May 15, 2014 -
Eastern Connecticut Health Network (ECHN) recently announced that its Corporators approved the sale of ECHN to the newly formed partnership between Tenet Healthcare Corporation (Tenet) and Yale New Haven Health System (Yale New Haven). The Corporators approved the transaction by a vote of 172-17.
“The Board of Trustees has worked tirelessly over the past two years to ensure that the communities we serve will continue to have local access to the highest quality healthcare,” said Peter J. Karl, President and Chief Executive Officer of ECHN. “Their careful study, outreach, due diligence and deliberation led to the decision that the transaction with Yale New Haven and Tenet was the right and best choice for ECHN and its communities. Today, we are extremely pleased that our Corporators voted in favor of this acquisition, so that ECHN can continue to secure the future access and delivery of health care for the residents of eastern Connecticut. On behalf of ECHN and its patients, I thank all of you.”
ECHN is also pleased with the General Assembly’s passage of a bill on May 7, the last day of this year’s legislative session, which, if approved by the Governor, will clarify that for-profit entities may own medical foundations, and will also add certain procedural steps to the review process governing conversions of not-for-profit hospitals to for-profit status. “Over the past year, our local legislators listened to our concerns, they understood that many of the hospitals in Connecticut were struggling financially, and they carefully crafted the bill that on one hand provides Connecticut hospitals with an option for conversion and also adds the governmental oversight they felt was needed to safeguard state residents,” said Karl. “It lays the groundwork for ECHN to move forward.”
Now with all of the governance approvals in place, ECHN will enter into a regulatory process. It will be seeking approval from the following agencies:
• Office of Health Care Access whose major functions include the administration of the certificate of need (CON) program which ensures that health providers fulfill the health needs of the community; preparation of the Statewide Health Care Facilities and Services Plan; health care data collection, analysis and reporting; and hospital financial review and reporting.
• Attorney General's Office protects the interests of the people of the state of Connecticut in gifts, bequests and devises for charitable purposes, including by reviewing acquisitions of nonprofit hospitals by for-profit entities in order to ensure compliance with Connecticut law.
• Federal Trade Commission reviews mergers and acquisitions, including in the health care industry, in order to ensure that they do not result in anticompetitive marketplaces to the detriment of consumers.
• Pension Benefit Guaranty Corporation regulates private-sector defined benefit pension plans in order to ensure timely and uninterrupted payment of promised benefits.
The remaining steps in the process are expected to take approximately another 12 months, after which the transaction will close. “Every hurdle cleared is one step closer to working with Tenet and Yale New Haven to create a health care network that is financially strong, dynamic, and readily accessible and responsive to the communities’ needs and priorities,” said Karl.