Progress Made, But Work Still Needed On Yale Buyout Of ECHN Hospitals

VERNON/MANCHESTER, CT — A day after the proposed takeover of Rockville General Hospital and Manchester Memorial Hospital by Yale New Haven Health cleared a major regulatory hurdle, Yale officials were quick to remind the public that the purchase from Prospect CT is far from imminent.

Waterbury Hospital is also in the mix, as are other holdings of the local hospital's operating parent, Eastern Connecticut Health Network.

On Wednesday, it was announced that that the Connecticut Office of Health Strategy, Yale New Haven Health Services and Prospect CT have come to an agreement that approves the Certificate of Need application for YNHHS’s acquisition of the three Prospect CT hospitals.

"Yale New Haven Health thanks OHS for their review of our proposed acquisition of Eastern Connecticut Health Network and WaterburyHEALTH. Throughout this process, we have worked closely with the state to maintain access to care for the Waterbury, Manchester and Rockville communities," Yale officials said.

They continued, "While OHS’ approval is an important milestone in this transaction, this process is not yet complete. As a next step, we are working with Prospect to reach agreement on several outstanding details that must be resolved to allow the transaction to close. We are hopeful that these details can be addressed, so we can extend the benefits of nonprofit, academic medicine to more patients across our region."

There is no formal negotiating timetable, officials said.

Key conditions outlined in the Agreed Settlement include:

• Constraining growth in commercial prices to within 0.5 percent of the Cost Growth Benchmark Target for 5 years
• YNHHS will invest a minimum of $6 million over three years to enhance access to mental health and substance use disorder treatment for patients in central western and central eastern Connecticut
• "Enhancing the community benefit services and activities" at each of the respective hospitals
• Collaborating with the Connecticut Department of Social Services and an Independent Monitor to measure and improve access to specialty physician services for Medicaid patients
• Engaging with the communities served by each of the respective hospitals by holding regular public meetings and selecting unbiased community representatives to represent the interests of their communities on the hospitals' boards
• Developing Strategic Plans to retain and enhance health care services at each of the hospitals, including physician recruitment and resource commitments for clinical service programming
• Promoting Advanced Alternative Payment Models with payers to improve population health, reduce the rate of unnecessary cost or utilization growth, improve access to primary care, address social determinants of health

Prior to entering confidential settlement negotiations, the proposed health systems' transaction triggered a statutorily required Cost and Market Impact Review. The report was also released Wednesday. The CMIR addresses key issues such as whether the community would be assured of continued access to high quality and affordable health care, and informed the settlement discussions.

An Independent Monitor will ensure YNHHS's compliance with all of the conditions described in this Agreed Settlement for five years, and will produce a schedule of required reports and data to be shared with OHS during the performance period, the principals said.

The settlement also requires Prospect to prioritize resolution of its Connecticut debts, including the payment of $55 million in back taxes by the closing date. Additionally, if the terms of the parties' private agreement materially change between the date of the Agreed Settlement and the financial close, OHS has the opportunity to renegotiate and withdraw Certificate of Need approval.

Vernon officials agreed it was the beginning of the process.

"While it is promising this acquisition has cleared a state regulatory hurdle, it is evident there is a lot of work still be to be done to finalize the deal," Vernon Town Administrator Michel Purcaro said.

Rockville General Hospital has been around for more than 100 years.

"We welcome this initial step in the process to get Eastern Connecticut Health Network out from under the control of Prospect Medical Holdings," Vernon Mayor Dan Champagne said. "The Town of Vernon will be carefully reviewing the terms of any agreement and its impact on Rockville General Hospital and our community."

Manchester Hospital's roots can be traced back to 1920.

Said Manchester Mayor Jay Moran, "We are close to Yale acquiring ECHN which first and foremost ensures quality healthcare and emergency care here in Manchester as well as employment for so many in our area. I’m relieved and excited about the news and look forward to everything being finalized."