Issue link: https://nebusinessmedia.uberflip.com/i/687858
www.HartfordBusiness.com June 6, 2016 • Hartford Business Journal 29 OTHER VOICES CT should create highway trust fund By Joseph R. Sculley I n the 2016 legislative session, the legisla- ture considered creating a "lockbox," a proposal that would have amended the Connecticut Constitution to protect trans- portation funds. In theory, the proposal would have ensured that "transportation revenues" that are deposited in the Special Transporta- tion Fund would only be spent on "transporta- tion purposes." However, the term "transporta- tion" is quite broad, and it should be care- fully examined in the context of this fund. An examination of the Special Transpor- tation Fund reveals a fundamental flaw. The transportation revenues that are deposited into the fund are comprised almost entirely of taxes and fees on cars and trucks. Yet transportation purposes funded by the Spe- cial Transportation Fund are not limited to the roads and bridges used by cars and trucks, they also include rail and transit. According to Federal Highway Administration data, less than 20 percent of Connecticut car and truck taxes and fees like fuel taxes (highway user fees) is spent on highways. That is the smallest percentage of any state. The rest is spent on transit or other general purposes. Connecticut has some of the highest state fuel taxes in the country, but when consider- ing that very little of that state tax revenue is put back into highways, it should beg the question as to why the fuel taxes are so high. Interstate truckers passing through Con- necticut pay their share of fuel use taxes to Connecticut based on how many miles they have driven in the state and how much fuel they consume in the state, regardless of where they purchased the fuel. Yet, appar- ently, most of that state fuel tax revenue is not invested back into the roads on which these trucking companies are engaged in interstate commerce, moving America's goods. Passenger-car drivers can simply fill up in a neighboring state that has lower fuel taxes and drive right through Connecticut. Connecticut should create a Highway Trust Fund, like the federal government and many other states have, and ensure that fuel- tax revenues are deposited in the fund, and only spent on pay-as-you-go highway projects, or for transportation (highway) bond debt service. This will force more state highway user fee revenue to be invested into highways. The businesses that deliver America's goods, and the residents of Connecticut who sit in traffic on the state's congested highways, deserve to have more of their state highway user fees like fuel taxes invested in improving the state's highway system. If Connecticut is going to improve its trans- portation infrastructure, the state must focus on highways, in addition to other modes. This focus should include not only maintenance and potential expansion, but the taxes that are paid to fund these things, and how those taxes are spent. Simply claiming that increased spend- ing on rail and transit will ease congestion because doing so takes drivers off the road is not a strong argument. The Federal Highway Administration data shows that Connecticut already spends most of its state highway user fees on rail and tran- sit, yet the state still suffers from terrible traf- fic congestion on our highways. If the spend- ing of state highway user fees on transit was guaranteed to ease congestion, Connecticut wouldn't have the traffic problems it does. The state needs increased highway invest- ment to ease congestion. That is why the state should create a Highway Trust Fund in order to ensure that Connecticut's highways, roads and bridges receive the proper attention and funding that they deserve. n Joseph R. Sculley is the president of the Motor Transport Association of CT. Joseph R. Sculley EXPERTS CORNER Tips for navigating hospital affiliations By Bryan Burgett, Thomas Marrion and Mark McCue T he pace of change in today's healthcare industry has caused consolidation to become the "new normal" for many com- munity hospitals and smaller health systems. Value-based payment, more informed patient- consumers, increasing costs of clinical per- sonnel, technology, and the need to expand the care network have led providers of all kinds to seek economies of scale. As a result, many hospitals are considering affiliating with a larger system or other strategic partner. This can be a challenging prospect, but with careful planning, hospitals can success- fully manage the process, turning the affiliation challenge into an opportunity. Here are some things to keep in mind: Identifying long-term objectives: The hospital's leadership should resist the urge to rush into merger negotiations without appro- priate preparation and advice. Leadership should evaluate the relative importance of: • Improved access to specialty services, recruitment and retention of physicians, and non-acute services; • Greater access to capital; • Cost-saving synergies; • Impact on organizational culture; and • Community participation on the current and potential future board of directors . The right partner and the right arrangement often come into focus based on this evaluation. Thorough articulation of the hospital's long-term objectives will help ensure a more constructive dialogue with potential strategic partners. Taking a self-assessment: The hospi- tal's leadership should honestly assess the organization's cur- rent strengths and weaknesses. An objective point of view on the hospital's desired role in the future and prepared- ness to assume this role is critical. Would the hospital be better served by remain- ing independent for some period of time, or should it seek to partner as soon as possible? What are the risks of waiting? Finding poten- tial partners: Find- ing the right partner is key to a successful affiliation. Advisors can assist in the plan to identify potential partners, whether through direct inquiries, a formal request- for-proposal process, or some other means. The universe of potential partners often is broader than initially considered by leaders. Understanding the opportunities: Affiliations can take many forms, ranging from loose to tight arrangements. Generally, the greater the "gap" between where the hos- pital stands today and where it needs to move in the future, the greater the level of integra- tion needed with a strategic partner. Full integration typically involves a parent- subsidiary relationship, meaning the hospital gives up most control to the larger system in exchange for assistance in meeting specific strategic and/or financial goals. Mergers, chang- es in corporate membership, and asset sales are examples of fully-integrated transactions. The hospital can retain more "local" control by being less integrated with a stra- tegic partner, aligning through various con- tractual relationships. However, antitrust, self-referral and other regulations can limit operational and financial flexibility. Putting the house in order: Advanced preparation is critical to a successful affiliation. First, the hospital's board of directors should understand and support the strategic partnering effort, including the reasons the hospital is seeking an affiliation, the long- term objectives, the universe of potential partners, and the desired affiliation model. Next, leaders assemble the affiliation team. Internally, that will typically include a combination of trustees, the CEO, the CFO, and other senior executives. External mem- bers of the team will include consultants, legal counsel, and finance professionals. Finally, preparation for due diligence is vitally important. The hospital can save sub- stantial time and money by performing an internal due diligence assessment, including: • Compliance and risk management; • Contracting, including fraud and abuse issues; • Debt financings; and • Employment and employee benefits. Even under the best of circumstances, a health-system affiliation is a significant undertaking and a substantial change to business as usual. Careful preparation and management of the process will maximize the chance for a successful outcome. n Bryan Burgett is a senior vice president of Kaufman, Hall & Associates LLC a national healthcare consulting firm. Thomas Marrion and Mark McCue are partners at Hinckley Allen, a regional law firm with offices in Hartford and across the northeast. Mark McCue Thomas Marrion Bryan Burgett ▶ ▶ Connecticut has some of the highest state fuel taxes in the country, but when considering that very little of that state tax revenue is put back into highways, it should beg the question as to why the fuel taxes are so high. ▶ ▶ … Many hospitals are considering affiliating with a larger system or other strategic partner. This can be a challenging prospect, but with careful planning, hospitals can successfully manage the process, turning the affiliation challenge into an opportunity.