale and Tenet.  Sen. Len Fasano, R-North Haven, said the bill had been revised multiple times to satisfy the companies.

“They knew every line, they knew every word in the agreement prior to its passage,” he said.

Speaking to reporters shortly after the session’s Wednesday midnight deadline, Rep. Sean Williams, R-Watertown, suggested that Yale and Tenet were trying to put doubt into Gov. Dannel P. Malloy’s mind. Malloy must sign the bill for it to become law. He vetoed a bill last year that would have made it possible for a for-profit company to acquire Waterbury and Bristol hospitals.

“I hope the governor doesn’t take the bait,” said Williams, who called Yale and Tenet “completely disingenuous and disgraceful.”

Malloy, when asked if he had any reservations about signing the bill, said he didn’t think so.

Another statement

Close to 1:30 a.m., Tenet and Yale issued another statement, this one expressing gratitude for the work the governor’s office and legislators put into the deal. “The issues are extremely complex and we look forward to working closely with the state’s leadership to ensure adequate protections are in place for patients and their communities as we all address the challenges presented by the current health care environment,” it said.

Pilgrim said Thursday morning that the initial statement was intended to reflect the companies’ need to closely evaluate the bill and its implications.

“We’re not aware of anything right now in this bill that would preclude us from pursuing these transactions,” he said. “We want to be careful, though, because we want to manage expectations appropriately.”

Petrini said Thursday that the statement was meant to indicate Tenet’s need to review all the language in the bill. “It evolved very rapidly over the course of the evening,” he said of the legislation.

House Democratic leaders said Thursday that they were surprised by the Tenet and Yale statement.

The bill that passed changes state law to make it easier for for-profit hospitals to operate in Connecticut. But it also expands state oversight on changes in hospital ownership and creates significantly more regulatory review for mergers and acquisitions involving physician practices.

Apologies

After the session ended, Fasano said, hospital lobbyists apologized for the initial statement. He said he believes Tenet and Yale will move forward with their plans.

But Fasano said the initial statement might have been a negotiating ploy, a way to pressure state leaders for additional concessions before moving forward with the acquisitions of the Connecticut hospitals, some of which are struggling financially.

Williams said he was still disappointed with the two companies Thursday.

“As far as I’m concerned, Yale’s word and Tenet’s word is no good, and I just wish I knew that before we sat down and negotiated with them,” he said.

But Williams said he was pleased with the bill itself, and said he had been told by Waterbury Hospital that the bill is workable and a good deal.

Malloy, whose chief of staff and general counsel were involved in crafting the deal, said the most important thing to him was to ensure that Waterbury has a strong hospital. He said he didn’t think anything in the bill would prevent that.

“I do believe that Tenet is serious about what they’re proposing,” he said. “They need to move a little more rapidly in reaching agreements that will allow that to happen.”

The unions

Fasano praised the unions for helping to make sure a deal got done.

“They recognized that patient care is paramount, and they were willing to take a backseat on some of these issues,” he said. “I give them a lot of credit. For labor to do what they did, they really helped us out.”

Union leaders said they supported the agreement, but hoped legislators would consider additional safeguards in the future.

Underlying discussions about making it easier for hospitals to become for-profit have been the contentious negotiations between Waterbury Hospital and unions representing its workers.

Barbara Simonetta, president of the union representing 400 Waterbury Hospital nurses and about 150 recently unionized technical employees, said the bill included important protections for employees and patients that the union would be “test driving” at Waterbury Hospital.

But Simonetta added that the union, Connecticut Health Care Associates/AFSCME, would continue to monitor how effective the safeguards are, and urge the attorney general and governor to use their powers to strongly intervene in the approval process for the deal between Waterbury Hospital and Tenet.

Similarly, Melodie Peters, president of AFT Connecticut, which represents health care workers at Manchester Memorial and Rockville General hospitals, called the compromise bill “a good start toward protecting patients and local economies,” but said it needs additional safeguards for quality care and community access to health care, as well as a way for affected communities to provide “meaningful input” on hospital takeovers.

Another union, SEIU 1199 New England, reached an agreement that covers Waterbury Hospital’s housekeeping and food service workers. They ratified the deal earlier this week.

Paul Filson, the union’s political director, said Wednesday night that union leaders agreed to the legislative compromise because they believed it offered some protections for workers and communities, and because they weren’t sure it would be a good idea if nothing passed.

Mark Pazniokas contributed to this story.