Connecticut approves merger of Northwell, Nuvance health systems

Connecticut’s Office of Health Strategy approved a merger between Northwell Health, a large New York-based health system, and Nuvance Health, which owns Danbury, Norwalk, Sharon and New Milford hospitals in Connecticut, as well as three hospitals in New York, according to a Tuesday announcement by the agency.

The two systems now have to complete the step of formally joining the entities together under the Northwell Health banner, a spokesperson for Nuvance Health said.

Northwell isn’t directly paying to buy the Nuvance Hospitals, per se, resulting in a technical purchase price of $0. Instead, the New York-based health system has agreed to invest $1 billion in Nuvance’s Connecticut and New York hospitals over the next five years, with annual reporting on the progress of those investments.

Those investments will go toward a number of capital projects and the implementation of a new electronic medical recordkeeping system, according to Boyd Jackson, director of legislation and regulation at OHS.

“No money is being transferred directly within the affiliation deal,” Jackson wrote in an emailed statement, explaining that, instead, “Northwell has made promises of capital investment.”

Nuvance Health has been struggling financially for some time, posting a $99 million deficit in fiscal year 2024, which executives chalked up to, among other factors, increasing costs and the aftereffects of the COVID-19 pandemic.

John Murphy, a physician and the chief executive officer of Nuvance Health, said the merger will help improve health care for the system’s patients.

“By joining forces with Northwell Health, we can strengthen and enhance our ability to meet the needs of patients across Connecticut and the Hudson Valley for generations to come,” Murphy said.

During a public hearing on the merger in November, Murphy said Nuvance’s financial challenges had reached a point where the system could no longer survive without the support of a parent company.

“Nuvance Health today finds itself at an inflection point, where continuing its current course threatens the long-term viability of our facilities and programs and the future of health care in Western Connecticut,” stated Murphy in pre-filed testimony for the November hearing. “We firmly believe the time has come to join a larger health system.”

The combined health system will have 28 hospitals, over 1,000 care sites and a network of 14,500 providers across New York and Connecticut, according to the statement from Nuvance.

The state’s approval hinges on certain conditions, laid out in an agreed settlement. These conditions include the $1 billion investment in Nuvance hospitals. The agreement also prohibits, for five years, any real estate sale-leaseback transactions, the type of deal that many critics say drained the resources from the Prospect Medical Holdings-owned Connecticut hospitals while enriching the health system’s private equity backers.

Northwell also reached an agreement in August with Attorney General William Tong to maintain labor and delivery services at Sharon Hospital for the next five years.

Northwell Health is the largest private employer in New York state, according to the company’s website, and owns 21 hospitals and 900 ambulatory sites. The health system does not currently own any hospitals outside of New York.

Health care consolidation — the trend of big health systems buying up hospitals — has been shown to lead to cuts in critical services, as well as higher prices. But the proposed merger with Northwell received significant public support.

During a hearing in November, several people from the hospitals’ surrounding communities expressed hope that Northwell could help strengthen the Connecticut hospitals. Those testifying included many Nuvance employees, as well as members of Save Sharon Hospital, a community group that has fought against service cuts at Sharon Hospital.

During the same hearing, Mark Solazzo, the chief operating officer at Northwell Health, said that the company intends to address financial challenges at Nuvance by, among other tactics, increasing staff retention, reducing reliance on outsourced contractors and driving down costs through collective purchasing.

“We have never closed a hospital, and we don’t intend to,” Solazzo said.

Katy Golvala is CT Mirror’s health reporter. This story was originally published by the CT Mirror.