Catholic Transcript Magazine of the Roman Catholic Archdiocese of Hartford Connecticut

Sunday, May 27, 2018

WATERBURY – A proposed joint venture between St. Mary’s Hospital and a health care investment and management company would not mean the hospital would compromise its Catholic mission, say officials from the hospital, the investment company and the Archdiocese of Hartford.

In fact, says hospital CEO Chad Wable, its Catholic identity would actually be strengthened.

The hospital announced in late March that it was pursuing a partnership with LHP Hospital Group Inc. (LHP), based in Plano, Texas, a leading national provider of capital and health care expertise to hospitals. The definitive agreement is subject to review and approval by the Federal Trade Commission, the state attorney general, the state Office of Health Care Access, the state Department of Public Health and the Vatican, officials said.

Mr. Wable told the Transcript in a telephone interview, "Our board of directors has constructed a contractual agreement with LHP Hospital and the partnership – the joint venture – to ensure that we not only maintain our Catholic identity and that we follow the ethical and religious directives, but that we strengthen them."

Practices such as abortion, in vitro fertilization and contraception are not permitted at St. Mary’s or at any other Catholic hospital. "It’s how we operate here now, and now we have a contractual agreement on top of that, so to me it’s even stronger," Mr. Wable said.

A March 22 joint press release from the hospital and LHP stated: "Saint Mary’s Catholic heritage and traditions and the Ethical and Religious Directives under which the hospital currently operates will be honored and maintained."

Archbishop Henry J. Mansell confirmed this when he said in a statement: "Pursuant to the agreement with LHP, St. Mary’s Hospital will retain its Catholic identity by adhering to the Catholic Ethical and Religious Directives as they apply to the provision of healthcare. Consistent with those Directives, the Hospital will be operated in accordance with the moral, ethical, and social teachings of the Roman Catholic Church."

(For the Archbishop’s full statement, click here.)

Dan Moen, CEO of LHP, told the Transcript by telephone, "We’re committed to maintaining the ethics, the morals of the Catholic Church in the operation of [St. Mary’s] hospital." He stressed that LHP has already partnered with two other Catholic hospitals and has remained faithful to the Catholic mission in both cases.

Under the agreement, local control of the hospital would be protected, while LHP would own an 80-percent position in the newly formed joint venture called SW Connecticut Health System LLC (doing business as St. Mary’s Hospital). A new 10-member board of directors would include five representatives from each of the two partners.

The choice of partnering with LHP culminated a search process that began in July 2010 with the appointment by Archbishop Mansell of a special task force, Mr. Wable said. More than 16 potential partners were considered. Hospital representatives met with four finalists before selecting LHP.

If the deal is approved – which could happen by the end of summer, both Mr. Wable and Mr. Moen said – LHP would infuse about $210 million into St. Mary’s to eliminate its debt, provide security for its pensioners and establish a foundation to focus on community health needs.

Of the $210 million, about $135 million would form the joint venture, of which St. Mary’s would own 20 percent with the option to buy up to 40 percent, Mr. Wable said.

St. Mary’s needs about $95 million to fully fund its pension plan – currently under-funded by about $65 million – and meet other obligations, he said. The remaining $40 million would go to form the St. Mary’s Foundation, which would address the needs of the Waterbury community’s less fortunate individuals, Mr. Wable said. The foundation’s functions could include health screenings, hospital bill assistance and even the funding of free care such as the Malta House of Care mobile clinic, he said.

About $75 million would go toward capital expenditures to implement new technologies, equipment and quality initiatives; improve and upgrade the facility and equipment; further develop existing service lines; recruit new physicians and retain employees; create and preserve jobs and health care access; and ensure access to experts, resources and the best practices of LHP’s national health care network, the press release said.

Mr. Wable said that the joint venture could pave the way toward a long-sought merger with Waterbury Hospital. He was unable to predict which direction such a merger would take, but he said, "Whatever we do related to our Catholic identity beyond this particular transaction [the LHP joint venture], we’ll be in close counsel with Archbishop Mansell."

Mr. Moen said, "We’re in it for the long run. We think it’s a good investment for us, because St. Mary’s has such a good reputation and a long history and tradition in that community."

According to its Web site, LHP "is a privately held company, established to provide essential hospital capital and expertise to not-for-profit hospitals and hospital systems, with which it forms joint ventures to own, operate and manage acute-care hospitals." It is owned by affiliates of the private equity firm CCMP Capital Advisors LLC, and the CPP Investment Board, as well as members of management.

St. Mary’s Hospital was founded in 1907 by the Sisters of St. Joseph of Chambery, and the completed facility was dedicated in 1909. It employs about 1,800 people, according to its Web site, http://www.stmh.org/index.html.

Within days of the announcement of the partnership, Yale-New Haven Hospital and the Hospital of St. Raphael announced the approval of a Letter of Intent (LOI) by both organizations’ boards of trustees to explore the potential integration of those two hospitals. The LOI defines an approach that would enhance healthcare quality, access and efficiency for greater New Haven and the broader region.

Under the language of the LOI, Yale-New Haven would purchase the assets of the Hospital of St. Raphael, producing one integrated hospital providing continued access to care at both campuses.