The troubled Waterbury Hospital is poised for a takeover by a Dallas-based corporation as soon as Sept. 30 if Gov. Dannel P. Malloy signs a hastily adopted bill that emerged from chaos in the legislature over the last two days.
The bill allows for-profit hospitals to employ doctors, undoing the major hurdle that had threatened a plan by Tenet Healthcare Corp. to acquire Waterbury, Bristol, Manchester Memorial and Rockville General hospitals.
It also adds a new twist that was not part of the public debate: Any hospital that acquires a practice with eight or more doctors must gain a “certificate of need” from the state Department of Public Health, a process hospitals must follow under existing law whenever they add or close medical services.
The bill does not offer the direct protections for workers that labor groups fought for two years to include. But labor groups signed off anyway, clearing the way for overwhelming votes in the House and Senate, because the bill strengthens regulators’ powers to assure quality of care and adds local hearings that must become part of the official record.
Labor groups were also pleased that the bill adds a “firewall” between a hospital system’s for-profit businesses and core, not-for-profit operations. The shifting of employees from core hospital units to profitable satellite businesses is a fierce battleground in health care.
Waterbury Hospital is the furthest along of four that Tenet is moving toward acquiring. On Thursday Trip Pilgrim, the Tenet senior vice president of development and point man for the deals, said the company is still sorting out everything the bill says, but he’s confident it will not stop the mergers.
“We’re pleased,” Pilgrim said Thursday. “We got a bill that we think allows us to continue to pursue these transactions. We’re going to do that.”
That was not assured. Tenet had said all along that it would pull out of the state if lawmakers added new regulations, and at 11:44 p.m. Wednesday, just after the bill passed, the company issued a statement casting doubt.
Tenet and Waterbury Hospital are about halfway through the rigorous certificate of need process with state regulators. That approval could come within two to five months, Pilgrim estimated, and with other state and federal reviews, the deal appears likely to close in 2014.
Bristol is the next furthest along but has not yet sought a certificate of need, and Manchester and Rockville are not far behind Bristol in the process, Pilgrim said.
All four not-for-profit hospitals have signed letters of intent with Tenet, a for-profit, publicly traded chain of 77 hospitals. All four would be owned by a new joint venture that’s partly owned by Yale New Haven Health System, with YNH, already Connecticut’s largest hospital system, helping to coordinate the statewide care.
The bill passed overwhelmingly by bleary-eyed lawmakers in the last hour before the session expired, with little or no debate and with little chance for rank and file members to review it and ask questions. But people who had been on both sides of the issue said it represented a fair solution for now, with more battles likely to come.
“The compromise bill passed late last night is a good start toward protecting patients and local economies faced with conversion of their community hospitals,” said Melodie Peters, president of AFT Connecticut, which represents hundreds of nurses, and a former state senator. “There is still much work to be done to assure a clear, transparent process for holding health management corporations seeking to take over our acute care facilities accountable.”
Peters noted that the bill “comes up short” on protections.
The issue at the heart of the bill is the measure allowing for-profit hospitals to employ doctors — a relationship that could create incentives for docs to make decisions based on finances, not just health. To avert those potential conflicts, existing law allows hospitals to affiliate with and essentially control “medical foundations” that employ doctors — but that system is only available to not-for-profit hospitals, a limit in place only in Connecticut.
The new bill extends it to for-profit hospital companies such as Tenet.
Tenet had originally fought hard for the bill, then changed course — saying it could affiliate with doctors at all of its Connecticut hospitals through Yale New Haven Health System. Attorney General George Jepsen, in a strongly worded letter to lawmakers last week, warned that there was no assurance he would approve that scheme.
Jepsen’s letter drove both sides to reach a deal. Labor groups accepted lower protections because they feared the Tenet-Yale plan would work, leaving them with nothing.
And supporters of the merger feared a long, bloody court battle if Jepsen rejected the plan — so they agreed to protections such as the new regulation on doctors’ groups and new limits on shifting work.