New state report shows better finances at most Connecticut hospital systems

CT Insider – Wednesday, February 5, 2025
By Liese Klein

Connecticut’s hospitals as a group saw their losses drop and their revenues increase in fiscal 2023, according to a new state report, even as labor and supply costs surged and some hospitals showed signs of severe financial distress.

Although still dealing with inflation and pandemic impacts and facing uncertainty in Washington, your local Connecticut hospital is unlikely to close anytime soon, the state’s top health regulator said.

The state Office of Health Strategy released its latest report on the finances of Connecticut’s 27 short-term, acute-care hospitals on Friday, highlighting a general uptick in the industry’s performance.

“I think that it shows general improvement when you look at individual hospital performance,” OHS Commissioner Deidre Gifford said in an interview on Friday. “We have fewer hospitals this year that had a negative.”

Losses at the state’s health systems dropped from $720.6 million in fiscal 2022 to $463 million in fiscal 2023, which ended on September 30, 2023, according to the report. A total of $307 million of the $463 million in losses was attributed to “medical group operating losses,” with a $109 million loss attributed to just one entity: UConn Medical Group.

The Connecticut Hospital Association said that despite some improvement in the recent report, the industry in Connecticut is still dealing with surging operating costs — which grew by $1 billion in 2023 — and ongoing losses from government-funded care.

“Negative margins mean hospitals are still operating at a loss; year after year this is not sustainable and threatens the ability of hospitals to meet their mission of creating healthier communities, supporting innovation and quality advancement and meeting evolving patient needs,” the CHA said in a statement.

Connecticut’s hospitals, by contrast, improved their finances as a group. The statewide total margin ‒ a metric that combines operating and non-operating performance as a picture of overall financial health — improved from a negative 3.5% in FY 2022 to 1.65% in FY 2023.

A significant outlier in the overall improvement in hospital and health-system finances was for-profit Prospect CT Inc., which saw sharp declines in financial metrics both as a system and at its three hospitals in fiscal 2023.

Prospect CT Inc. reported the highest losses of any health system in the state, at $86.4 million, and experienced the second-largest decline in both total and operating margins, after Day Kimball Healthcare.

The operating margin, or the gains or losses from patient care and related services, at Prospect’s Manchester Memorial Hospital fell from 4.08% in 2022 to negative 3.35% in 2023. Waterbury Hospital’s operating margin fell from negative 3.73% to negative 9.91% in the same period, while Rockville General’s plunged from negative 1.51% to negative 24.88%, among the worst of all state hospitals.

Prospect did not respond to a request to comment by post time.

“There’s a very particular reason why Prospect in particular is struggling, and it has to do with their business practices,” Gifford said. “They extracted a lot of the value out of those communities and those hospitals. They took that value and gave to investors and did not reinvest in the community.”

But even with the recent declines in their margins, Prospect’s larger hospitals, Waterbury and Manchester, show strong revenue and could be turned around under new management, Gifford said.

Yale New Haven Health, which was embroiled in a legal battle with Prospect at the time the for-profit system declared bankruptcy, saw its its operating margin as a system improve from negative 3.85% to negative 2.21%, and its flagship Yale New Hospital improve its margins from negative 5.97% to negative 1.03%

The New Haven-based system has cut some jobs in the past year as part of cost-cutting measures sparked by surging expenses and the lingering effects of the COVID-19 pandemic.

Yale New Haven Health spokesperson Dana Marnane said Prospect’s financial troubles were evident when the New Haven-based system decided to sue last year over its agreed-upon $435 million purchase price for the three hospitals. Multiple filings in the lawsuit discussed growing signs of financial distress at Prospect.

Rural hospital’s losses mount

The single-most financially stressed Connecticut hospital in the report was Nuvance Health’s Sharon Hospital, a community pillar in rural Northwest Connecticut that has been cutting back services like maternity care for years.

Sharon Hospital was the worst performer in the state in 2023, with a negative 48.5% total margin and an unbroken streak of five years of losses.
Owner Nuvance Health has cited Sharon’s poor performance and its strained finances in its argument for merging with New York’s Northwell Health, a deal that is still under consideration by state regulators.

“Information in this report from 2023 shows the hardship many rural hospitals face when striving for financial stability,” Sharon Hospital President Christina McCulloch said on Friday. “Our hospital is not in danger of closing, rather based on the strength and support of the Nuvance Health system we continue to make investments in our talent, services, technology and facilities.”

Gifford said the Nuvance-Northwell merger review was progressing even as the state seeks to pilot a new funding structure to keep rural hospitals afloat.

“We think that rural and independent hospitals are really good candidates to try out a different way of getting payment for their services,” Gifford said.

The new program, a partnership with the federal Centers for Medicare & Medicaid Services called “global budget,” could launch in Connecticut as soon as 2027, Gifford said.

Bristol Hospital launches turnaround

Another hospital showing signs of distress in the report was Bristol Hospital, with zero days of cash on hand in fiscal 2023 and negative total margins in four of the previous five years.

But Bristol Hospital boosted its total margin into the positive range in 2023, now has 15 days of cash on hand on average, and is on a path to financial sustainability, CEO Kurt Barwis said on Thursday.

The hospital hired a management consulting firm last year with a turnaround team that focused on expenses like labor cost and supply chain, Barwis said, improving the hospital’s bottom line by 63% as of September, compared to the same period in 2023.

“They didn’t just make recommendations, they supported implementation with absolute accountability,” Barwis said of the turnaround team.

After some cuts at Bristol Hospital in recent years, “we have added and expanded services more recently,” he added.

This is a developing story and will be updated.

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