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Hospital Plan: Iffy Prognosis

March 1, 2007
By CHRISTOPHER KEATING, Capitol Bureau Chief

A growing bipartisan chorus of legislators is questioning whether the General Assembly should approve the University of Connecticut Health Center's request for a new hospital in Farmington.

The legislators say they have not yet seen enough justification for a new, 352-bed facility that area hospitals complain would drain patients from throughout the region.

But that is just the first obstacle the university may face. The overriding issue at the legislature may be that some lawmakers are hesitant to approve another major project for UConn, given that the state has already earmarked $2.3 billion to renovate and expand the state's flagship university.

What's more, the request for the hospital comes at the same time as UConn's recent request for what is, in effect, a second bailout in seven years, to cover a projected $21 million health-center deficit for the fis- cal year ending June 30.

House Speaker James Amann, D-Milford, said another problem is that the state's struggling hospitals have been complaining that reimbursement for patients on Medicaid and other government programs are so low that, collectively, the hospitals face potential losses this year of $280 million.

"We need to address that problem first before we start talking about a new hospital," Amann said in an interview. "With $280 million in the hole, this is not the year to be discussing [a new hospital]. I'm more concerned about keeping the hospitals we've got instead of building a new one."

Gov. M. Jodi Rell has not taken a position on the new hospital or on a request from UConn for an increase in annual subsidies, but budget director Robert Genuario said that his team is studying the numbers closely and is willing to speak with UConn officials. As a legislator in 2000, Genuario supported the $20 million bailout the health center received that year, but he recalls that UConn pledged then that "we'll right the ship, and we won't need to come back" for more money.

"We can't have them coming back for $20 million every seven years," Genuario said.

Based on the widespread support for UConn's basketball teams statewide and the number of legislators who are alumni, UConn traditionally holds a built-in cheering section in the General Assembly. Fourteen of the 36 state senators and more than 30 members of the House of Representatives hold UConn degrees.

But even among some alumni, the plan for a new hospital raises questions.

"I'm sort of dumbfounded that they would suggest they need $500 million for a new hospital," said deputy Senate Republican leader John McKinney of Fairfield. "The current hospital runs at a deficit. How are they going to pay off the bonds? It's bad policy."

McKinney, a UConn Law School graduate, said the legislature must carefully study the potential repercussions in the Hartford area.

"You're also talking about crippling St. Francis and Hartford Hospital," McKinney said. "The state shouldn't be in the business of crippling those hospitals."

McKinney said UConn has benefited from taxpayers' money far more than other state entities. Since the UConn 2000 program was approved in 1995, state taxpayers have funded 87 major projects and more than 9 million square feet of new and renovated construction. With interest on the bonds, the total cost will be more than $4 billion.

"At some point, you have to say, `Enough is enough,'" McKinney said.

The health center, a multifaceted entity with 5,200 employees, consists of John Dempsey Hospital and three major schools: a 320-student medical school, a 160-student dental school and a 380-student graduate school in bio-medical sciences. The center is also involved in more than $90 million worth of research annually, in areas like stem cells and cancer vaccines.

UConn stressed that a new facility would not cost taxpayers any new money. It's asking the legislature to place the new hospital on the list of "named projects" under the UConn 2000 legislation, which would allow university trustees to transfer $45 million that has already been earmarked for the health center. The state would need to back about $400 million in bonds that UConn says it would repay annually with hospital revenues. The rest of the money for the new hospital, university officials say, would come from private fundraising.

Hospital officials reject the arguments that other hospitals would be damaged financially by a new, larger facility.

"We don't believe that the replacement hospital would have a negative impact on anyone," said Jim Walter, a UConn spokesman. "We see it as growth, not stealing patients from anyone.

"We are not asking the state for any new dollars to fund this project. ... People have this misconception we have a blank check with the state of Connecticut. That's not the case with the hospital."

UConn officials have also stressed that although the health center as a whole receives state money for academic programs, John Dempsey Hospital itself receives no state funding.

