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04/03/2019

OHS Approves Western CT Health Network and Health Quest Merger Application

(HARTFORD, CT) – Connecticut Office of Health Strategy (OHS) Executive Director Vicki Veltri announced today that the Certificate of Need application for the transfer of ownership of Western Connecticut Health Network, Inc. (WCHN) and Health Quest Systems to a newly-formed not-for-profit entity has been approved subject to quality, cost, and accessibility conditions. Pursuant to multiple sections of the General Statutes, OHS leads the Health Systems Planning Unit that administers the Certificate of Need program—a regulatory responsibility to promote statewide health facility and service development and monitor the impact of provider acquisitions and consolidations on the communities they serve.

Veltri said, “This decision moves us toward Connecticut’s overall health policy goals to improve access to high-quality care and contain healthcare costs. Healthcare expenses are growing at a faster pace than overall consumer costs—they have a significant impact on consumers and our economy and OHS is taking note. This approval institutes the first cost growth cap tied to a transfer of ownership, thereby linking healthcare cost growth to the consumer price index and slowing the high rate of growth. This helps address a major issue brought to us by consumers and addresses a challenge that faces Connecticut and the nation.” 

The new entity will be the parent company to hospitals in the WCHN system—Danbury, Norwalk, and New Milford—and Sharon Hospital and hospitals in New York that are part of the Health Quest system. For fiscal years 2019-2021, the merger is expected to save WCHN and Sharon Hospitals more than a total of $100 million through the standardization of health reimbursements, improved contracting for pharmaceuticals and supplies, and consolidation of administrative and back office functions. 

Under Connecticut General Statute § 19a-639(a), the agreement sets forth a number of requirements that must be met by the new non-profit system including: 

Complying with the first cost growth cap that OHS has imposed in a hospital transfer of ownership. This condition links cost growth to the consumer price index;
Promoting ongoing and enhanced community participation on the Boards of Directors for each hospital, requiring the inclusion of a total of 14 community representatives;
Expanding participation in Alternative Payment Models that improve access to primary care, strengthen patient outcomes, and help hold down the cost of care;  
Maintaining sufficient obstetric and gynecologic care at Danbury, Norwalk, and Sharon hospitals to meet the needs of the community; 
Tying the entity’s Community Benefits Program to the assessment outcomes in their required Community Health Needs Assessment; and
Increasing funding by at least one percent per year for the next five years to enhance the entity’s community benefit program.

The new entity will hire an independent monitor chosen by OHS to serve for five years who will conduct on-site visits and report on agreement compliance.

All documents related to the Health Quest Systems / Western CT Health Network CON application can be found in the OHS CON portal under Docket # 18-32238. Click on the blue filter icon next to ‘docket number’, type 32238 in the first box, then click ‘filter’.

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