The rush to pass Malloy’s UConn Health Center and Bio-Science Initiative… Who’s Zooming who?

(Cross-posted from Pelto’s Point at the New Haven Advocate)

 

A new surgery center for UConn…when they already have one… ?

So who is it that is going to make a lot of money on Malloy’s Health Center Plan?

For the last two weeks, legislators have been complaining about the Malloy Administration’s demand that they adopt the Governor’s UConn Health Center Initiative without having the time to actually review and investigate the proposal.  When it went before the Finance, Revenue and Bonding Committee legislators were required to vote even before the legislature’s own Office of Fiscal Analysis could prepare a memo on the project’s fiscal impact.

Nonetheless, the State Senate has passed SB1152, Malloy’s $864 million mega proposal, pretty much along party lines and the House will follow suit in the next fifty eight hours (before the legislative sessions ends).

Senate passage came only 15 days after Governor Malloy released his plan to renovate and expand the University of Connecticut Health Center while turning Connecticut into one of America’s premier Bio-Science research centers.

According to Malloy, the project would create 3,000 construction jobs annually from 2012 through 2018 and 16,400 full time jobs once the project is complete, which in turn will generate a $4.6 billion increase in personal income by 2037.

While some legislators and others have raised concerns or at least questions about the project, proponents have sung its praises.

A Hartford Courant editorial called it a “bold stroke, one designed to carve out a bigger share of the growing bioscience business for Connecticut while stabilizing the University of Connecticut Health Center’s finances.”   Other newspapers have taken a similar approach.  The New Britain Herald, for example said “We like Malloy’s plan because of its broader vision.”

On the other hand, editorials in both the Journal Inquirer and New Haven Register have identified major problems with the plan and columnist Kevin Rennie had a must read column in Sunday’s Hartford Courant (link below)

Malloy’s nearly $1 billion initiative would be paid for with $254 million in new state bonding, which would come on top of the $338 million in bonding that the Legislature approved last year for the UConn Health Center.

UConn would be required to come up with an additional $69 million on its own and the final $203 million would come from a new, privately owned surgery center to be built at the Health Center.  UConn would be required to sign a long-term lease with the private entity thereby assuring them of the revenue stream to pay back their investment.

As part of this project, $30 million of this money would be diverted to the UConn Health Network Initiatives.  These dollars would be used to help protect other area hospitals from any competition that might develop from the enhancement of the UConn Health Center.

These taxpayer funds will be used in part for (1) A simulation and conference center on the Hartford Hospital campus that uses new technologies and simulated care settings to educate and train healthcare professionals; (2) A Connecticut Institute for Primary Care at the Saint Francis Hospital and Medical Center; (3) A new cancer treatment center to be built at the Hospital of Central Connecticut in New Britain and (4) Patient room renovations at Bristol Hospital.

But that $30 million is “chump change” compared to the state funds that will flow to the private entity that is building the new ambulatory/surgery center.

The legislation requires the University of Connecticut to construct a “new ambulatory care center through debt or equity financing obtained from one or more private developers who contract with UConn to build the center.”

Let’s face it.  Someone out there is going to be making a lot of money on this deal.

The only question is who?

In return for putting up $203 million for a new building in Farmington, the private developer will have the ultimate tenant, the state of Connecticut, for life.

The law REQUIRES UConn to lease the building from the private developer (contract details to be worked out at a later date).

Even if the UConn Health Center decides it doesn’t want or need the space UConn will be on the hook.

Even if market factors beyond UConn’s control make a surgery center unprofitable, UConn will be on the hook.

And that means Connecticut taxpayers will be responsible for paying the private developer no matter what.

Talk about removing the risk from a private investment.

A public-private partnership where all the risk is carried by the public.

And to make the situation even more suspicious, the legislation is moving so quickly that legislators didn’t have the time to examine whether a new surgery center is really needed considering Connecticut already has 143 surgery centers including many in the Hartford area.

And more even more incredible is that legislators are voting on this plan without being aware that the UConn Health Center already has a surgery center that was created through a public-private joint venture back in 2002.

According to their own website “The Medical Arts and Research Building (MARB), which opened in 2005, added to the campus a four-story, 103,663 square-foot, facility… It is also home to the Farmington Surgery Center, a multispecialty outpatient surgery center.”

Back in 2002, the University of Connecticut Health Center applied and received permission from the Connecticut Office of Health Care Access to create the Farmington Surgery Center.

