Skip to main content
Sister Publication Links
  • ESG: THE IMPLEMENTATION IMPERATIVE
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Current News
    • Providers
    • Insurance
    • Digital Health
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Transformation
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Unwell in America
  • Opinion
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Excellence in Governance
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top 25 Innovators
    • Diversity in Healthcare
      • - Luminaries
      • - Top 25 Diversity Leaders
      • - Leaders to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Digital Health Transformation Summit
    • ESG: The Implementation Imperative Summit
    • Leadership Symposium
    • Social Determinants of Health Symposium
    • Women Leaders in Healthcare Conference
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Diversity Leaders Gala
    • Top 25 Women Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Hospital at Home
    • - Workplace of the Future
    • - Digital Health
    • - Future of Staffing
    • - Hospital of the Future (Fall)
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
  • Data Center
    • Data Center Home
    • Hospital Financials
    • Staffing & Compensation
    • Quality & Safety
    • Mergers & Acquisitions
    • Data Archive
    • Resource Guide: By the Numbers
    • Surveys
    • Data Points
  • MORE+
    • Contact Us
    • Advertise
    • Media Kit
    • Newsletters
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Finance
March 08, 2014 12:00 AM

Tenet affiliation with Yale New Haven eases entry into Northeast

Beth Kutscher
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    More deals ahead? “I wouldn't be that audacious. Sometimes a strategy can get out ahead of what really needs to be in place.”—Marna Borgstrom, President and CEO, Yale New Haven Health System

    Tenet Healthcare Corp.'s partnership with Yale New Haven Health System, New Haven, Conn., signals growing opportunities for investor-owned chains in the Northeast region, which has been reluctant to welcome for-profit healthcare. But the new affiliation also highlights state regulators' unease with for-profit operators and other market-driven changes as providers buy more physician practices and assume more financial risk for patient outcomes.

    “The reality of the marketplace is that we are moving to a point of mergers and consolidation,” said Angela Mattie, an associate professor of management at Quinnipiac University in Hamden, Conn. “It's less about who's delivering care and more about what the care is and are we delivering the best value possible.”

    Like many states in New England and the mid-Atlantic region, Connecticut has tried to limit corporate influence in healthcare. Its broad corporate-practice-of-medicine restrictions on who can employ doctors have been a barrier for companies like Dallas-based Tenet that are moving toward integrated delivery networks and risk-based payment.

    Discussions around a partnership with Yale New Haven began when Nashville-based Vanguard Health Systems, which Tenet acquired last October, began looking at hospital acquisitions in Connecticut. Letters of intent currently are in place with Waterbury Hospital, Bristol Hospital, and the Eastern Connecticut Health Network, a two-hospital group with facilities in Manchester and Rockville.

    As the industry moves toward narrow provider networks and risk-based payments, joint ventures and other partnerships will be one way for providers to position themselves in the new operating environment, said Keith Pitts, Tenet's vice chairman.

    Tenet's partnership with Yale New Haven will help create a healthcare delivery network facilitating care coordination and participation in value-based payment contracts. 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. In addition, Yale New Haven will hold a minority stake in other hospitals Tenet acquires, including future deals in the greater Northeast region.

    For Tenet, the deal provides a way around Connecticut's broad corporate-practice-of-medicine law. While many states restrict corporations from directly employing physicians, most states allow doctors to be employed through a not-for-profit foundation created and governed by doctors. But in Connecticut, the organizing entity has to be not-for-profit as well, said Trip Pilgrim, senior vice president at Tenet. That's where Yale New Haven comes in.

    The growing trend of physician employment has been controversial in Connecticut. In a November opinion piece in the Hartford Courant, state Attorney General George Jepsen cautioned against a repeal of the state's corporate-practice-of-medicine law.

    Even allowing not-for-profit providers to form medical foundations has “resulted in the aggressive acquisition of physician practices by nonprofit hospitals,” he wrote. “Hospital-affiliated practices can negotiate higher rates than independent physician practices, charge separate 'facility fees,' drive out competition in particular markets and provide care in areas where more patients are covered by higher-paying commercial health insurance policies.”

    MH Takeaways

    The Yale New Haven deal provides a way around Connecticut's corporate-practice-of-medicine law, allowing Tenet to align with employed physicians.

    There also are concerns about physician consolidation and providers taking on greater financial risk, said Ellen Andrews, executive director of the Connecticut Health Policy Project. “It's a real shift in the players and the doctor incentives,” she said. “There's a lot of anxiety about it and the Legislature is definitely looking at it.”

    Tenet still must receive approval for its three Connecticut hospital acquisitions. Given there has only been one other for-profit conversion in Connecticut, “we'd expect the completion of this deal to be drawn out into the second half of 2014,” Deutsche Bank analyst Darren Lehrich wrote in a research note. But if approved, Tenet would be a consolidator in an otherwise fragmented southern New England market, he added. Tenet, through Vanguard, already owns three Massachusetts hospitals.

    Tenet isn't the first publicly traded chain to ally with an academic medical center to capitalize on an academic organization's brand and clinical expertise. Last year, Community Health Systems formed such a partnership with the Cleveland Clinic—combining its operations strength with Cleveland Clinic's expertise in clinical programs like cardiovascular care. Joint acquisitions also will be part of that deal.

    But Borgstrom said Yale New Haven doesn't necessarily have the same aspirations as its peer Duke University Health System. The 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.”

    Follow Beth Kutscher on Twitter: @MHbkutscher

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    sutter_i.jpg
    Sutter Health lost $249M in 2022 in reversal of fortune
    money arrows decrease down 2
    Bon Secours Mercy Health's 2022 losses exceed $1 billion
    Most Popular
    1
    More healthcare organizations at risk of credit default, Moody's says
    2
    Centene fills out senior executive team with new president, COO
    3
    SCAN, CareOregon plan to merge into the HealthRight Group
    4
    Blue Cross Blue Shield of Michigan unveils big push that lets physicians take on risk, reap rewards
    5
    Bright Health weighs reverse stock split as delisting looms
    Sponsored Content
    Daily Finance Newsletter: Sign up to receive daily news and data that has a direct impact on the business and financing of healthcare.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • Providers
      • Insurance
      • Digital Health
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Unwell in America
    • Opinion
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top 25 Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Hospital at Home
        • - Workplace of the Future
        • - Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • Data Center
      • Data Center Home
      • Hospital Financials
      • Staffing & Compensation
      • Quality & Safety
      • Mergers & Acquisitions
      • Data Archive
      • Resource Guide: By the Numbers
      • Surveys
      • Data Points
    • MORE+
      • Contact Us
      • Advertise
      • Media Kit
      • Newsletters
      • Jobs
      • People on the Move
      • Reprints & Licensing