Hartford Business Journal

20 Hartford Business Journal • January 5, 2015 www.HartfordBusiness.com OpiniOn & Commentary editorial Time to give busway a chance T he state is in the middle of a major PR push to make Connecticut residents and businesses aware that the controversial New Britain-to-Hartford busway is near- ing its inaugural 9.4 mile run. In March, the $567 million shuttle service will begin transporting residents from 10 stations starting in New Britain and coursing through Newington, West Hartford, and Hart- ford. The state Department of Transportation is projecting 13,000 rides a day, eventually growing to 15,000 rides by 2030. The busway will require a $10 million annual subsidy. The busway, of course, has been a hot political issue over the years, with some questioning the decision to invest hundreds of millions of state and federal tax dol- lars in a bus route. In fact, this very newspaper has printed op-eds that have slammed the busway concept. Some have argued it would have been wiser to invest that money in rail transportation. Was the busway the best use of taxpayer money? Maybe or maybe not, but at this point the issue is moot. The busway will become a reality in three to four months, and the region would be wise to leverage it for all its worth. That means businesses, particularly in downtown Hartford, should adopt policies that encourage employees to use the busway, and residents who are skeptical about its convenience should give it a try. If, at the very least, CTfastrak eases congestion along I-84, that will benefit com- merce in central Connecticut. On an early positive note, Hartford Business Journal news editor Gregory Seay recently reported that the busway is spurring interest in transit-oriented development along the Hartford-to-New Britain route. There are at least a half dozen actual or planned residential and commercial develop- ments situated within a mile or closer to the busway. Another half-dozen projects are said to be under consideration for development. The political rhetoric surrounding the busway has been quiet recently but will heat up once early ridership statistics are released. If the numbers fall flat, Gov. Malloy will face criticism. If more riders than expected use bus transit, Malloy gains a political victory. Either way, the busway should be given at least a year before it is judged a success or failure, or something in between. And since taxpayers footed the bill to build it, we'll all benefit if it's a success. n State's hospital-deal restrictions need explanation With the recent decision by Tenet Healthcare Corp. to pull out of its acquisitions of five Connecticut hospitals, it's time for the Office of Health Care Access (OHCA) or Gov. Dannel P. Malloy to explain why the 47 restrictions placed on the Waterbury Hospital deal were necessary. Those conditions, which required the appointment of an independent monitor, the freezing of pricing and staffing levels for five or more years, and the filing of strategic spending and hiring plans, mirrored some of the language initially included in bills proposed last legislative session to govern nonprofit to for-profit hospital conversions. Lawmakers agreed some of those restrictions were too onerous and passed a watered- down measure. Still, OHCA decided that Tenet's Waterbury Hospital purchase required more strin- gent oversight. The question is, why? Certainly, nonprofit to for-profit hospital conversions need close scrutiny, but it's hard to understand why Tenet was being asked to play by different rules than other Connecticut hospitals. At a time of rapid consolidation in the healthcare industry, Connecticut needs to have a fair and equitable legal framework in place to govern hospital mergers and acqui- sitions. Right now, it appears we don't have one. The focus of any requirements should be on preserving high quality and access to care, while at the same time pressuring hospitals to control costs. n rule of law Lawmakers must use actions, not words to make CT biz friendly By John M. Horak T he General Assembly recently created a "Commission on Connecticut's Leader- ship in Corporation and Business Law." The Commission's mandate includes some worthy specifics, and the more general charge of recommending policies to encourage busi- nesses to establish and maintain their head- quarters and operations in the state. The Com- mission has until Oct. 1, 2015, to develop and submit a 10 year "plan of action." While some of the specifics within the Commission's charter are non-controversial and make great sense (creating a special court for business liti- gation, for example), the more general objective of recommending policies to make the state more attractive to business may be anoth- er example of the "words vs. action" phenom- enon commonly seen in the political sphere. It works like this: The words the Com- mission will use in its Oct. 1 report are ones we already know, and what we really need is leadership capable of putting words into action. And what are the words we already know about making Connecticut business friendly? How about these nine: "Connecti- cut needs to put its balance sheet in order." Balance sheets are very efficient docu- ments. They com- press into a few pages a snapshot of what lies in an organiza- tion's past (how it has been managed) and what challenges lie ahead (how challeng- ing are management's tasks). In the same way that investors look at the balance sheets of businesses when making invest- ment decisions, busi- nesses look at the bal- ance sheet of a state when deciding to stay, move or expand. The state is the earth beneath a busi- ness's feet; and if the state's balance sheet is seriously asunder (which is the case in Con- necticut) the business knows that in some manner, shape or form, it will bear a part of the state's excess liabilities even if they arose long before the business entered the state. Recent comments from Office of Policy and Manage- ment Secretary Ben Barnes about "paying the price for 50 years of pension underfunding" speak for themselves. The "words vs. action" dichotomy plays out somewhat differently in the private sec- tor. When a business with an underwater bal- ance sheet has restless creditors knocking at the door, the "words" are typically found in a report of a "turnaround consultant" whose job is both to offer an opinion on how to fix the balance sheet, and more importantly to help the creditors determine if management has the ability to take the actions necessary to turn the business around. If there is a lack of confidence in manage- ment its members can be replaced, or supple- mented by an appointed crisis manager who takes over the reins. Of course, the ultimate management change takes the form of a bankruptcy court judge with sweeping powers to compel chang- es to the balance sheet. Political entities have purposes and func- tions much different than those of business entities (which is not to say they do not have a common interest in effective leadership, deliv- ering good services, and operating efficiently). In the political sphere, leadership is cho- sen and changed by electoral means. The results of Connecticut's November election are still warm to the touch, making this a con- venient time to segue back to the question at hand — is our management team (the legis- lative and executive branch members collec- tively) up to the task? Can these folks take actions that speak so loudly for themselves that additional words become unnecessary? I will hold my opinion on this question for the time being, and instead offer a standard by which we can measure their performance as we enter the next legislative session. It is a very high standard and one indigenous to Con- necticut in the sense that it was articulated by a gentleman named John Filer at a speech I was fortunate enough to hear many years ago at the University Club in Hartford. Mr. Filer was a major philanthropist and businessman (CEO and Chairman of Aetna from 1972 to 1984), and gen- erally as good and capable a human being as Connecticut has produced. The speech was entitled "Leadership in a Democracy," and it provided insight into the personal virtues and skills required to lead democratic organizations in which, unlike mon- archies or tyrannies, power is shared and everyone has an opinion and a vote. His words included humility, building trust, constructing consensus, reason, listen- ing, selflessness and, as important as any in times of fiscal crisis, the personal toughness to withstand with patience the anger that is always a consequence of hard decisions. With Mr. Filer's thoughts in mind I will observe the performances of our leaders in the 2015 General Assembly to see what they are able to deliver (or not). n John M. Horak has practiced law at Reid and Riege P.C. in Hartford since 1980. The views expressed are his own. HartfordBusiness.Com Poll Do you use a financial/investment adviser to manage your money? ● Yes ● No To vote, go online to HartfordBusiness.com. Last week's poll results: Was your business more profitable in 2014? 40% Yes 60% No John M. Horak ▶ ▶ In the same way that investors look at the balance sheets of businesses when making investment decisions, businesses look at the balance sheet of a state when deciding to stay, move or expand.

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