The health center's longtime leader, Dr. Peter J. Deckers, told lawmakers last week that the 224-bed Dempsey Hospital generates insufficient income to balance the books.

During the past five years, according to UConn officials, Dempsey has used its profits of $19.3 million to support the medical and dental schools, instead of investing in the hospital itself. What's more, they say, the hospital has also underwritten "unprofitable" inpatient services for prisoners from the Department of Correction.

Despite its suburban location, Dempsey ranks fifth in the state for the most patient days that are paid for by Medicaid, which traditionally pays only about 70 percent of treatment costs. Overall, 22.3 percent of the total "patient days" at Dempsey are paid by Medicaid, surpassed only by Connecticut Children's Medical Center, Yale-New Haven Hospital, Bridgeport Hospital and St. Francis Hospital and Medical Center. The statewide average is 17.9 percent.

One of UConn's top legislative supporters, Rep. Denise Merrill, D-Mansfield, said the legislature must not lose sight of the state's support for the academic mission.

"It's imperative that we keep our medical school healthy," Merrill said. "It needs to be our first goal. We rely on the UConn Health Center - the dental school - to provide most of the dental care for children on Medicaid. A lot of them are complex dental cases that no one else will take on."

UConn has one of the smallest medical schools in the nation, and the 224-bed hospital is less than one-third the size of Hartford Hospital. With about 165 average daily patients, Dempsey ranks far behind the 444-patient census average at St. Francis and 621 daily patients at Hartford Hospital, according to the Office of Health Care Access, which must approve any construction at UConn. But Dempsey says it has only 108 "flexible beds" that would be available for an appendix-surgery patient, for example, because that patient could not be placed in any of the beds set aside for neo-natal, psychiatric and prison-inmate needs. As such, Merrill and other lawmakers say that only a comprehensive analysis will determine how many hospital beds the region needs.

"Can't all these hospitals get together and figure out the most efficient solution?" Merrill asked. "I do think we need a study."

Lawmakers said they expect support for the hospital from the Democratic-controlled appropriations committee, led by Merrill and Democratic Sen. Toni Harp, a longtime health care advocate in New Haven.

Besides maintaining that the small size of its current hospital is an obstacle to breaking even financially, health center officials argue further that their bill for employee benefits is much higher than that of other hospitals.

The health center says it pays benefit rates of 40.9 percent to its employees, far above the average hospital rate of 27.4 percent. This costs Dempsey an estimated $10.5 million more than other hospitals, officials say. For example, a person earning $100,000 per year would also receive pension, health care and other benefits worth about $41,000.

The health center has five retirees drawing more than $170,000 per year each. There are also 20 health center employees who earn more than $260,000 each, according to the latest records released by the state comptroller's office.

Some legislators believe that UConn's arguments, and the special place the school holds in the hearts of many in the legislature, may not outweigh recent history.

The $20 million bailout the legislature approved in 2000 occurred amid criticism and calls for greater financial oversight from the state auditors.

Lawmakers at the time said the fiscal situation was worse than they expected and that even financial professionals at the legislature's nonpartisan fiscal office had trouble following the money trail.

Rep. Christopher Caruso, a Bridgeport Democrat and veteran legislator, said the General Assembly needs to put on the brakes.

"It doesn't mean that every time they want a new toy that we're supposed to jump through hoops and get it for them," Caruso said. "UConn has to realize that they are part of the state. They are not a separate island."

Caruso says lawmakers should be concerned about the widespread fire and building code violations on the university's Storrs campus that came to light during construction of the UConn 2000 projects.

"We've put so much money into UConn over the years, and we've seen a lot of abuse take place," Caruso said. "I think we need to catch our breath. The new construction has been shoddy at best. I'm very hesitant when I hear UConn talk about new buildings and new structures."

Aware that "this wouldn't be easy," Walter, the school spokesman, said UConn continues to be optimistic about a long-term plan that will take months at the legislature and then at least another six months for approval from the state Office of Health Care Access.

"We know," he said, "we can't take our foot off the gas pedal."