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Yale New Haven Hospital
Yale New Haven Hospital

Tenet, Yale New Haven join forces in Connecticut

By Beth Kutscher
Posted: March 6, 2014 - 7:00 am ET

Tenet Healthcare Corp. is partnering with Yale New Haven (Conn.) Health System, the two systems announced today. Tenet is following the lead of other publicly traded chains that have allied with academic medical centers to capitalize on the academic center's brand and clinical expertise.

The partnership with not-for-profit Yale New Haven will allow Tenet to develop integrated physician networks that it is prohibited from doing under Connecticut's broad corporate practice of medicine law, in a state that currently is dominated by not-for-profit hospitals. State law permits only not-for-profits to organize medical foundations that employ doctors.

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Discussions around a partnership began when Vanguard Health Systems, which Tenet acquired last October, began looking at hospital acquisitions in Connecticut. Prior to its own takeover, Vanguard had letters of intent in place with Waterbury (Conn.) Hospital; Bristol (Conn.) Hospital; and Eastern Connecticut Health Network, a two-hospital group with facilities in Manchester and Rockville.

The partnership allows Tenet and Yale New Haven to create a healthcare delivery network that will enable care coordination and the opportunity to participate in value-based payment contracts.

In addition, Yale New Haven will bring the clinical expertise and strong service lines that it is already known for, said Marna Borgstrom, president and CEO of the three-hospital system. One quality initiative, for instance, might focus on eliminating unnecessary variations in care.

Yale New Haven also will hold a minority stake in the hospitals Tenet acquires, including through future deals in the greater Northeast region. Tenet's portfolio includes three hospitals in Massachusetts, which it acquired through Vanguard.

But Yale New Haven doesn't necessarily have the same aspirations as its peer Duke University Health System. That Durham, N.C.-based system formed a joint venture with publicly traded LifePoint Hospitals in 2011 and has been rapidly buying medical centers not only in North Carolina, but as far away as Michigan.

“I wouldn't be that audacious,” Borgstrom said. “Sometimes a strategy can get out ahead of what really needs to be in place.”

The partnership also offers a legal way around Connecticut's corporate-practice-of-medicine law. While many states set restrictions on corporations directly employing doctors, most states allow physicians to be employed through a not-for-profit foundation created and governed by doctors. “The big difference in Connecticut is that the organizing member has to be a not-for-profit as well,” said Trip Pilgrim, senior vice president at Tenet. That's where Yale New Haven comes in.

The three hospitals to be acquired work mostly with independent community physicians. Without the partnership with a not-for-profit system like Yale New Haven, investor-owned Tenet was blocked by Connecticut's law from moving toward a physician employment strategy. “The goal is really to create a clinically integrated platform,” Pilgrim said.

Follow Beth Kutscher on Twitter: @MHbkutscher

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