CT News Junkie | OP-ED | Collapse Of The Tenet Deal An Ominous Sign

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OP-ED | Collapse Of The Tenet Deal An Ominous Sign

by | Dec 19, 2014 5:30am
() Comments | Commenting has expired
Posted to: Business, Health Care, Opinion, Health Care Opinion, Nonprofits, Bristol, Manchester, Sharon, Vernon, Waterbury

The apparent collapse of a deal allowing a for-profit company to buy five hospitals in Connecticut could deal a devastating blow to the patients who depend on those facilities — and to the healthcare access of hundreds of thousands across the state.

Cries of “regulatory abuse” and “duplicity” are being heard as the Dallas-based Tenet Corporation backed out of a deal to buy the facilities, two of which are in Waterbury. So in addition to the Brass City, patients in Vernon and Bristol are left wondering whether their local hospitals will be around much longer. Also affected are patients of Eastern Connecticut Health Network, which operates the Rockville General and Manchester Memorial hospitals.

Tenet’s Dec. 11 letter to Attorney General George Jepsen and the state Office of Healthcare Access (OHCA) said nothing about the reasons for the company’s withdrawal but a statement posted on Tenet’s website cited an “extensive list of proposed conditions to be imposed on the Waterbury Hospital transaction, which . . . 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.”

Translation: the regulatory burden this crummy little state wants to impose on us wouldn’t be worth our time and money. And it certainly won’t satisfy our investors who would, after all, be providing the resources these hospitals so desperately need to remain viable and competitive.

The decision came only 10 days after OHCA had proposed 47 restrictions on hospital operations. Earlier, Jepsen’s office imposed 21 more restrictions regarding Waterbury Hospital’s future charitable foundation, which would be funded with proceeds from the sale.

As a condition of Tenet’s acquisition of the nonprofit Waterbury Hospital with partner Yale New Haven Hospital, OCHA had proposed setting tough restrictions on staffing, services and pricing. Those are not exactly the kinds of words private business leaders like to hear.

So who’s happy with this decision? Labor unions and some on the far left who believe — mistakenly, I think — that it’s impossible to deliver quality for-profit healthcare at a fair price. With some justification, the unions are convinced that a for-profit company would be less friendly to organized labor.

But would the unions be happy if some of these hospitals simply folded and gave pink slips to all the workers? I realize that sometimes management will bluster about mass layoffs in order to get concessions from labor, but in this case the threat appears real.

For the eighth time in the last 10 years, Greater Waterbury Health Network, the parent organization of Waterbury Hospital, has reported a fiscal-year deficit. Last fiscal year, the organization lost more than $6 million. That was preceded by a surplus of $2.2 million in fiscal 2012, but deficits were reported in each of the six previous fiscal years.

The reason, hospital analysts say, is lower rates of reimbursement for Medicare and Medicaid, shorter hospital stays, and more patients seeking outpatient care at specialty clinics.

But perhaps an even bigger problem is poor access to capital, which can adversely affect a hospital’s competitiveness. Unless it’s a relatively large facility or one affiliated with a wealthy institution such as Yale, your average hospital is poorly positioned to raise the kinds of funds necessary to renovate its buildings to modern medical standards and purchase the kind of expensive diagnostic equipment needed to compete.

So we are left with for-profit corporations. Sharon Hospital is currently the only for-profit hospital in the state. When it was acquired by investor-owned Essent Healthcare in 2002, Sharon had lost $16 million in the six years leading up to the sale. Sharon was clearly in danger of closing.

I use Sharon Hospital regularly and I can tell you it’s not perfect. But since the acquisition, Essent invested $40 million in new facilities and procedures, retired the previous nonprofit’s $11.4 million debt, expanded services, turned a 5-percent profit, and now pays $1.4 million annually in taxes to the town of Sharon.

So here’s the deal. If you’re a staunch union member — or a member of the far left — who thinks for-profit companies can’t be trusted with your health, be prepared to wait longer for nonprofit care or to travel farther to find it.

And you will have only yourselves — and the state’s oppressive regulatory regime — to thank for it.

Contributing op-ed columnist Terry Cowgill lives in Lakeville, blogs at ctdevilsadvocate.com and is news editor of The Berkshire Record in Great Barrington, Mass. Follow him on Twitter @terrycowgill.

DISCLAIMER: The views, opinions, positions, or strategies expressed by the author are theirs alone, and do not necessarily reflect the views, opinions, or positions of CTNewsJunkie.com.

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Comments

(5) Archived Comments

posted by: dano860 | December 19, 2014  8:06am

Here, here!
Well said.
This is just one example of over stepping regulations and union pandering that is slowing the growth of our crummy little State…or at least as Terry explains, we are perceived by business investors.

posted by: ocoandasoc | December 19, 2014  6:44pm

Terry is far from a right-wing union hater, and his comments are on the money. I’ll go a little further. The CT State legislature and its regulatory agencies are in the pocket of big labor. And that adversely affects both the quality of healthcare and its affordability. But it also adversely affects education in the State, the business climate and cost of doing business in general, and results in wasteful projects like the busway and the failure to save tax dollars through outsourcing, true competitive bidding, and actual negotiation. The unions could have chosen to negotiate with Tenet directly, instead they made the State lay down their demands as requirements for doing business. They should not have that power.
The backlash against the unions appears to have started… but they have had their absolute way for so long that I doubt they’ll give up ground anytime soon. No, the only chance of reigning them in will be if voters demand that their legislators act in THEIR interest instead of the unions who finance and provide manpower for their anointed candidates’ campaigns, and then vote them out of office if they fail to do so.

posted by: MGKW | December 20, 2014  6:56pm

I agree with all of you…Terry did a good job of laying out the healthcare environment we are in. The marketplace is forcing change in healthcare all across the country.

Hospitals are known for their insularity and bad management—-accountability, cost efficiency and hard decisions are all part of the model that hospitals will have to embrace to a certain extent if they are to survive.

I am fiscally a conservative and a social liberal but both the unions and the Malloy administration are playing with fire…cuts will have to be made but who is going to make them?

One more thing, when you talk to rank and file union members at Waterbury they are both upset and scared as a result of what has happened…the leadership really is not talking and communicating….old story, union leaders would rather cut a certain % of their rank file to save money vs ensuring full employment with some give backs….highly frustrating and oxymoronic!

posted by: Bluecoat | December 20, 2014  9:50pm

Great post on American Thinker in regards. To Tenet hiring of Jeb Bush
Interesting…...

posted by: Politijoe | December 24, 2014  7:56am

Politijoe

Although there is some validity in Terry’s opinion it’s also not quite that simple is it. For instance his translation of Tenets decision
“the regulatory burden this crummy little state wants to impose on us wouldn’t satisfy our investors.”  As a result, this interpretation relieves Tenet of any responsibility and lays the entire burden on organized labor. Do we know how much if any Tenet was willing to compromise regarding union protections, if so that wasn’t stated in the article. The march towards a for-profit system of healthcare in our country that is staunchly anti-labor at the expense of middle-class wages, protections and benefits may in fact be the larger story.