Having decided that it can’t sustain itself financially, Eastern Connecticut Health Network, operator of Manchester Memorial and Rockville General hospitals, continues to try to find a buyer. The latest bidder is Prospect Medical Holdings, Tenet Healthcare Corp. having withdrawn last year when state government imposed onerous conditions on its bid.
ECHN President Peter Karl says the company has to cut expenses by 15 to 20 percent, and the communities it serves have an interest in knowing how this would be accomplished, especially since one option would be to close Rockville.
Two recent public hearings called by ECHN and Prospect provided little useful information. While Prospect said it planned to keep nearly all ECHN employees, honor union contracts, and maintain Rockville, it would not respond to the Journal Inquirer’s questions about how it might exact savings from ECHN’s operations.
Maybe some hints will be obtained from Prospect by the state attorney general’s office and health department, which will supervise the sale of ECHN and have asked Prospect for answers on about 50 issues.
Even so, Prospect is not likely to offer any long-term guarantees. Its plans will be good only until they change, and medicine is changing fast, in part because of government’s increasing interventions, largely matters of shifting and concealing costs.
Part of that cost shifting and concealment will be the annual property tax revenue Manchester and Vernon expect to receive upon conversion of ECHN’s hospitals from nonprofit to profit-making status, revenue estimated at $4.4 million. That windfall will be generated by increasing hospital charges to insurers and patients, reducing compensation to hospital employees, or exacting efficiencies in hospital operations, efficiencies that Prospect declines to identify.
Since towns never reduce property taxes and since most of their spending goes to unionized town employees who by contract receive salary and benefit increases every year, this cost shifting will transfer money from hospital patients and maybe hospital employees to town employees, cost shifting that will be essentially a tax on illness. Not one person in a thousand will be able to figure it out and instead the blame will fall falsely on medical insurers.
Every business operation can be more efficient. For example, it’s not clear why ECHN’s top executives should continue to be so highly paid while the company operates at such a loss. Having already negotiated two sales agreements, first with Tenet and now with Prospect, ECHN’s management must have pretty good ideas of where cuts could be made, just as Prospect’s management does, having bid for a money-losing company.
But even if state government pries some of these ideas out of Prospect and they cause controversy, what is the alternative to the sale of ECHN? Maintaining the hospitals as nonprofit, locally focused operations and deciding on and implementing the necessary efficiencies on the basis of community interest and participation would be possible only with much civic engagement, and that no longer seems available.
ECHN’s board of trustees long has been compromised by self-dealing and conflicts of interest, some of its members receiving large payments from the company, and the company’s 232 corporators — the company’s ultimate authority — members of the communities served by ECHN, have been indifferent to this and to the board’s long failure to get expenses under control. Indeed, last month when the corporators approved the sale of the company to Prospect, 27 percent of them didn’t even vote. Why have they been purporting to serve as corporators?
As civic engagement declines, only profit will be left to run hospitals and all sorts of other things that once were run in pursuit of the public interest. It will be a very different world.
Chris Powell is managing editor of the Journal Inquirer, in Manchester, Conn.