Hartford Business Journal

12 Hartford Business Journal • August 7, 2017 www.HartfordBusiness.com commitment to work. At the conclusion of ECHN's 2017 fiscal year on Sept. 30, Collins said his team will have invested about $10 million in the hospital system, with another $4 million committed near-term. Renovations include a $1 million upgrade to Woodlake at Tolland, a nursing home and rehab facility ECHN is selling for $10 million, with plans to lease it back and continue to operate it. "We are not a real estate company," Collins said when asked about the deal. "If we can get capital for an asset, so be it." The largest capital investment so far will be unveiled in November, when ECHN opens a geriatric psychiatry unit at Manchester Memorial and moves its adult psychiatry unit to Rockville General in Vernon. Containing up to 21 beds and costing $1 million, the geriat- ric unit will take over space that's been occupied by a 24-bed adult psych unit. Ren- ovations at Rockville will cost $4.2 million, according to ECHN. As a result of the expansion and reshuffling, Collins expects to double the average num- ber of inpatients at Rockville General, raising much needed revenues. Part of the strat- egy is to modernize ECHN to meet the reali- ties of today's healthcare environment, in which technological advancements have led to shorter hospital stays for childbirths and various surgeries. "You just don't need these big-bedded hos- pitals anymore," Collins said. "What you do need, regardless of affluence, is psychiatry and substance abuse [services]." Mental illness and substance abuse come with a hard-to-shake stigma, but demand for those services, especially in light of the state's and nation's opioid epidemic, is grow- ing, Collins said. He said he's received some pushback from Vernon residents about mov- ing a psych unit to town, where he himself resides. But he said the geriatric psych unit must be located in Manchester because that location gets higher reimbursement rates from Medicare. And Rockville has room for the displaced unit. Simply put, it's a financial decision. "My motive is that we have a full hospital," Collins said. "Do you want to drive by and see one car in the parking lot or do you want to see 40 cars in the parking lot?" Asked about Collins, Prospect said in a statement that its leaders believe he is the man for the CEO job. "Under his leadership, we have made great progress in investing in our facilities, services, equipment and staff in order to best serve the healthcare needs of the Manches- ter and Vernon communities," Prospect said. "Working together, we are committed to maintaining ECHN's mission and long tra- dition of providing high-quality, com- passionate care." Fiscal squeeze With the excep- tions of its 2015 and 2016 fiscal years, ECHN posted posi- tive operating mar- gins throughout much of the past decade, including during the Great Recession. But from 2008 to 2016, rising expenses outpaced growth in net patient revenues by nearly two fold, according to financials pub- lished by the Office of Health Care Access. As a result, a small operating loss in 2015 grew to a nearly $34 million loss in 2016, as expenses hit a high-water mark and patient revenue dipped to a four-year low. The deal with Prospect lifts a weight off ECHN, freeing it from mounting debt and pension liabilities and infusing the system with capital. (Prospect also acquired Water- bury Hospital, which shares some manage- ment and compliance functions with ECHN, though they remain separate entities.) When Collins predicts ECHN will be profitable this fiscal year, he is referring to earnings before taxes, depreciation and amortization (EBITDA), which is somewhat similar to operating income. ECHN is also recruiting primary care and emergency physicians and recently launched an ad campaign on television and in print and digital platforms to promote the system. "I think we have to work on reviving the institution," Collins said. He said his suburban hospitals are well positioned, despite larger hospitals just miles away in Hartford, because they can compete on cost and quality. "There's nothing in the data that shows the outcomes are any better in academic medical centers vs. community hospitals," he said. Besides the financial health of the ECHN system, Collins said he also has his approxi- mately 3,000 employees in mind, many of whom were hit with wage and retirement contribution freezes in recent years