New England Diary

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Chris Powell: Ban investors from taking over and looting charitable hospitals

“The Cunning Thief,’’ by Paul-Charles Chocarne-Moreau, depicting a thief about to steal a baked good.

MANCHESTER, Conn.

Connecticut Gov. Ned Lamont and state legislative leaders have not yet completed their health-care proposals for the new session of the General Assembly but they should include legislation forbidding the sale of nonprofit hospitals to profit-making entities. 

Many nonprofit hospitals in Connecticut have been acquired in recent years by large nonprofit chains, such as Hartford HealthCare and Yale New Haven Health, and so may not be vulnerable to acquisition by profit-making entities. But many other nonprofit hospitals in the state may be -- the ones owned by smaller chains of nonprofits and the few nonprofit hospitals that remain independent.

Good luck to anyone who can start a private hospital and make money from it. But state government must protect the nonprofit hospitals insofar as they have been built over many years by community charity and voluntarism and their capital properly belongs to the community. An investment company's 2016 acquisition of three Connecticut nonprofit hospitals -- Waterbury, Manchester Memorial, and Rockville General, in Vernon -- has resulted in the liquidation of that community capital for private profit. 

The investment company sold the real estate of the three hospitals, paid the money to its investors, and then leased the property back so hospitals could continue operating but with the added expense of rent. This was essentially what in high finance is called a leveraged buyout. More simply it is looting.

Now the three hospitals are insolvent, operating under financial duress, and being offered for sale but there appears to be only one potential buyer, Yale New Haven Health, and it wants a subsidy from state government to make the deal. It's starting to seem as if the hospitals may fail before a deal is made.


The same situation has unfolded recently in Massachusetts, where an investment company bought the six nonprofit hospitals of Caritas Christi Health Care and eventually liquidated their real estate for profit for investors. Now those hospitals are insolvent and in severe trouble as well.

In a statement last month the entire Massachusetts congressional delegation wrote that the investment company "stripped out and sold the property from underneath these hospitals, creating hundreds of millions of dollars in profits for private equity executives while leaving the facilities with long-term liabilities that are magnifying -- if not creating -- the current crisis." 

The acquisition of nonprofit hospitals by private investors is a racket. Connecticut should outlaw it. If nonprofit hospitals can't survive financially, their assets should default to state government, which should reorganize them in the public interest, not the private interest, so the charity that built them endures.


Can armed civilian patrols reduce the violent crime in Hartford's Garden Street neighborhood, where two people were shot to death Feb. 10? A city pastor, Dexter Burke of The Light Church of God, thinks so and is organizing the patrols as well as a block watch and trash-collection efforts.

Hartford police will welcome the extra eyes and ears if not necessarily the extra pistols to be carried, though the people in the patrols will be licensed.

Burke is tired of the prayer vigils led by another city clergyman that always pop up following shootings in the city. While television news often publicizes them, the vigils do no more than display the righteousness and ineffectiveness of their participants.

Burke's accusation that Hartford's police are "unwilling or unable" to protect the neighborhood is less justified, since Hartford is full of poverty and crime, not just around Garden Street. Of course Connecticut's other cities are full of poverty and crime too, and nobody ever does anything about that either -- or at least nothing effective. 


Citizen patrols and block watches may help but may not reduce crime as much as push it into other areas. Still, that might not be so bad, for with more crime in middle-class suburbs, maybe state government could be prompted to examine  why nothing it does to reduce poverty and crime has much effect.

Chris Powell has written about Connecticut government and politics for many years (CPowell@cox.net).