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February 11, 2022

Yale New Haven Health’s market share to see a boost if hospital acquisitions gain approval

Contributed A Yale New Haven Health lab in New Haven.
By Greg Bordonaro, Zachary Vasile

If Yale New Haven Health completes its proposed deal to acquire three more Connecticut hospitals it would control about 36.4% of all hospital operating revenue in the state, according to an HBJ analysis of the most recently available hospital financial data. 

But that wouldn’t be a huge jump from its current market position. 

On Thursday Yale New Haven announced plans to acquire two health networks, including three hospitals, from California-based for-profit hospital operator Prospect Medical Holdings.

Under the terms of the agreement, Yale New Haven Health would buy Manchester Memorial Hospital, Rockville General Hospital in Vernon and Waterbury Hospital, along with all of their associated real estate assets, physician clinic operations and outpatient services.
Manchester and Rockville operate under the banner of Eastern Connecticut Health Network, while Waterbury Hospital is the flagship of Waterbury HEALTH. Together, the two Prospect-run systems employ thousands of workers.

In fiscal year 2020 — the latest data available from the Office of Health Strategy — Yale New Haven Health, which already owns three other Connecticut hospitals, reported total operating revenue of $5.2 billion, which represented about 32.8% of the $15.9 billion in operating revenue reported by all Connecticut health systems combined.

By comparison, Prospect Medical’s Connecticut operations in fiscal year 2020 reported $565.6 million in total operating revenue, which represented about 3.6% of total operating revenues reported statewide. Combined Yale and Prospect accounted for 36.37% of total statewide operating revenue that year. The acquisition of Prospect would boost Yale’s operating revenues by about 10%, based on fiscal 2020 data. 

 

By comparison, Hartford HealthCare, the other major system in Connecticut, recorded $4.3 billion in operating revenue in fiscal 2020, for about 26.8% of statewide market share.

Together, Yale, Hartford HealthCare and Prospect reported $10.1 billion in operating revenue in fiscal 2020, which accounted for about two-thirds of all Connecticut health system operating revenues recorded that year. 

Competition heats up

The planned triple-acquisition marks a major incursion by Yale New Haven into what has traditionally been Hartford HealthCare’s backyard. Hartford HealthCare has recently moved into Yale New Haven’s territory with the opening of new locations in Fairfield County, including the purchase of Bridgeport-based St. Vincent's Medical Center, setting the stage for increased competition between the two systems.

The deal also comes as figures in Connecticut’s healthcare industry, as well as some government officials, voice increasing concern over the concentration of the state’s health services in the hands of a few major players, giving them outsized influence in setting prices.

Last month, those anxieties were put on full display as Hartford-based St. Francis Hospital and Medical Center filed a lawsuit against Hartford HealthCare, alleging unfair and monopolistic business practices. St. Francis contends that HHC is buying up physician practices, particularly in cardiology, in a bid to force St. Francis out of the market.
Hartford HealthCare has said the lawsuit is without merit.

State lawmakers have already said healthcare industry consolidation will be a focus this legislative session, and a working group within the state Office of Health Strategy has been convened to study and recommend new regulations for physician practice mergers and acquisitions.

Sustaining access

Under the proposed Yale deal, Manchester Memorial, Rockville General and Waterbury hospitals would switch to not-for-profit status, officials confirmed. Prospect made headlines when it first entered the Connecticut market years ago because it was a for-profit operator, an unfamiliar model for hospitals in Connecticut.

The proposed deal would have to be cleared by regulators before either of the health systems change hands. Still, Yale New Haven Health and Prospect said they believe the transaction will be completed later this year.

“As we begin to emerge from an international pandemic that has devastated many hospitals across this nation, it is critical that we think creatively about sustaining local access to high quality care,” said Yale New Haven Health CEO Marna P. Borgstrom. “Innovation has become a watchword for a post-pandemic healthcare environment, and we are all exploring clear opportunities to enhance access to high-quality care while driving down costs. While this is at a very early stage, our goal is to sustain critical access to vital healthcare services directly in these local communities.”

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