How CT is dealing with concern of price increases after Northwell-Nuvance hospital deal

News-Times – Sunday, April 13, 2025
By Rob Ryser

DANBURY – Western Connecticut residents will feel the effects of Northwell’s $20 billion takeover of Nuvance in as soon as a month, whether it’s with the updated look of hospital websites or in the way health-care centers answer the phone.

A state oversight agency that approved the Northwell deal last week says health-care consumers should expect “positive impacts” from the megamerger for Nuvance’s health centers and hospitals in Danbury, New Milford, Norwalk and Sharon, which have been bleeding hundreds of millions of dollars in losses.

With one exception.

“(Northwell) was ranked the 17th most expensive system in the country … in stark contrast to the ranks of 146th for Yale New Haven and 161st for Hartford Healthcare – Connecticut’s two most expensive systems,” the state Office of Health Strategy said in a market impact report completed in February. “Collectively, our analyses suggest that there is a significant concern that prices will increase substantially following the (Northwell-Nuvance merger) transaction.”

Northwell – New York state’s largest health-care system with 21 hospitals – disagrees that it is one the most expensive systems in the country. And Northwell objects to the health strategy office’s suggestion that it plans to “import” expensive New York prices into Connecticut.

Nevertheless, during negotiations with the health strategy office, Northwell agreed to five years of price controls in Connecticut to seal a deal that creates a 28-hospital system in New York and Connecticut, with 1,000 health-care sites and a network of 14,500 providers.

The five-year price control requires increases in health-care bills to be in line with two cost-of-living indexes – one calculated by Connecticut and the other calculated by the New England branch of the federal statistics bureau. For example, the Connecticut index was 4% in 2024, after it was adjusted for inflation. The New England index was 3.3% for 2024.

“We see it as likely that Nuvance’s Connecticut hospitals will experience a price increase after being acquired … the question is the magnitude of the increase,” the state health strategy office said in its February report. “A price increase at Nuvance hospitals could be a particular problem for Connecticut if other systems in the state are able to raise prices in response.”

Northwell objected to the state agency’s suggestion that a New York-style price hike was inevitable in Danbury or Norwalk or Sharon.

“There is no means for Northwell Health to automatically or unilaterally extend any purportedly higher prices paid to a particular New York hospital to a different hospital in Connecticut,” lawyers for Northwell and Nuvance wrote to the state in mid-January. “(We) have made public commitments to honor Nuvance Health’s existing contracts (and) to negotiate any Nuvance Health contract renewals in good faith … these commitments further eliminate any possibility of a price ‘import.’”

The state health strategy office pointed out in Northwell’s defense that New York is a high-price state, and that it costs Northwell and competing New York health systems more to operate centers of excellence.

“Many of these New York systems are renowned for high quality care, so this is not a commentary on these systems being overpriced, but rather that they are objectively high priced,” the health strategy’s February impact report said.

To protect health-care consumers in western Connecticut, the state oversight agency required Northwell to allow five years of independent annual audits “for any price increases” to ensure “compliance with the defined price constraints.”

“The (independent monitor) shall determine whether there has been an increase in excess of the price constraint in any fiscal year,” says the agreement signed on April 7 by Northwell, Nuvance and the state. “If the (independent monitor) determines that there has been an increase in prices in excess of the price constraint, (the health strategy office) may extend the price constraint and associated reporting period and require that (Northwell and Nuvance) produce an (improvement plan) to address the excessive price growth.”

Nuvance operates hospitals in three Hudson Valley towns in New York. The state oversight agency focused its review only on Nuvance’s Connecticut footprint. For review purposes, New Milford Hospital was considered a campus of Danbury Hospital.

The review found that in 2023, the average commercial hospital inpatient bill was $34,500. Danbury and Norwalk hospitals had average bills below $30,000, and Sharon Hospital had the second-lowest average bill of all Connecticut hospitals at $15,000.

“The current price points for Nuvance’s hospitals leaves room for price increases,” the health strategy office’s February report warns.

The state’s concern about Northwell’s prices was the only stumbling block in the merger talks. The state called the deal “positive from nearly every other perspective.”

Specifically, the state said the deal should financially stabilize Nuvance’s hospitals, keep certain services open, including the maternity wing at Sharon Hospital and the inpatient behavioral wing at Norwalk Hospital, and invite more investment and better recruitment and retention of health-care professionals.

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