Hospital merger raises concerns

SHARON — Winsted’s Community Lawyer Charlene LaVoie is raising concerns about a proposed hospital merger that she says looks more like a takeover that is not being properly reviewed.In a letter to state Attorney General George Jepsen last month, LaVoie noted that an announced “merger” between RegionalCare Partners and Essent Healthcare, which owns Sharon Hospital, looks more like an acquisition to her, and that such transactions require greater oversight than has been given to the deal.“After reviewing documentation obtained pursuant to the Freedom of Information Act request submitted by a concerned citizen to the Office of Health Care Access (OHCA), it is clear that ownership of all Essent’s assets — including Sharon Hospital — will be sold to RegionalCare, the new owners,” LaVoie wrote. “Essent states that ‘Essent will remain as the surviving corporation, will retain its name and will be wholly owned by RegionalCare.’”LaVoie said she believes a takeover requires a certificate of need (CON) application and public hearing, since a new entity will effectively be created as RegionalCare takes over Essent and Sharon Hospital, even as representatives of RegionalCare say they have cleared that hurdle.In a statement this month, RegionalCare spokesperson Kim Fox of the Nashville, Tenn., public relations firm Jarrard Phillips Cate and Hancock, said a CON would not be required. “The state Department of Public Health will be involved. We have started the process with the state of Connecticut, and we are following their lead.”The proposed merger will combine the four hospitals owned by RegionalCare, which are in: Florence, Ala.; Muscle Shoals, Ala.; Ottumwa, Iowa; and Wilmington, Ohio; and the three hospitals owned by Essent, which include hospitals in Waynesburg, Pa., and Paris, Texas, in addition to Sharon Hospital. RegionalCare representatives have said the merger is necessitated by a weak economy, and that a larger system of hospitals will be able to operate with greater efficiency.LaVoie’s letter to Jepsen claims that OHCA incorrectly decided that, since Essent is not changing its name as a result of the new ownership, the merger with RegionalCare does not qualify as a takeover. “OHCA’s reading of the statute is too restrictive and narrow and doesn’t address that RegionalCare can change the governance policies and the Board of Directors at any time,” LaVoie wrote.“Since RegionalCare is privately held, without the CON process there is no public scrutiny of the financial statements and no assessment of its financial health to determine its financial ability to provide continued quality medical care, including vital charity care,” LaVoie continued. “In addition, without the CON process the community cannot be assured that RegionalCare has the demonstrated track record and experience to run Sharon Hospital successfully. This lack of transparency also means that the Sharon Hospital community cannot know how much debt the restructured Sharon Hospital will have or RegionalCare’s future plans.”State Rep. Roberta Willis said Tuesday that the RegionalCare-Essent deal is very concerning to her and that she wants more oversight. “I’m really feeling that this was premature,” she said. “There should have been a public hearing process. I’ve gone to the attorney general’s office, and I’m hoping that they can intervene. I’m just questioning the way the merger was portrayed to OHCA. It wasn’t portrayed so much as an acquisition. It sounded like it was just a merger.”LaVoie noted that RegionalCare is a Nashville-based, private leverage buyout firm created two years ago, which has acquired several hospitals “and is said to have borrowed several hundred million dollars. It could affect the continued viability of Sharon Hospital if RegionalCare is over-leveraged and heavily in debt and is unable to continue operations in the short, or long, term. It is unclear when the ‘merger’ will be effective, or if any permits or approvals will be required by the Department of Public Health — so time is of the essence.’”Willis said she will continue to pursue the matter with the attorney general’s office and OHCA. “It deserves more scrutiny,” she said.