Cautious Optimism For Workers In Waterbury Hospital’s Third Merger Try

Ramona Barnes has more than a passing interest in the fate of Waterbury Hospital and she’s following the latest merger deal with surgical precision.

She is, in fact, a surgical assistant at Waterbury Hospital, where she was born, where her three sons were born, where she has worked for 28 of the past 38 years, where one of her sons is also employed and belongs to her union.

Barnes listened closely this week as executives from the hospital and from Prospect Medical Holdings Inc. described what might happen when and if a Los Angeles-based, for-profit chain buys Waterbury Hospital.

Of special interest to Barnes, a delegate for the SEIU District 1199 New England union, is a one-sentence statement contained in a Q&A that management handed out to the staff and the public.

“All employees who wish to remain with the hospital will be offered the opportunity to do so, in their current positions.”

That could be read as the promise of a job — which is more than the two previous would-be merger partners offered. And that matters a lot because the last merger deal, with Texas-based Tenet Healthcare, died in large part over the issue of job guarantees that state regulators wanted to mandate.

The statement by Prospect is hardly ironclad, it’s not a long-term promise and it’s not a legally binding vow, as Prospect hasn’t even negotiated a takeover deal yet. Waterbury Hospital and Prospect, which owns 13 hospitals in California, Texas and Rhode Island, have just signed a letter of intent and must now reach an agreement in the coming weeks before seeking approval from regulators to merge.

But that statement, along with Prospect’s early willingness to work with the unions and to accept the current collective bargaining agreements, is raising hopes that this could be, at long last, the right merger for a hospital that some say must have a partner to survive.

“I’m a little cautious but I am optimistic that it’s going to be something good for Waterbury Hospital,” Barnes said. She recounted that, at an employee forum, “They said, ‘If you want to stay, you’re welcome to stay.'”

“So,” Barnes recalled asking Tom Reardon, the Prospect regional vice president, “are we looking at a reduction again in staff?”

He didn’t promise there would not be layoffs. But, Barnes and others said, Reardon described a business model that will lead to more revenue, more patients in the hospital.

Hmmm, higher revenues are coming. Where have we heard that before? Oh yes, at the start of every single merger in recorded history. Sometimes it happens and sometimes it doesn’t.

When it comes to the future of Waterbury Hospital and the jobs of the 2,000 people who work there, nothing is a sure thing.

It’s been a tumultuous three years, even by the standards of the topsy-turvy health care world. The hospital has seen two failed merger deals, three rounds of layoffs, tense union contract talks that went into overtime and, just last month, a comment by Gov. Dannel P. Malloy in the Republican-American newspaper that Waterbury probably can’t support two hospitals.

Both of the previous merger deals included St. Mary’s, the other hospital in town, which is generally stronger financially. This one does not. And unlike the last one, with Tenet, this deal is not part of a complicated arrangement. The Tenet deal involved five Connecticut hospitals under the clinical umbrella of Yale-New Haven Hospital.

How, then, can Prospect, a small player in the national hospital game, make a good offer that supports Waterbury Hospital’s staffing and strengthens its market position when others have failed, or in the case of Hartford HealthCare, did not try?

Reardon, at Prospect, declined to talk with me about the merger, saying through a spokesman that it’s too soon without a final deal worked out. But there are reasons to support the optimism of union leaders, rank-and-file workers and hospital management.

Darlene Stromstad, the Waterbury Hospital CEO, who has worked toward a merger since she arrived in 2011, said she has guarded optimism.

“I have way too much experience to be standing up and screaming and shouting,” Stromstad said Friday. “This is an organization that has been through this process.”

The three rounds of layoffs since 2012, most recently 80 full-time-equivalent positions affecting more than 100 people in January, have left the hospital with improved finances. “We are an extremely lean organization when you benchmark our hospital compared to others,” Stromstad said.

And the hospital is refocusing on its own growth strategies, rather than waiting for the merger to happen. That can help matters once a deal does close.

“While our attention was placed on trying to get a deal done, the hospitals around us were investing in their own growth,” she said. “What we haven’t maintained is the competitive edge.”

Now, she said, “We are also working very hard to strengthen the day-to-day operations of this organization and reclaim our rightful position in this market.”

For example, on Monday, the same day as the merger announcement, doctors performed the hospital’s first robotic surgery, a prostatectomy, Stromstad said — with the latest, greatest equipment.

Then there is the matter of Prospect’s business strategy, which the company calls a “Coordinated-Regional-Care solution.” The idea is to create networks including medical groups and insurers that take advantage of Obamacare incentives to maintain overall population health and avoid over-treatment. This type of model is much talked about in health care and could lead to success for a hospital group that succeeds at it.

Stromstad said the hospital considered Prospect more than two years ago, when it eventually chose Vanguard, which merged into Tenet. “We liked the Prospect folks then and we like them now,” she said. “The reason we did not pick them before is that they had not done business in the Northeast.”

Prospect’s successful purchase of hospitals in heavily regulated Rhode Island convinced the Waterbury board to give it another shot.

It was Connecticut regulation that drove out Tenet in December, after the state Department of Public Health issued proposed conditions on job security and medical services that Tenet considered ridiculous.

Will that happen again this time around? Prospect’s lack of a hard-line stance on union matters could help with regulators. The company has even said it would honor the contracts of outsourced union work, including food service, transportation and environmental services, once known as housekeeping.

“There definitely have been conversations with people at the state level that give us an indication that it is worthwhile pursuing this transaction,” Stromstad said. She would not elaborate.

Tenet offered $100 million for Waterbury Hospital, including $55 million in promised capital improvements. Could Prospect come away with a deal for less spending on facilities and more on staffing? No one will say, but that outcome seems unlikely considering that the hospital needs the upgrades.

It’s also possible that Tenet and before that, LHP Group, which proposed in 2012 to combine the city’s two hospitals into a single, $400 million facility, would have succeeded well enough to maintain staffing, but those deals simply never got that far. The LHP deal died amid rancor over St. Mary’s adherence to Catholic principles on reproductive health services.

Union leaders will start to meet with Prospect on Monday. That alone is a good sign, said Barbara Simonetta, president of Connecticut Health Care Associates, which represents 400 nurses and 150 technicians in separate contracts at Waterbury Hospital.

As for the public statement about jobs by Prospect, Simonetta said it’s not a guarantee but she added, “I believe it addresses one of our major concerns in the former deal.”

And while she would prefer long-term job protection, Simonetta said that’s not coming from anyone in any deal. “I can’t guarantee that there are going to be the same number of bodies in the building that there were five minutes ago,” she said.

Brenda Morisette, lead delegate for District 1199 at the hospital, said she’s concerned about initial research that shows Prospect tends to lay off staff after taking control of a hospital. But she added, “That they even wanted to meet with the union was a different tack than the other two had taken.”

Every merger is unique and it’s way too soon to know what will happen with staffing or even whether Prospect will come away with the keys to the hospital. But the stakes are high on both sides, as the hospital seeks a secure future and Prospect seeks to secure its foothold in the region.

That alone can be good for workers, who have proven they have political clout through the unions.

“They need to merge the hospital,” said David Pickus, president of District 1199 New England, “so they need this to succeed.”