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No decisions on big hospital mergers until 2017, says Connecticut governor

Under an executive order issued by Connecticut Gov. Dannel P. Malloy, a decision on the proposed affiliation between Yale-New Haven (Conn.) Health System and Lawrence + Memorial Hospital in New London, Conn., is delayed until 2017.

Thursday, Gov. Malloy ordered the Connecticut Department of Public Health to push back final decisions on certain hospital deals until next year while a task force examines the state's oversight process for hospital transactions, according to The Connecticut Mirror.

The task force is charged with reviewing the state's certificate-of-need process and has until Dec. 1 to report its findings. Under the executive order, decisions on certain CON applications will be delayed until Jan. 15, 2017. The order only applies to transactions that could result in a health system's operating revenue accounting for more than 20 percent of hospital operating revenues in the state, based on fiscal year 2014 numbers.

Since Yale-New Haven Health System's operating revenue exceeds the threshold, the executive order affects the system's proposed affiliation with Lawrence + Memorial Hospital. The delay comes after labor unions and advocacy organizations called on state regulators to review the proposed deal, citing concerns that the combined health system would command too much market power.

Regarding the executive order, Lawrence + Memorial spokesman Michael O'Farrel told The Connecticut Mirror, "This action is injurious to our organization, the people we serve and the people we employ. Jobs are at stake. Access to care is at stake. The long-term viability of our organization is at stake."

The executive order does not apply to out-of-state companies seeking to acquire Connecticut hospitals. Therefore, a deal in the works for Los Angeles-based Prospect Medical Holdings to take over three Connecticut hospitals is not affected.

More articles on healthcare industry transactions:

Prime Healthcare pays $25M for Pennsylvania hospital
The rise of 'super regional systems' and what it means for healthcare
5 recent hospital transactions and partnerships

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