The Health Center and Health Resources International (HRI), a private surgery center company joined together to create the Farmington Surgery Center, LLC.  As part of their application to the state the partners committed $5.6 million to create the new surgery center.

While the Office of Health Care Access eventually approved the creation of the Farmington Surgery Center it blasted the applicants saying “The concept of a free-standing ambulatory surgery center is a sensible solution to JDH’s [John Dempsey Hospital’s] need for additional space and equipment in its surgical suite. However, none of the information related to control by the UCHCFC, [UConn Health Center Finance Corporation]  the impact on JDH, the continuity of care, the financial feasibility of the project itself had been developed. At the time of the application’s submission, critical agreements between the Applicants had not yet been executed. While the late file submissions have alleviated some of OHCA’s concerns, OHCA should not have needed to conduct 4 hearings and accept numerous late file submissions to have adequate information”.

Connecticut’s Office of Health Care Access went on to rule “the Certificate of Need application of the University of Connecticut Health Center Finance Corporation, on behalf of the John Dempsey Hospital, and Health Resources International, LLC, d/b/a Farmington Surgery Center, LLC is hereby approved with conditions.”

But just four years later, in 2006, the UConn Health Center went back to the Office of Health Care Access for permission to change the ownership structure of the Farmington Surgery Center.

Apparently, as a result of financial and operational problems, UConn moved to “consolidate its ownership of the Farmington Surgery Center (“FSC”) at a total capital expenditure of $1,892,500.”

At the time, just over 25% of the Farmington Surgery Center was owned by Health Resources International (HRI) and three physician groups.   UConn’s explanation about their decision to purchase back control of their surgery center was that it would allow the surgery center to “operate under the hospital’s acute care hospital license; bill third-party payers at a more favorable provider-based rates; and reduce the professional liability expenses and exposure as a result of the facility being covered under JDH’s self-insured medical malpractice plan.”

It turned out that UConn didn’t actually need state agency approval for this change so after paying out the $1.8 million, the UConn Health Center became the sole owner of the Farmington Surgery Center.

And now here we are 5 years later, as a result of Governor Malloy’s initiative UConn will be legally required to contract with yet another private entity to expand its surgery center but this time, instead of a $6 million public-private investment, it is a $203 million dollar private deal.

While legislators race to put Malloy’s Health Center plan into law, the question remains…

Someone is going to make a lot of money on this deal…

So who is this project for?

For more on Malloy’s initiative take Kevin Rennie’s piece in the Courant – UConn Health Center More Rash Than Bold

Shared Sacrifice? What about the unshared sacrifice to date?

UConn Storrs (photo by uconnruf)

Are Connecticut’s public colleges and universities in the cross-hairs again?

Yeah…yeah… we’ve heard all it all before…“A well educated workforce is the key to economic growth and prosperity” and “The percentage of college educated workers is one of the single most important factors to a state’s economic health.”

However, when it comes to adequate state support for our public colleges and universities, Connecticut has a long and sad record of failure.

Twenty years ago, when we already ranked at the bottom of the nation, about half of UConn’s budget came from state funds.

This year, the state of Connecticut will cover less than a third of the University’s total operating expenses.

A similar story holds true at Connecticut State University and Connecticut’s Community and Technical College System.

Without enough state funds to fulfill their missions, Connecticut’s public institutions of higher education have been forced to become increasingly reliant on students and their parents to pick up the costs associated with running high quality educational programs.

Whether at UConn, CSU or the Community/Technical Colleges, tuition and fees are now paying for the lion’s share of the total operating cost.

Adding to the problem, at UConn, not only have there been record tuition increases but the University has dramatically increased the number of students as a way to raise additional revenue. Their rationale is simple – more students mean more tuition and fees, even if the end result is larger class sizes, fewer course offerings and the need to take more than 4 years to complete a basic bachelor’s degree.

Since the UConn 2000 infrastructure program began in 1995, the number of students at UConn has jumped from 14,500 to 21,500.  However, in a stunning tribute to the notion of “pay more, get less”, while the number of students has increased by 48 percent, the number of full-time faculty is up barely 15%.

As Governor Rell and the Legislature grappled for ways to “balance” this year’s budget without having to deal with any political ramifications they did something that had never, ever been done before.  Rather than “cut” the budget for Connecticut’s public institutions of higher education, they actually reached into the school’s internal operating fund and transferred more than $30 million in student tuition and fees over to the state’s General Fund.

Not only did the gimmick mean students and parents paid more in tuition only to see the money go to the state’s non-higher education costs but this maneuver amounted to the deepest percentage cuts to Connecticut’s public colleges in state history.

