Yale's Plan To Purchase Manchester, Rockville Hospitals Clears Hurdle

CONNECTICUT — A major regulatory hurdle has been cleared in Yale's bid to acquire Rockville General Hospital and Manchester Memorial Hospital.

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 Prospect CT’s three Connecticut hospitals – Manchester, Rockville and Waterbury Hospital.

The announcement was made Wednesday. Both hospitals operate under the Eastern Connecticut Health Network banner with Prospect being the parent.

The settlement terms will "ensure that the quality, access, equity, affordability, and cost-effectiveness standards of the Certificate of Need statute are met," the principals said.

"This settlement agreement will help guarantee that residents of these communities will have local access to safe and affordable health care. The hospitals will continue providing vital services and will preserve jobs in the community," they added.

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 3 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
• Allowing physicians, physician assistants and advanced practice registered nurses to terminate their existing non-compete agreements with Prospect without penalty at the time of the acquisition.

Prior to entering confidential settlement negotiations, the proposed health systems' transaction triggered a statutorily required Cost and Market Impact Review. The final 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.

"We are confident that we've come to an agreement that is in the best interest of the residents of Connecticut, which has been our priority since receiving this application," OHS Executive Director Dr. Deidre Gifford said. "I want to thank both the Yale and Prospect parties for their collaboration in reaching this agreement. With these conditions in place under the new ownership of Yale New Haven Health, we can expect that these hospitals will continue to operate and provide high-quality services to their patients and communities."

The Agreed Settlement resolves both the transfer of ownership of the hospitals as well as Northeast Medical Group’s acquisition of Prospect CT's medical group.

Gov. Ned Lamont released the following statement in response to the announcement:

"I am glad that all the parties have been able to reach an agreement on this transaction in a way that ensures that the residents who live in each of the hospitals' host communities will continue to have local access to essential medical care, and the jobs of the employees who provide this care will be preserved under this new ownership," he said. "I know that many people have been anxious to get to this day, and I completely understand their concerns. While it may have taken a little bit of time to get here, this process is an important part of protections under the law to ensure that patients are receiving affordable, high-quality care and that the hospitals will continue meeting all of their obligations to patients, employees, and the community at large. I appreciate the hard work of the Office of Health Strategy and the participation of everyone who helped make this agreement happen."

And he seemed to hope the next step might be faster.

"With today’s approval by the Office of Health Strategy, I encourage Prospect to work with Yale to reach a deal that will allow them to finalize this purchase and bring a much-needed resolution to this transaction," Lamont said.

Vernon officials reacted positively. Rockville Hospital has been a major part of the community for more than a century.

"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.”

Vernon officials called Rockville General Hospital "an essential community asset that has a long history of serving the people of Vernon and surrounding towns.

"The prospect of having a world-class system such as Yale New Haven Health operating in our community is extremely appealing,” Vernon Town Administrator Michael Purcaro said. "Our main focus is ensuring that Rockville General Hospital is a fully functioning medical facility and an integral part of Yale’s plans for our region."

Purcaro said Yale New Haven Health Vice President of Community and Corporate Alliances Paul Mounds contacted town hall Wednesday afternoon to brief him on the announcement.

"I appreciate Paul reaching out," Purcaro said. "Open and timely communication with Yale New Haven Health is critical in this process and gives us the opportunity to advocate for the needs of Vernon and our neighboring communities."

Said Manchester Mayor Jay Moran, "This a huge step in the process. 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."

All filings related to the dockets can be found in the CON Portal under the Docket Numbers: 22-32594-CON and 22-32606-CON.