Residents from different communities in primarily rural northeastern Connecticut gathered outside Day Kimball Hospital on Monday, July 18, 2022, in Putnam, Conn., to stage a protest. These concerned individuals are rallying against Day Kimball Healthcare’s intention to affiliate with Covenant Healthcare, a Catholic health system that follows the directives set by the U.S. Conference of Catholic Bishops. The protesters fear that this affiliation may have an impact on the healthcare services provided by Day Kimball Hospital.
State lawmakers are becoming increasingly concerned about the closure of hospitals and the potential for higher costs for patients. As a result, they are taking action to address these issues by scrutinizing potential health care mergers. In some cases, lawmakers have successfully stopped deals that they believe are not in the best interest of the public.
Financially strapped hospitals frequently seek mergers or acquisitions with other systems. Over the past two years, there has been a steady increase in health care mergers and acquisitions following a slowdown during the pandemic. However, several proposed hospital deals in Connecticut, Louisiana, Minnesota, and other locations have failed to materialize due to strong opposition from lawmakers, organized labor, and grassroots organizations.
According to Becker’s Hospital Review, there were at least 10 healthcare “megadeals” that were called off or unwound last year. These cancellations were partly attributed to increased oversight in the industry.
Minnesota Attorney General Keith Ellison, a Democrat, expressed concern about the declining state of healthcare transactions in certain areas. He highlighted instances where promises were made but not fulfilled, resulting in the closure of clinics, increased prices, and reduced access to healthcare services.
In late 2022, while Ellison was actively campaigning for reelection, he received news of Fairview Health Services’ plans to merge with Sanford Health, a larger health care system based in South Dakota.
The Minnesota Democratic legislators, nurses unions, University of Minnesota leaders, and community groups strongly criticized the proposed deal. They expressed concerns about the potential use of Minnesota tax dollars to fund the University of Minnesota Medical Center, which is owned by Fairview. There were also worries about the creation of a local healthcare monopoly as a result of the merger, which could lead to reduced services and increased costs for patients.
“We’ve witnessed instances across the country where certain healthcare transactions have been accompanied by a plethora of promises. However, upon closer examination, we discover that clinics are shuttering, prices are skyrocketing, and accessibility is dwindling.”
Minnesota Democratic Attorney General Keith Ellison
During the Fairview-Sanford deal, Ellison’s office conducted public listening sessions throughout the state. Although Fairview and Sanford officials argued that the merger would lead to an expansion in care and some residents voiced their support for the deal, the general sentiment from stakeholders was predominantly negative, as Ellison remembers.
In May 2023, Democratic lawmakers took action by passing a bill that effectively prohibits anti-competitive health care mergers and enhances state oversight of potential deals. This significant legislation was promptly signed into law.
Sanford Health ultimately decided to call off the merger two months later, citing the lack of support from certain Minnesota stakeholders.
Financially struggling hospitals
In March 2023, Massachusetts-based Covenant Health decided to cancel its plan to acquire a smaller, struggling healthcare system in the rural northeast corner of Connecticut. According to consultancy KaufmanHall, over a quarter of healthcare deals announced in the United States last year involved a financially distressed partner.
Community groups came together to protest the deal, expressing their concerns that the takeover by Covenant could result in reduced access to reproductive care and other essential services. Covenant, being a Catholic system, adheres to a set of guidelines known as the Ethical and Religious Directives for Catholic Health Care Services. These directives prohibit the system from offering certain types of healthcare, including emergency contraception, fertility services, gender-affirming care, abortion, and certain end-of-life care.
Connecticut State Representative Jillian Gilchrest, a Democrat, expressed her concerns regarding a Catholic-affiliated health care institution that adheres to Catholic directives. She emphasized that her worries stemmed from the limited health care options already present in the region, particularly after the closure of a nearby Planned Parenthood clinic.
Women in the northeast corner of Connecticut faced a worrying lack of access to reproductive health care.
A sense of concern swept through the local community as the possibility of losing their hospital loomed with Covenant’s impending takeover. However, amidst the unease, a coalition of individuals emerged, determined to challenge the proposed acquisition and urged the state to reject it. Among those taking a stand was Gilchrest, who, alongside 15 fellow Democratic state legislators, affixed their signatures to a letter expressing opposition to the deal.
Unfortunately, it failed to materialize a few months later.
In a statement announcing the cancellation of the deal, Covenant President/CEO Steve Grubbs expressed that the affiliation was no longer financially viable.
In a statement released shortly after the announcement, Day Kimball Healthcare CEO R. Kyle Kramer expressed disappointment with Covenant’s decision not to acquire the system.
“We are actively seeking the most optimal course of action for Day Kimball and eagerly anticipate collaborating with local and state officials. We are also open to exploring conversations with other potential partners to ensure the preservation of vital hospital services in the northeastern Connecticut community,” stated Kramer.
Gilchrest expressed her hopes that Connecticut lawmakers would take further actions in safeguarding the services that are being eliminated as a result of certain hospital mergers, with a specific focus on women’s health services.
“I’m afraid that we haven’t made significant progress yet,” she expressed to Stateline. “Due to numerous mergers, we are witnessing the continued closure of vital services such as labor and delivery units, particularly impacting women’s reproductive health care in Connecticut.”
More pushback
In Louisiana this year, state lawmakers and community groups successfully halted the proposed $2.5 billion sale of the nonprofit Blue Cross and Blue Shield of Louisiana to for-profit insurance giant Elevance Health. Blue Cross had justified the proposed sale by claiming that it would assist the nonprofit insurer in curbing the escalating healthcare expenses and enhancing its competitiveness against national competitors.
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In a recent development, the state senators of Louisiana have submitted a comprehensive report to the state insurance commissioner. The report highlights numerous concerns regarding the fairness of the deal, as well as alleged attempts by Blue Cross to influence the votes of policyholders. Additionally, the report sheds light on Elevance’s troubled history, which includes fines, penalties, lawsuits, and premium increases. It is worth noting that the Louisiana Hospital Association, along with other medical groups and the state treasurer, has expressed opposition to this deal.
Louisiana state Senator Jeremy Stine, who belongs to the Republican party, has announced his intention to introduce a bill during the current legislative session. The bill aims to establish certain consumer protection standards that must be met before allowing deals like the proposed sale of Blue Cross to go into effect.
State Senator Mike Stine expressed his concerns about the potential repercussions for Louisiana’s healthcare system in response to the proposed sale of Blue Cross Blue Shield to Elevance Health. Stine emphasized the importance of considering the impact on the state’s healthcare landscape.
“We aim to prevent any undue influence, personal gain, or hasty decision-making that could compromise the health and well-being of our community by implementing these safeguards.”
In Minnesota, the attorney general’s office has already examined almost twelve healthcare transactions since the passage of the new law less than a year ago.
According to Elizabeth Odette, the manager of the antitrust division at the Minnesota Attorney General’s office, prior to the enactment of this law, they were not provided with advance notice of a merger or any other transaction unless the parties involved voluntarily disclosed the information.
“There were instances where our options for taking meaningful action were limited, especially when the parties involved had not yet finalized the transaction.”
According to the spokesperson, the stronger law has provided an opportunity for their office, as well as the public and the parties involved, to have more time to carefully evaluate the potential consequences of a significant merger.
Stateline is a nonprofit news network called States Newsroom. It is supported by grants and a coalition of donors as a 501c(3) public charity. Stateline maintains its editorial independence. For any questions, you can contact the editor, Scott S. Greenberger, at [email protected]. You can also follow Stateline on Facebook and Twitter.
