Hartford (Conn.) HealthCare and the Connecticut Attorney General’s Office have reached an agreement designed to limit cost growth and preserve competition following the health system’s planned acquisition of two hospitals from Prospect Medical Holdings.
Under an agreement of assurances executed Dec. 26, Hartford HealthCare agreed to several conditions intended to mitigate potential anticompetitive effects tied to its $86.1 million purchase of Manchester Memorial Hospital and Rockville General Hospital in Vernon, Conn. The deal cleared a key regulatory hurdle earlier this month when the Connecticut Office of Health Strategy approved the transaction with additional service and pricing conditions.
The attorney general’s investigation found the acquisition could otherwise increase Hartford HealthCare’s bargaining leverage with commercial payers and accelerate price growth in the Capitol Planning Region, where the system already operates multiple hospitals and physician practices. The agreement aims to preserve access to care while curbing near-term cost escalation, according to the filing.
As part of the agreement, Hartford HealthCare Medical Group must maintain “reimbursement neutrality” for physicians transitioning from Prospect’s medical foundation for at least two years. That means the system must submit claims at reimbursement levels that do not exceed historical rates for the top five commercial payers, aside from negotiated cost-of-living increases.
The agreement also includes protections to preserve physician mobility and competition. Hartford HealthCare must maintain an open medical staff at Manchester Memorial, cannot require physicians to be employed by the system to hold privileges and may not restrict physicians from practicing at other Connecticut hospitals. Noncompete clauses will be waived for most physicians who leave within 90 days of the transaction’s close, according to the agreement.
While the attorney general cited concerns about reduced competition and potential price increases, the agreement acknowledges that Prospect’s Connecticut hospitals were financially distressed and at risk of exiting the market without the transaction. Regulators concluded the acquisition could preserve access to essential services, stabilize the workforce and support quality improvements — provided safeguards were put in place.
All provisions in the agreement will remain in effect for three years, with Hartford HealthCare required to submit annual compliance certifications to the attorney general’s office. The state retains enforcement authority through Connecticut Superior Court if the system fails to meet its obligations.
The acquisition follows Los Angeles-based Prospect Medical Holdings’ Chapter 11 bankruptcy filing earlier this year and a previously failed attempt by Yale New Haven Health to acquire the same hospitals. Hartford HealthCare secured the assets after no competing bids were submitted during the bankruptcy process.
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