Waterbury’s Hospitals Say Merger Would Require $180 Million in State Aid

By Marc Silvestrini, Waterbury Republican-American, Conn.

Mar. 5–WATERBURY, Conn. — Representatives of Waterbury and Saint Mary’s hospitals told state officials Monday they believe the best long-term solution to Greater Waterbury’s health-care needs is for the hospitals to merge, and that a merger would require about $180 million in state assistance.

The hospitals presented state officials with a plan to merge their administrative and clinical functions into “a single consolidated entity,” John H. Tobin, president and chief executive officer of Waterbury Hospital, and Robert P. Ritz, president and chief executive officer of Saint Mary’s Hospital, said Tuesday.

The merged hospital, which would be given a yet-to-be-chosen name, would have two campuses, using the hospitals’ existing facilities, they said. State officials were told it would cost about $180 million to complete the merger, and that it could not happen without “significant financial support” from the state because neither hospital has the financial reserves to underwrite the project.

“We presented them with what we feel is the best way to insure long-term access to quality health care for the people of this community, going forward,” Tobin said. “We also told them that if the state is prepared to help us financially, we’re prepared to move forward. If they’re not, we’re not.”

Michael P. Starkowski, commissioner of the state Department of Social Services and the meeting’s host, said Tuesday the plan is obviously the result of “a lot of planning and research.” But he also said it was far too early in the process to comment on whether the state should or would commit to the financial support.

“We’ve been given the view from 40,000 feet,” he said. “Now we need to go behind the curtain and take a real good look at what they propose to do.”

The projected cost of the merger includes $100 million for capital projects that would include extensive renovations and remodeling at both plants, as some clinical departments would be eliminated to avoid duplication while other departments would expand, and integrating the two hospitals’ information technology systems. Another $60 million would be required to restructure existing debt at both institutions.

The hospitals are drafting a Letter of Intent to merge, which will be presented to the state once it is finalized, the presidents said. The hospitals and their respective boards and administrative staffs are also trying to resolve several key issues surrounding the proposed merger, including antitrust issues, labor law, pension issues and canonical issues, they said.

The six-member team that traveled to Hartford on Monday included Ritz;

Tobin; Robert M. Halko, the chief financial officer at Saint Mary’s; Kit Kamholz of Kaufman Hall, a financial adviser to Waterbury Hospital; and James C. Smith, chairman and chief executive officer of Webster Financial Corp., and Joel S. Becker, president and chief executive officer of Torrington Supply Co, who represented the Saint Mary’s and Waterbury Hospital boards of directors, respectively.

The two-hour presentation was made in Starkowski’s Sigourney Street office. J. Robert Galvin, commissioner of the state Department of Public Health; Cristine A. Vogel, commissioner of the state Office of Health Care Access, and Richard D. Gray, executive director of the Connecticut Health and Educational Facilities Authority, were also present.

The meeting was held in response to a letter the hospitals received in January in which state officials said they would not release $5.5 million earmarked for the two hospitals from the state’s Hospital Hardship Fund unless the institutions filed a joint plan by March 15 specifying the steps they will take to “streamline administrative and operational costs through consolidation.”

Saint Mary’s is scheduled to receive $3.5 million from the hardship fund, while Waterbury Hospital is approved to receive $2 million. Both Tobin and Ritz said state officials seemed satisfied that Monday’s presentation properly addressed the request for action made in the January letter, and that the hardships funds will be released in the near future.

Starkowski said the meeting was “very informative, cordial and positive.” He said he would attempt today to brief Robert Genuario, secretary of the state Office of Policy and Management, who could not attend the meeting, and that a final decision on releasing the hardship funds would be mailed to the hospitals by the end of the week.

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