Hartford Business Journal

14 HARTFORDBUSINESS.COM | DECEMBER 1, 2025 its outlook to negative, citing continued operating losses and the financial demands of large construction projects, including a new $838 million neurosci- ence tower in New Haven. Even so, S&P said Yale New Haven Health's substantial liquidity and strong patient demand provide meaningful stability as the system works to restore healthier margins. Retirement program Part of the struggle in balancing the organization's finances, O'Connor said, is trying to manage rising costs without shifting them onto employers and patients. The system's hospitals — partic- ularly Yale New Haven and Bridge- port — function as "safety net" institutions, meaning they treat a disproportionate share of unin- sured and destitute patients in their emergency departments. "We've absorbed a lot of that (cost), and in doing so it's created some oper- ating losses," he said. In response, Yale New Haven has "done a lot of things we've never done before, like initiate a voluntary retire- ment program," O'Connor said. Announced in July, the program resulted in 600 employees accepting the offer — a figure O'Connor shared publicly for the first time. Most employees who opted in left in September, though some will remain until year's end due to an expected visit by the Joint Commission, the nonprofit that accredits healthcare organizations. O'Connor said the system will likely hire about 400 employees to replace those who left. Even with that partial backfilling, Yale New Haven Health expects to save about $50 million from the program, both by reducing its workforce by roughly 200 positions and lowering salaries and benefits for new hires who replace longtime workers. Internal assessment The retirement offer came after the health system announced in March that it was redesigning its operating model, including how its inpatient care and ambulatory operations are structured. At the time, officials said the reorganization would affect management and administrative roles as the system consolidates its leader- Yale New Haven Health's new $838 million neuroscience tower under construction in New Haven. Contributed Photo 'Volatile Period' Yale New Haven Health CEO O'Connor details tough year, restructuring and plans for recovery By David Krechevsky davidk@hartfordbusiness.com Y ale New Haven Health System CEO Christopher O'Connor likes to joke that he's "living the dream." But he quickly concedes that the past year has been a bit more night- marish than dreamy. "It just feels like there are constant challenges and curveballs being thrown our way," he said during a recent exclusive interview with Hartford Business Journal. O'Connor describes Yale New Haven Health (YNHHS) as a "resilient organization" focused on serving the community, but acknowledges the "economic environment is getting tighter and tighter." Prescription-drug prices and equipment costs keep rising. Federal research funding is shrinking. Patient subsidies and tax credits tied to Affordable Care Act insurance plans have been reduced. And Medi- care and Medicaid reimbursement rates remain low. "The headwinds are strong," O'Connor said. "It's a volatile period." Yet, those aren't the only reasons the past year has been unsettling. YNHHS also: • Reached a settlement in September to exit its long-de- layed attempt to buy Waterbury, Manchester Memorial and Rock- ville General hospitals, agreeing to pay Prospect Medical Holdings $45 million — about 10% of its original $435 million bid. • Agreed to pay $18 million to resolve claims tied to a March data breach. • Continued work on a system reor- ganization that included a voluntary retirement program for employees 65 and older with at least 10 years of service, and adjustments to multiple C-suite roles. All of that translated into a $40 million net operating loss through the end of the third quarter for the 2025 fiscal year. Even still, O'Connor says Yale New Haven is well-positioned to with- stand the turbulence while staying focused on long-term growth, partic- ularly in central Connecticut. "We've had such tremendous AT A GLANCE Yale New Haven Health System Industry: Health Care Founded: Yale New Haven Hospital founded in 1826; the health system in 1995 Top Executive: Christopher O'Connor, CEO HQ: 789 Howard Ave., New Haven Hospitals: Bridgeport, Greenwich, Lawrence + Memorial in New London, Yale New Haven Hospital, Westerly in Rhode Island 2024 Operating Revenue: $7.2 billion Employees: 29,486 employees and 7,569 medical staff Yale New Haven Health CEO Christopher O'Connor says the hospital is in a position financially to absorb recent losses. Contributed Photo success at Yale New Haven over a long period of time, we were in a position to absorb that volatility," he said. "Our balance sheet remains strong. We have the strongest balance sheet in the state." 'Stabilization journey' Yale New Haven Health has produced sizable deficits for three out of the last four fiscal years. The lone exception was fiscal 2024, when the system reported a $46.2 million surplus — a sharp reversal from losses of $240.3 million in 2022, and $162.3 million in 2023. But O'Connor said that surplus was driven largely by a one-time $100 million settlement tied to the federal 340B Drug Pricing Program, which allows hospitals serving large numbers of low-income patients to buy certain outpatient drugs at steep discounts. "A discount was applied inappropri- ately by the Centers for Medicare and Medicaid Services, and therefore they were underpaying us," O'Connor said. While the 2025 deficit will be sizable, O'Connor said he expects Yale New Haven Health, which generated $7.2 billion in operating revenue in fiscal 2024, to return to positive operating results in fiscal 2026, projecting a $50 million surplus. "I'm confident in the steps that we've taken that we will hit our budget this year and continue that stabilization journey," he said. Outside analysts have reached similar conclusions about the system's financial pressures. In a May report, Fitch Ratings affirmed Yale New Haven Health's A+ credit rating and said the system remains financially solid thanks to its sizable cash reserves and strong position in Connecticut's healthcare market. Fitch described 2025 as a "transition year," noting that higher labor costs, inflation and slower-than-budgeted patient volumes continue to strain operations. But the rating agency also said it expects gradual improvement as Yale New Haven's restructuring efforts and major capital projects move forward. S&P Global Ratings took a slightly more cautious view in an assessment released this fall. The agency main- tained YNHHS' AA- rating but revised

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