In recent weeks, the Malloy Administration has made it clear that they will be calling for shared sacrifice as they look for record budget cuts.  The problem is that that Connecticut families seeking a college degree have already sacrificed far more than their fair share.

Further complicating the notion of shared sacrifice is that fact that the new Administration and the Legislature fully understands that there are significant areas of the state budget where cuts are simply not possible – either because there is a consensus that the services are just to vital to cut or there isn’t the political will to make those cuts. 

For example, State government can’t cut its debt services payments; we’ve already learned the disaster associated with failing to make pension payments; Malloy has promised not to cut local education funding and every dollar cut from Medicaid (health programs) means an immediate loss of 50 cent in federal reimbursement.

So the notion of across the board cuts is absurd.

Certain areas will be cut deeper than others and Connecticut’s history is to cut our public colleges and universities knowing that if the schools really need the funds they can get them by increasing tuition.

While the Malloy Administration would not be alone in targeting cuts to higher education, California’s new governor has proposed nearly $2 billion in cuts to their colleges, it is important to note that not all states are undermining the work of their universities.

Gov. Robert M. McDonnell, Virginia’s Republican Governor recently proposed adding $50 million to their higher education budget.  It would be part his longer term plan to create a more educated workforce

Meanwhile, Sam Brownback, the new ultra-conservative Republican governor of Kansas has actually proposed a three-year, $105-million plan to enhance their university programs that educate students for high-paying jobs in areas such as aviation, cancer research, and engineering.

And not to be outdone, this year, North Carolina actually increased their higher education budget this year by 6%.

Of the 50 states, the average percentage of the state budget devoted to public higher education is 9%. 

Virginia already devotes 14% of its state budget to its public colleges, North Carolina 16% and Minnesota 23%. 

Connecticut is at 7.3% and dropping.

Cutting our colleges is bad for our economy, bad for middle class families and bad for our society.

Next Wednesday, budget day, will tell us a lot about what “shared sacrifice” really means

FYI – Two-Thirds of the cost of the Burton Family Football Complex and Shenkman Training Center came from Connecticut taxpayers.

Over the past week or so a lot of attention has been given to Robert Burton’s request that UConn return his $2.5 million donation and that they take his name off the building that honors him for that contribution.

Yesterday Chris Keating of the Hartford Courant went a long way in setting the record straight with his blog post – http://blogs.courant.com/capitol_watch/2011/01/burton-family-football-complex.html

Along with what the Courant laid out, here are the facts:

In May 2002, UConn announced that Robert G. Burton was making a contribution of $2.5 million to the University of Connecticut and his donation would “be used to build the Burton Family Football Complex on the Storrs campus.”  A naming ceremony for the Burton Family Football Complex was then held May 7 at UConn.

(Burton has already donated about $1 million to established the Robert G. Burton Endowed Scholarship Fund at UConn and the Michael G. Burton Scholarship Fund (named for his son who was captain of the Husky football team in 1999) Both are given to football student-athlete in the School of Business).

In February 2004, UConn announced that “Preliminary designs have been completed for The Burton Family Football Complex and the Indoor Facility on the Storrs campus.”  The projected cost of the project at the time was about $40 million.

In August 2005, the UConn Board of Trustees approved a “Final” project budget of $45.5 million with $31 million coming from UConn 2000, $10 million from gifts and $5 million from Athletic Department Accounts (the bulk of which is comes via the general UConn student fee).

In September 2006, the UConn Trustees approved a “Revised Final” project budget.  The total cost rose to $48.8 million of which UConn now reported $31 million from UConn 2000, $15 million from gifts and $2.5 million from Athletic Department funds.

In its April 2007 semi-annual report to the Governor and Legislature, UConn wrote that “The Intramural, Recreational & Intercollegiate Facilities Project is complete, operational and occupied. This facility houses the football program including offices, training rooms, locker rooms, dining facilities, lounge, strength and conditioning room and an indoor practice field.  When not used by athletic teams, the indoor field is used by the recreational programs.

In fact, as we learned during the UConn 2000 investigation, UConn students have very limited access to the facility.  Hartford Courant investigative reports discovered that while UConn students lined up to use exercise equipment in the old Field House, they were not allowed to use the top of the line exercise equipment in the Burton Complex that is reserved for year around use by the football team.

Most recently UConn has been moving forward on implementing a new recreation fee for students to generate enough funds to actually build a new recreational facility for students.