Connecticut places moratorium on many hospital mergers

Connecticut's governor has placed a moratorium on many forms of hospital mergers within his state, expressing concerns that such transactions are driving up healthcare costs, according to the Hartford Courant.

Gov. Dannel P. Malloy issued the executive order last week that he said would begin an extensive overhaul of Connecticut's certificate of need process.

"With continuing changes in the healthcare industry, it is critical that our state laws ensure that all hospitals continue to thrive, and that the deck is not stacked in favor of fewer than a handful that dominate the marketplace,'' Malloy said in a statement. "We need balance. Fewer healthcare systems mean fewer choices for consumers, and that can dramatically affect both the quality of care and costs. It's time we take a holistic look at the acquisition process."

Mergers and acquisitions among hospitals and healthcare systems have been very active in recent years. Many in the provider community see it as a way for hospitals to weather some of the financial stressors of the Affordable Care Act. It has also been argued that hospitals need to merge, consolidate and affiliate in order to improve population health. But some deal-making, particularly hospital acquisitions of physician groups, have been tied to an increase in prices.

Deals among providers in Connecticut have been picking up steam in recent years, and while it has gained the attention of lawmakers, they have yet to do anything substantive about the issue. 

But Malloy's latest action could imperil at least one significant hospital deal, according to the Courant, An affiliation between Lawrence+Memorial Hospital and the Yale-New Haven healthcare system.

Malloy and the state's hospitals have been at odds with one another for a long time. The hospital sector has been particularly aggrieved by a cut in Medicaid payments that the Malloy administration enacted last year to balance the budget.

To learn more:
- read the Hartford Courant article
- check out Gov. Dannel Malloy's statement