Chris Powell: How many jobs were actually created by Conn. state fund? Stop companies from looting hospitals

Chimera. Apulian red-figure dish, ca. 350-340 BC

MANCHESTER, Conn.

Connecticut's state auditors are on a roll with their critical report about state government's "venture-capital firm," Connecticut Innovations, which was published the other day soon after the critical audits about expensive management failures at Central Connecticut State University, the state Department of Energy and Environmental Protection, and the Correction Department.

The problem with Connecticut Innovations, the auditors say, is that the agency, which spends tens of millions of dollars investing in new companies in the state, can't be sure that the companies have produced all the jobs they promised to produce with state government's investment. According to the auditors, Connecticut Innovations says verifying the job numbers would require auditing the companies and the companies can't afford it. Connecticut Innovations adds that while the state Labor Department has data about employment at the companies, it's always out of date.

This explanation is weak. Surely without much cost the subsidized companies can quantify their employment at regular intervals and identify their employees by names, address, and hours worked. Connecticut Innovations then could do spot checks about the claimed employees. This wouldn't be foolproof but it would be better than simply accepting the data provided by the subsidized companies as Connecticut Innovations does now.

Connecticut Innovations says it will try to figure something out, though the issue may be forgotten unless the General Assembly presses it.

The auditors' report on Connecticut Innovations should be taken by the legislature as an invitation to reconsider the agency in its entirety. For even if the job-creation data reported to Connecticut Innovations could be verified comprehensively, it would not mean the agency's subsidies were essential.

For the world is full of banks and investment firms that finance new businesses. Who can be sure that the jobs at companies subsidized by Connecticut Innovations couldn't have been created anyway with private financing? Why does state government need to get into the venture capital business any more than it needs to get into any other business?

Of course a venture capital firm operated by state government can provide one thing more readily than a private venture-capital firm can -- political patronage for those who run the government.

In any case if Connecticut had an economic and political climate more favorable to business and wealth creation than to employment by and dependence on government, state government might not feel as compelled to play favorites and subsidize certain businesses. A better economic and political climate would be the best innovation of all.

Better late than never -- and in the middle of his campaign for re-election -- Connecticut U.S. Sen. Chris Murphy has noticed the looting of Waterbury, Manchester Memorial, and Rockville General hospitals by the California-based investment company, Prospect Medical Holdings, which purchased them from their nonprofit operators in 2016 and began mortgaging their property and stripping their assets to pay big dividends to its investors.

This kind of thing has become a nationwide racket, and Murphy cited the Connecticut angle last week during a Senate hearing about the bankruptcy of Steward Health Care, a for-profit company that recently ran three hospitals in Massachusetts into bankruptcy.

Murphy asked: "How have we let American capitalism get so far off the rails, so unmoored from the common good, that anybody thinks it's OK to make a billion dollars off of degrading health care for poor people in Waterbury, Connecticut?"

The answer is simple. It is less a matter of capitalist greed than government's negligence. That is, in Connecticut and elsewhere government has allowed profit-making companies to acquire nonprofit hospitals and extract for profit the decades of public charity that built them.

Federal and state law could prohibit such transactions. So how about it, Senator, Gov. Ned Lamont, and state legislators? And Senator, how about returning the $2,500 campaign contribution you received from Prospect's political action committee in 2017, a year after it acquired the Connecticut hospitals, a contribution reported this week by political blogger Kevin Rennie?

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