Tenet Healthcare’s CEO Trevor Fetter skewered Gov.Dannel P. Malloy’s administration and state regulators in a Jan. 16 letter, saying that the state put “excessively onerous” conditions on Tenet’s plans to buy five nonprofit hospitals in the state.
Fetter, however, did leave the door open to negotiate a deal, and laid down terms for the start of an agreement.
Tenet’s chief executive was responding to a Jan. 12 letter from Malloy that invited Tenet, a for-profit hospital chain based in Dallas, to come back and negotiate terms of its possible acquisition of five Connecticut hospitals. In December, Tenet withdrew its bid to buy Waterbury Hospital and four others after state health regulators drafted various rules that Tenet would have to abide by.
“I recall the first time that you and I met, nearly one and one-half years ago, when I asked whether you wanted our company in Connecticut,” Fetter wrote to Malloy. “You candidly told me that you were not sure you wanted us, but not sure you didn’t want us. I was taken aback, because we are a major employer in fourteen states, deliver high quality healthcare at a reasonable cost to millions of Americans, invest more than $1 billion annually in capital in our operations, and pay taxes to state and local governments that in many cases they never received before.”
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Tenet intended on buying Waterbury Hospital, St. Mary’s Hospital in Waterbury, Bristol Hospital, Rockville General Hospital and Manchester Memorial Hospital. Fetter wrote that he viewed the acquisitions as a win-win situation for all involved.
The purchases would be a new market opportunity for Tenet, which would partner with Yale-New Haven Health System for its Connecticut hospitals. The deal would mean $400 million in health care-related capital investments in Waterbury, Bristol, Manchester and Vernon, Fetter said. It also would provide a new source of tax revenue because the hospitals are currently nonprofit and would become for-profit entities under Tenet.
“It has been reported that our unfortunate experience was due to pressure placed on your administration by labor unions,” Fetter wrote. “As I mentioned to you in our initial meeting, roughly 20 percent of our total employee base of over 100,000 people is represented by unions.”
Tenet has enjoyed stable and productive relationships with organized labor for more than a decade, he said.
“In my opinion, the unions in Connecticut hospitals have more to fear from the financial instability of their host hospitals than from Tenet,” Fetter said in the letter.
Tenet spent two years and more than $2 million working on possible acquisitions in Connecticut, which resulted in 68 conditions, “most of which were excessively onerous and negated any ability for the state, the local communities or Tenet to realize the benefits outlined above,” Fetter wrote.
In order for a deal to come to fruition, an agreement would have to:
•Apply equally to all hospitals in the state.
•Apply equally to any other entities that want to buy hospitals in the state, whether they are for-profit or nonprofit.
•Provide an opportunity to create an operating model that allows the hospitals to become sustainable and to support their own capital needs. Waterbury Hospital, for example, has been operating at a net loss.
•The approval process must cover all of Tenet’s proposed acquisitions concurrently.
•The process must have support from, and involvement by, Malloy’s office and the attorney general’s office with regard to any federal regulatory process.
“…We only want to operate in places where we are wanted by the local communities,” Fetter wrote in the letter. “We have experienced a tremendous outpouring of support in that respect from the communities these hospitals serve, but our experience in Hartford has been quite the opposite.”
He ended the letter by saying that he would not be offended if Malloy turned his attention to other ways of addressing the difficulties that Connecticut hospitals face.
Malloy’s chief of staff Mark Ojakian said in a statement: “We are working towards an agreement for these transactions to move forward with the appropriate accountability measures to protect the Waterbury communities and the State of Connecticut. I look forward to working with Tenet, in good-faith negotiations, to come to a resolution to this matter.”
Earlier this month, a Tenet senior vice president, Trip Pilgrim, met with the highest-ranking Senate member, Sen. Martin Looney, D-New Haven, and the Senate’s top Republican, Sen.Len Fasano of North Haven.
Adam Joseph, a spokesman for Looney and Connecticut Senate Democrats, said that Looney wanted to see if continued conversation was possible after Tenet pulled its application from state regulators last month. Now that there is some dialogue between Malloy’s office and Tenet, Looney has more or less concluded his role in the negotiations, Joseph said.
Responding to Tenet’s letter, Joseph said that Looney was “surprised by the tone of the letter, as it was not a tone that was conducive [to] restoring open communication.”
Fasano could not be reached late Thursday.
Date: January 22, 2015