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Gov. Rell Rejects UConn, Hartford Hospital Proposal

ARIELLE LEVIN BECKER

March 17, 2009

Gov. M. Jodi Rell on Monday dealt a critical blow to the University of Connecticut's plan for a new $475 million hospital and partnership with Hartford Hospital, calling the proposal promising but unaffordable.

"As interesting as the proposal is I cannot give it my support," Rell wrote in a letter to the leaders of the legislature's higher education committee, which is scheduled to take up the issue today.

Without Rell's support, the project has little chance of moving forward. She controls the agenda for the State Bond Commission, which would need to approve bonding for the proposed hospital, and would need to sign off on any legislative approval for the proposal.

Rell based her position on an analysis by the state Office of Policy and Management, which raised concerns about the cost as well as qualms about workforce issues and a lack of state control over the partnership. The plan would cost the state $50 million a year in debt service for the new hospital and $13 million in annual labor costs, according to the analysis.

"In light of the current economic climate and the enormous budget deficit the state must confront in Fiscal Years 2010 and 2011, I feel we cannot in good conscience make such a large financial commitment," she wrote. "In short, this is an intriguing proposal but we simply cannot afford it at this time."

Still, Rell wrote, state officials should reconsider the issue once the economic picture improves and the other concerns are resolved.

But UConn President Michael Hogan, who has touted the proposal as a necessary solution for the Health Center's financial woes, warned that the choices facing the Health Center will be severe.

The university can continue to seek state funding to cover the Health Center's deficits, which Hogan projected to increase to more than $20 million in the coming years. Or, if state officials do not provide that funding, Hogan said, UConn would be forced to pursue a "massive and immediate" reconfiguration of John Dempsey Hospital, likely losing its public service mission.

He said he understood the financial challenges Rell faces, but said doing nothing would cost more.

"By saying no at this point, we almost certainly will lose any prospect for a partnership and, in the meantime, drop our public service missions or throw more good money after bad," he said.

The proposed partnership would create a "University Hospital" with campuses in Farmington and Hartford. Hartford Hospital would assume responsibility for the Health Center's deficits. But the state would be responsible for the cost of building the new hospital and for an estimated $13 million a year in labor costs.

UConn officials pitched the proposal as a potential economic engine for the area, citing a study by the Connecticut Center for Economic Analysis at UConn that projected that the plan could create 18,200 jobs and $3.28 billion in new individual income by 2040.

But the proposal faced strong opposition, too. Unions representing Health Center workers raised concerns about what the merger would mean for workers and for the Health Center. Leaders of St. Francis Hospital and Medical Center in Hartford and Bristol Hospital argued that a new, state-financed hospital in Farmington could lure away privately insured patients, hurting the two hospitals financially.

OPM Secretary Robert Genuario warned in a letter to Rell that the debt service the state would take on by paying for a new hospital "will crowd out other important state programs and initiatives."

Genuario noted that the state has authorized $2.3 billion in capital investments for UConn and the Health Center in recent years, and that the university should consider reallocating some of the $827 million that has not been spent. "UConn needs to consider this new project as a part of a re-prioritization of the existing generous commitments rather than simply requesting more funds as though there is no limit to the amount of debt service the taxpayers can afford," Genuario wrote.

Alternatively, he wrote, UConn should consider partnering the medical school and research facilities with existing private hospitals, rather than building a state-financed hospital.

Hogan has rejected that idea, saying that having its own hospital is key to attracting and retaining faculty and to maintaining a high-quality medical school.

But critics, including Senate Republican Leader John McKinney of Fairfield, say that model could work. "I don't believe a brand new John Dempsey Hospital is the only way to have a successful UConn medical school," McKinney said Monday.

McKinney hopes that top officials from John Dempsey and Hartford hospitals will now come up with a creative solution to solve the problems at the Health Center. "I don't think they fully examined their options outside of building a new hospital," he said. "They've been focused on a new hospital solution to the exclusion of a non-new-hospital solution, for lack of a better term."

Courant Capitol bureau chief Christopher Keating contributed to this story.