Hartford Business Journal

22 HARTFORDBUSINESS.COM | FEBRUARY 5, 2024 Dr. Robert Roose is the president of Johnson Memorial Hospital. PHOTO | CONTRIBUTED Joint Venture Johnson Memorial Hospital eyes $17.8M Enfield surgical center, to be partially owned by physicians Value proposition Johnson Memorial's new building, called the Ambulatory Care Center, is set to be completed in May and go live this summer. The existing Enfield surgical center, which is located on the same campus, has four licensed operating rooms but "is outdated and outliving its useful lifespan," the hospital said. The new facility will have four state- of-the-art operating rooms and two recovery rooms, although only three operating rooms would function at the start, with the fourth "coming online as demand increases," the hospital said. Johnson Memorial "has operated an ambulatory surgical center in Enfield for several decades," said hospital President Dr. Robert Roose in an interview with the Hartford Business Journal. The modernized facility, he said, will expand and enhance the care the hospital can provide, and comple- ment industry trends of shifting less-serious, lower-risk inpatient surgical cases to outpatient facilities, and forming joint ventures between physicians and hospitals. Partial ownership will incentivize participating physicians to "provide low-cost, high-quality care to patients, thus resulting in a value-driven opera- tion," the hospital said. In surgical centers where surgeons and hospitals are part owners, Roose added, "you can deliver care in a way that's going to be the highest standard, but also in a way that is the most efficient utilization of resources, which can keep the costs down for the patients and overall community." Participation in the joint venture does not require physicians or surgeons to be part of practices owned by Trinity Health Of New England, Roose said. "We are in the process of engaging private and employed surgeons and physicians from the community," he said. "As we create the organization that will be managing the center, we will have more information as it develops." Jeffrey Hogan, president of Farmington-based Upside Health Advisors and a healthcare consul- tant, said converting a surgical center to an outpatient facility partially owned by physicians makes sense as a way to reduce the cost of care. "There are only a certain number of specialists who do these things, and they're attracted to ownership," Hogan said. "They want skin in the game." He said physicians and surgeons also benefit because they get "predictable lower costs for high-volume services." The decision, he added, reflects the fact that hospital systems now realize that "a lot of treatment is going out of the hospitals, because hospital prices have been consistently rising by double digits." In order to stay competitive and maintain some of that revenue, hospitals "have to offer an attractive business case to attract surgeons," By David Krechevsky davidk@hartfordbusiness.com A fter completing a $6 million renovation and reopening its cancer center in Enfield last summer, Johnson Memorial Hospital has proposed a more than $17 million upgrade to its nearby surgery center that would include making it an outpatient facility partially owned by physicians. The proposal is part of a larger $40 million investment in Johnson Memorial's Enfield campus, and it reflects elements of a value-based care model that aims to lower costs and improve patient outcomes, officials said. According to a project application filed with the state Office of Health Strategy, which needs to approve the plans, Johnson Memorial wants to convert its existing Enfield surgical facility operations from a hospi- tal-based outpatient department to a freestanding outpatient surgical facility located on the second floor of a $17.8 million, 43,200-square- foot medical office building already under construction on the Hazard Avenue campus. In addition, Johnson Memorial, which is owned by Trinity Health Of New England, would transfer ownership of the surgical center to a new joint venture, called the Enfield Surgery Center. Trinity Health Of New England would hold a 51% stake, while physicians would own the remaining 49%. Trinity Health identified Greater Enfield as a key market in which to expand and modernize its ambulatory services, according to the project application, known as a certificate of need. Based on that, the organi- zation undertook a "refresh" of the Enfield campus, including renovating its Karen Davis Krzynowek Cancer Center and constructing a new surgical center. Many health systems in Connecticut and nationwide have been shifting non-emergency care out of hospitals to lower-cost urgent care or outpatient surgery centers. The trend has led hospital operators, like Trinity Health, Hartford Health- Care and Yale New Haven Health, to open new or acquire stakes in existing surgical centers. Other companies, like insurers and private equity firms, have also been investing in freestanding, outpatient surgical centers, which are seen as future growth engines. Johnson Memorial, which has its main campus in Stafford, projects its modernized Enfield surgery center will perform over 5,000 procedures during its first full year of operation, and more than 6,000 by its third full year. In fiscal year 2022, the hospital reported $65.8 million in operating revenue and an operating loss of $13.3 million, according to the Office of Health Strategy. Johnson Memorial Hospital operating performance FISCAL OPERATING OPERATING INCOME YEAR REVENUE (OR LOSS) 2019 $79,558,000 $9,888,000 2020 $85,351,000 $11,346,101 2021 $77,054,000 -$1,561,002 2022 $65,792,000 -$13,297,000 Source: CT Office of Health Strategy

• Cover