Chris Powell: Letting Tenet buy 4 Conn. hospitals would hit public hard

By CHRIS POWELL

Plans to sell four nonprofit community hospitals in Connecticut -- in Waterbury, Bristol, Manchester and Vernon -- to a national hospital chain, Tenet Healthcare Corp., raise two big issues of public policy.

The first issue is the political economy of medicine. It is proceeding as follows.

Gov. Dannell Malloy and the General Assembly already have reduced substantially state government's financial support for hospitals. This has pushed weaker hospitals toward insolvency and induced them to look for buyers, including for-profit companies. While state officials say the insolvent hospitals have no choice but to sell out, state government itself is largely responsible for that insolvency.

The nonprofit hospitals acquired by for-profits will lose their tax exemption and start paying state corporation and municipal property taxes. The acquired hospitals will recover their new tax expenses by increasing charges to patients and insurance companies.

The insurers will recover their increased costs by raising premiums to policyholders, thereby getting blamed by the public for price increases that are actually state tax increases.

State officials then will congratulate themselves on their new revenue and spend it to increase compensation for the government and welfare classes that support them at election time.

All this will be the product of a supposedly liberal Democratic regime and more of what passes for liberalism — pious plunder.

The second policy issue here is control of the hospital business, a change from local control to distant control by the Wall Street funds that own Tenet. State government could appropriate for local control simply by adequately covering the uninsured. If, as hospitals say, they can't find investment capital with which to modernize operations and improve efficiency, state government could create a capital fund for them as it has created other capital funds.

Instead state government lately has appropriated for:

* A bus highway from Hartford to New Britain even as the busiest commuter railroad in the country, the one serving Fairfield County, repeatedly broke down.

* All sorts of corporate welfare in the name of economic development less plausible than the economic development that might come from modernized hospitals. (Who can forget the burrito shops in Colchester and East Lyme that took state money and ran?)

* And, of course, incessant raises and benefit increases for government employees, often euphemized as “aid to education” when it is only aid to educators.

Public forums held last week by Tenet and Eastern Connecticut Health Network, whose hospitals in Manchester and Vernon would be acquired, illuminated the dubious nature of the undertaking.

The companies refused to answer critical questions put to them by the (Manchester, Conn.) Journal Inquirer, including whether “golden parachutes” have been promised to ECHN's already extravagantly paid executives; whether there would be any guarantees of hospital staff levels after an acquisition; and about exactly how Tenet would make the hospitals profitable. ECHN's president did reveal that the hospital in Vernon would be guaranteed three more years of operation, which meant that its closing is contemplated if not already planned.

While ECHN's executives maintain that the hospital company can't regain solvency on its own, Tenet obviously sees plenty of money ahead in the hospital business, if only through fraud. Over the last 10 years the corporation has paid a billion dollars in fines for misconduct and has appropriated another $27 million for possible new fines.

The fate of the two ECHN hospitals now is in the hands of their 257 community corporators, whose service seems to have been a mere formality in light of what they have slept through -- not only the extravagant executive salaries but also the lucrative contracts given by ECHN to members of its self-dealing Board of Trustees.

Chris Powell is managing editor of the Journal Inquirer, in Manchester, Conn.

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