Hartford Business Journal

www.HartfordBusiness.com March9,2015•Hartford Business Journal 3 St. Francis Hospital in a deal-making mode By Greg Bordonaro gbordonaro@HartfordBusiness.com S t. Francis Hospital and Medical Center CEO Chris Dadlez is in an enviable posi- tion compared to many of his peers. While other hospital executives are scram- bling to find a merger partner following the departure of Tenet Healthcare, St. Francis is working several deals that will expand its geographic footprint in northeast Connecti- cut and make it one of the best capitalized hospitals in the state. The 682-bed nonprofit hospital recently agreed to acquire Stafford Springs' Johnson Memorial Medical Center and is awaiting regu- latory approval to merge with Michigan-based Trinity Health, a $14 billion Catholic care pro- vider that owns 86 hospitals across the country. Meantime, Yale New Haven Health System is quietly using St. Francis as an outpost to expand its reach into Greater Hartford, par- ticularly for cancer care. The Trinity deal could be a game-changer because it assures St. Francis a strong capital partner at a time of great economic uncertainty in the industry. The national hospital chain's promise to invest $275 million in St. Francis over five years, and make Hartford its New England headquarters, has also caught the attention of other Connecticut hospitals, Dadlez said. "My phone has actually been ringing off the hook [from hospital executives]," said Dadlez, who will become CEO of Trinity's New England operations. "They know we are in a good position." During a recent hour-long interview with Hartford Business Journal, Dadlez, sitting in a corner office within the medical center's Wood- land Street campus, explained the strategy behind St. Francis' recent deal-making and how its aims to secure the hospital's long-term future. Why Trinity? St. Francis' potential marriage with Trin- ity achieves several goals, Dadlez said. Although St. Francis isn't cash-strapped (it had a $14 million operating margin in fiscal 2014, making it one of the better performing hospitals in the state), Trinity's $275 million investment will relieve the hospital's debt and pension obli- gations, liabilities that have become problem- atic for many healthcare providers. St. Francis will also look to purchase more physician prac- tices, open new outpatient centers, and make other investments to expand its integrated care delivery network, Dadlez said. Trinity, Dadlez said, puts St. Francis in a better position to deal with a changing health- care landscape, in which hospitals are being asked to manage patients beyond their walls. That requires establishing deeper partner- ships with or acquiring primary, emergency, and post-emergency care providers to ensure patients have access to the best quality care in the correct, lowest-cost setting. Establishing those ties across the contin- uum of care will become particularly impor- tant, Dadlez said, as payment models shift away from fee-for-service, in which doctors are reimbursed for every test and procedure they perform, to a system that incentivizes pro- viders to keep patients healthy, and penalizes physicians if they aren't successful. With $14 billion in annual revenue and a double-A bond rating, Trinity has access to much more and cheaper capital than St. Fran- cis could get on its own, Dadlez said. For Trinity, the merger opens a stronger foothold in New England where it wants to expand its presence, said D. Scott Nordlund, Trinity's executive vice president of growth, strategy and innovation. St. Francis will anchor Trinity's East Coast operations, which also includes Springfield, Mass.-based Sisters of Providence Health Sys- tem, but other deals will likely follow, particu- larly in Connecticut, Dadlez said. Eastern Connecticut Health Network, which owns Manchester Memorial and Rockville Gen- eral hospitals, has already expressed interest in a merger, Dadlez said. St. Mary's, Waterbury, and Bristol hospitals are also looking for part- ners after their deals with Tenet Healthcare col- lapsed earlier this year. "The intent is to go after other opportuni- ties," Dadlez said. "There are plenty of options especially with Tenet leaving." ECHN spokeswoman Nina Kruse con- firmed that the nonprofit hospital operator has issued a request for proposals to merge with several organizations including St. Francis. "A partnership will allow ECHN to rein- vest in programs, providers, technology and facilities," Kruse said. "It will also allow us to benefit from the economic scale of a larger organization to reduce expenses as payments from the government continue to decline." Border Expansion One opportunity is Johnson Memorial Medical Center, which St. Francis has agreed to purchase out of bankruptcy. The 101-bed hospital has experienced significant financial Trinity Health Headquarters: Livonia, Mich. Geographic Reach: 21 States Revenue: $13.6 billion Operating Income: $119.6M Community Benefit Ministry: $900 million Discharges: 542,000 S o u r c e : T r i n i T y h e a l T h Continued COM P L ET E T H AT D EG R E E ! William Barnett, Ph.D. Dean of Graduate Studies Trinity College gradstudy@trincoll.edu http://gradstudy.trincoll.edu Degree completion rates in higher education have garnered much attention lately, with good reason. According to the most recent data from the National Student Clearinghouse, graduation rates are slowly climbing. Here are U.S. and Connecticut figures for all student types from 2014: Type of Institution U.S. Completion CT Completion 4-year public (starting + other) 60% 69% 4-year private (starting + other) 61% 80% 2-year public 40% 32% Further, a multitude of other studies confirm that income and employment prospects correlate very highly with degree completion regardless of field and for all degree levels. This is why we work very hard at Trinity College to help students finish their baccalaureate and master's degrees. In general, students who complete their degrees will enjoy a sense of accomplishment, greater confidence, and enhanced opportunities. THREE-YEAR FLAT TUITION RATE FOR M.A. STUDENTS St. Francis Hospital and Medical Center CEO Chris Dadlez has a lot to smile about now that his hospital found a merger partner in Michigan-based Trinity Health, but other industry trends, particularly reduced reimbursements from the state and federal government, still pose significant industry challenges. St. Francis has also partnered with Yale's Smilow Cancer Hospital, shown to the right, which will bring its cancer research and clinical trials to Hartford. P h o T o | c o n T r i b u T e d P h o T o | h b J F i l e

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