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For-profit hospitals can benefit the state

By TRIP PILGRIM and VINCENT PETRINI

Publication: The Day

Published October 27. 2013 4:00AM

Yale New Haven Health System (YNHHS) and Tenet Healthcare Corporation (through its acquisition of Vanguard Health Systems on Oct. 1) have signed a Letter of Intent to develop an innovative partnership to adapt to the changes taking place across the health care industry. The two organizations bring together clinical and operational expertise, economies of scale and the capital necessary to create a for-profit model of growth and the provision of high quality health care services.

As state and federal payments are being cut, hospitals across the state are struggling to stay viable and provide quality health care for Connecticut residents. This has actually been the case for some time, and as every year goes by, it becomes clearer and clearer that the status quo is no longer an option; hospitals are in dire need of a sustainable solution.

Tenet and YNHHS are proposing such a solution to ensure Eastern Connecticut Health Network (ECHN) remains an integral part of Connecticut's communities and economy. Under the proposed partnership, ECHN would be converted from its current not-for-profit status to a for-profit and would be owned by the partnership between Tenet and YNHHS. Tenet would manage ECHN and provide flexible access to capital to invest in cutting-edge technology, infrastructure and services. YNHHS would provide ongoing clinical support, quality and service line management, while remaining independent and not-for-profit.

With only one for-profit hospital in Connecticut, many residents are uncertain about the impact that for-profit conversion will have on the hospitals and the state. While we understand and respect those concerns, many of them are born out of the myths associated with for-profit hospitals. It's time to clear up what it means to be a for-profit and what it doesn't mean.

It does mean that the hospital pays income, property and sales taxes. For cities and towns in Connecticut, this will bring millions of dollars of new tax revenue. A for-profit also has access to equity and debt markets, which will provide the necessary capital to advance the services at ECHN.

It does not mean that the income generated by Tenet Healthcare facilities is sent from the communities to Wall Street. In fact, in order to grow, a company must make investments up front and regularly. Tenet Healthcare, through its Vanguard acquisition, has proven just that. For example, the company invested $900 million in the San Antonio market, and at the Detroit Medical Center, the company has committed to investing $500 million of construction capital and $350 million of routine capital.

It does not mean the least fortunate in our communities will lose access to care. In fact, the charity care provided at Tenet Healthcare hospitals matches or exceeds comparable not-for-profit hospitals.

Being a for-profit hospital does not mean that quality will be hurt; doing so would make absolutely no sense. Physicians have a choice, and if quality is not good, they will take their patients somewhere else. If you cut the quality of care, you will end up with an empty hospital. For-profits and not-for-profits also adhere to the same patient care services and licensing rules, including Medicare, state Department of Health regulations and the Joint Commission for Accreditation standards.

The proposed partnership between Tenet Healthcare, YNHHS and ECHN would deliver sophisticated care across a wide spectrum of primary and specialty services to keep patients well throughout their whole life, rather than just take care of them when they are sick.

As the health care industry changes, so too must the hospitals. For some hospitals this means entering into mergers or developing innovative strategic partnerships that may involve, as in this case, converting to a for-profit status.

Tenet has also signed Letters of Intent to purchase the assets of Waterbury Hospital and Bristol Hospital. Under the proposals, both hospitals could opt into the partnership with YNHHS.

Whether a hospital is for-profit or not-for-profit, it has a mission to provide the highest quality care for all those who need it, including the uninsured and under insured, to serve the community and be the economic engine for millions of Americans and their families.

Tenet and YNHHS stand ready to help lead Waterbury Hospital, ECHN and Bristol Hospital - and their patients and employees - to a better, financially sustainable future.

Trip Pilgrim is senior vice president and chief development officer for the Tenet Healthcare Corp.; Vincent Petrini the senior vice president of public affairs at Yale New Haven Health System.

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