as ECHN grappled with rising expenses. ECHN recently distributed $1 million in raises to more than 1,000 non-union employees who had gone without pay hikes for approxi- mately three years, a tumultuous period that included the scuttling of an acquisition of ECHN by Tenet Healthcare — another large for-profit operator. Collins said he hopes to build on the pay hikes by unfreezing retirement contributions next fiscal year, which will depend on hitting certain financial milestones. As he works to build up ECHN, recruiting more skilled workers will be important, he said. "They're in demand," he said. Labor union AFT Connecticut is cur- rently negotiating new contracts for about 700 unionized nurses, technicians and other workers at ECHN, said AFT Connecticut Executive Vice President John Brady, who is also a registered nurse. "Raising the standards for these vital care- givers is critical in order to attract and retain the high-quality workforce that the region's patients need and deserve," he said, adding that part of their negotiations include establishing pay parity between workers at both hospitals. "While all our members at [Manchester] look forward to long-promised wage increas- es and restored contributions to their retire- ment security, the registered nurses at [Rock- ville] deserve the same," he said. n from page 1 ECHN in union negotiations ▶ ▶ ' There's nothing in the data that shows the outcomes are any better in academic medical centers vs. community hospitals.' Michael F. Collins, CEO, Eastern Connecticut Health Network (ECHN) American Eagle CU buys East Hartford office tower By Gregory Seay gseay@HartfordBusiness.com E ast Hartford's American Eagle Finan- cial Credit Union has paid $6.6 mil- lion for an office building in town to consolidate its executive and administra- tive offices and about 200 employees. American Eagle CEO Dean Marches- sault said the state's second-largest credit union by assets closed on 333 East River Drive July 28 following an auction of the property after it landed in receivership last fall. He said The Simon Konover Co. in West Hartford previously owned the five- story, glass-sheathed tower overlooking the Connecticut River. The $1.6 billion-asset credit union, origi- nally launched to serve the savings and credit needs of aircraft workers and others at Pratt & Whitney, plans to consolidate staff and operations from two other buildings it owns in East Hartford and Glastonbury. It expects to occupy the 100,000-square- foot building by late 2018, he said. Meantime, it will keep its 44,000-square-foot headquar- ters building and branch office at 415 Main St., directly opposite Pratt & Whitney. But its 30,000-square-foot Glastonbury office building at 20 Western Blvd. will soon be put up for sale, the CEO said. "Our business has been growing a lot lately,'' Marchessault said of the reason for the CU's search for a new home. Originally, American Eagle sought to lease larger office space, and inspected buildings in both towns, plus ones in Rocky Hill and downtown Hartford, he said. In Hartford, the CU looked at Hartford Square North, known as the "Candy Cane Build- ing,'' on downtown's southern edge. But "Hartford was not our target mar- ket,'' Marchessault said. However, Connecticut Children's Medi- cal Center has since announced its lease of a large chunk of office space at Hartford Square North. Eventually, American Eagle will occupy about 60 percent of 333 East River Drive's space, with the rest leased to tenants, Mar- chicheault said. The building is presently 84 percent leased, with at least one tenant expected to decide soon whether to renew its lease in the building. "We're going to take our time to decide about what to do," Marchessault said. "We're under no particular pressure to [relo- cate] right now.'' n American Eagle Financial Credit Union's new East Hartford home, 333 East River Drive. P H O T O | C O N T R I B U T E D ECHN's Operating Margin (fiscals 2008-2016) S O U R C E : S T A T E O F F I C E O F H E A L T H C A R E A C C E S S -$35,000 -$30,000 -$25,000 -$20,000 -$15,000 -$10,000 -$5,000 $0 $5,000 $10,000 Operating Margin (in 000s) Year 2008 2009 2010 2011 2012 2013 2014 2015 2016 $7,303 $7,120 $6,538 $43 $4,149 $112 $2,173 ($280) ($33,861) Collins said he wants to unfreeze ECHN's contributions to employee 401(k) accounts next fiscal year. H B J P H O T O | S T E V E L A S C H E V E R

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