(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