Yale New Haven Health CEO O’Connor details tough year, restructuring and plans for recovery

Hartford Business Journal – Monday, December 1, 2025
By David Krechevsky

Yale New Haven Health System CEO Christopher O’Connor likes to joke that he’s “living the dream.”

But he quickly concedes that the past year has been a bit more nightmarish than dreamy.

“It just feels like there are constant challenges and curveballs being thrown our way,” he said during a recent exclusive interview with Hartford Business Journal.

O’Connor describes Yale New Haven Health (YNHHS) as a “resilient organization” focused on serving the community, but acknowledges the “economic environment is getting tighter and tighter.”

Prescription-drug prices and equipment costs keep rising. Federal research funding is shrinking. Patient subsidies and tax credits tied to Affordable Care Act insurance plans have been reduced. And Medicare and Medicaid reimbursement rates remain low.

“The headwinds are strong,” O’Connor said. “It’s a volatile period.”

Yet, those aren’t the only reasons the past year has been unsettling. YNHHS also:

• Reached a settlement in September to exit its long-delayed attempt to buy Waterbury, Manchester Memorial and Rockville General hospitals, agreeing to pay Prospect Medical Holdings $45 million — about 10% of its original $435 million bid.
• Agreed to pay $18 million to resolve claims tied to a March data breach.
• Continued work on a system reorganization that included a voluntary retirement program for employees 65 and older with at least 10 years of service, and adjustments to multiple C-suite roles.

All of that translated into a $40 million net operating loss through the end of the third quarter for the 2025 fiscal year.

Even still, O’Connor says Yale New Haven is well-positioned to withstand the turbulence while staying focused on long-term growth, particularly in central Connecticut.

“We’ve had such tremendous success at Yale New Haven over a long period of time, we were in a position to absorb that volatility,” he said. “Our balance sheet remains strong. We have the strongest balance sheet in the state.”

‘Stabilization journey’

Yale New Haven Health has produced sizable deficits for three out of the last four fiscal years. The lone exception was fiscal 2024, when the system reported a $46.2 million surplus — a sharp reversal from losses of $240.3 million in 2022, and $162.3 million in 2023.

But O’Connor said that surplus was driven largely by a one-time $100 million settlement tied to the federal 340B Drug Pricing Program, which allows hospitals serving large numbers of low-income patients to buy certain outpatient drugs at steep discounts.

“A discount was applied inappropriately by the Centers for Medicare and Medicaid Services, and therefore they were underpaying us,” O’Connor said.

While the 2025 deficit will be sizable, O’Connor said he expects Yale New Haven Health, which generated $7.2 billion in operating revenue in fiscal 2024, to return to positive operating results in fiscal 2026, projecting a $50 million surplus.

“I’m confident in the steps that we’ve taken that we will hit our budget this year and continue that stabilization journey,” he said.

Outside analysts have reached similar conclusions about the system’s financial pressures.

In a May report, Fitch Ratings affirmed Yale New Haven Health’s A+ credit rating and said the system remains financially solid thanks to its sizable cash reserves and strong position in Connecticut’s healthcare market. Fitch described 2025 as a “transition year,” noting that higher labor costs, inflation and slower-than-budgeted patient volumes continue to strain operations.

But the rating agency also said it expects gradual improvement as Yale New Haven’s restructuring efforts and major capital projects move forward.

S&P Global Ratings took a slightly more cautious view in an assessment released this fall. The agency maintained YNHHS’ AA- rating but revised its outlook to negative, citing continued operating losses and the financial demands of large construction projects, including a new $838 million neuroscience tower in New Haven.

Even so, S&P said Yale New Haven Health’s substantial liquidity and strong patient demand provide meaningful stability as the system works to restore healthier margins.

Retirement program

Part of the struggle in balancing the organization’s finances, O’Connor said, is trying to manage rising costs without shifting them onto employers and patients.

The system’s hospitals — particularly Yale New Haven and Bridgeport — function as “safety net” institutions, meaning they treat a disproportionate share of uninsured and destitute patients in their emergency departments.

“We’ve absorbed a lot of that (cost), and in doing so it’s created some operating losses,” he said.

In response, Yale New Haven has “done a lot of things we’ve never done before, like initiate a voluntary retirement program,” O’Connor said.

Announced in July, the program resulted in 600 employees accepting the offer — a figure O’Connor shared publicly for the first time.

Most employees who opted in left in September, though some will remain until year’s end due to an expected visit by the Joint Commission, the nonprofit that accredits healthcare organizations.

O’Connor said the system will likely hire about 400 employees to replace those who left. Even with that partial backfilling, Yale New Haven Health expects to save about $50 million from the program, both by reducing its workforce by roughly 200 positions and lowering salaries and benefits for new hires who replace longtime workers.

Internal assessment

The retirement offer came after the health system announced in March that it was redesigning its operating model, including how its inpatient care and ambulatory operations are structured. At the time, officials said the reorganization would affect management and administrative roles as the system consolidates its leadership to speed up decision-making and support future growth.

In October, four senior executives left the organization — two from Yale New Haven Health and two from Greenwich Hospital.

O’Connor said the Greenwich leadership changes — which eliminated the chief operating and chief financial officer roles — were directly tied to the systemwide restructuring, bringing that hospital’s administrative setup in line with others in the system, which includes five hospitals overall.

Conversely, O’Connor said he initiated the departures of Yale New Haven Health’s CFO Gail W. Kosyla and General Counsel Bill Aseltyne to help the organization “move ahead,” calling the changes part of his assessment of “what’s needed to be successful in the future.”

Those roles will be refilled, he said.

O’Connor named Kosyla his CFO in October 2022, about seven months after he took over as CEO, replacing Marna P. Borgstrom, who retired.

Keep improving

Meanwhile, O’Connor said the combined $63 million YNHHS will pay in the Prospect and data breach settlements isn’t expected to significantly weaken the system’s overall financial position.

For the data breach — which compromised the personal information of about 5.6 million patients — the health system had cyber insurance coverage, O’Connor said.

He added that he objects to the settlement itself. The system has “one of the most sophisticated cyber-proof structures,” he said, yet a “bad actor gets in, and we have to pay the government a settlement. I don’t get that. It’s victim shaming.”

As for the Prospect settlement, O’Connor said it’s a nonoperating expense that can be offset because the health system’s investments produced strong “nonoperating gains.” The settlement payment was recorded in the quarter ended Sept. 30, 2025, when the system recorded nonoperating gains of about $182 million.

The more painful part of the failed Prospect bid, he said, is watching the three hospitals be acquired by other systems.

Expanding into the Waterbury area and gaining a foothold in Manchester and Vernon — markets dominated by Hartford HealthCare, the state’s second-largest health system — had been a key motivation for the bid.

Now, Hartford HealthCare is seeking to acquire the Manchester and Rockville hospitals, while UConn Health is pursuing Waterbury Hospital.

None of that alters Yale New Haven’s plan to expand urgent and ambulatory care centers into central Connecticut, O’Connor said.

“We have plans being activated now to do that,” he said. “The board has already given us the seed money necessary to initiate that work. So we are absolutely going to continue our ambulatory expansion.”

In addition, two major projects are expected to be completed in 2026.

One is the 505,000-square-foot Neurosciences Center on the St. Raphael campus in New Haven, at 659 George St. The other, being developed jointly with Hartford HealthCare, is the $75 million, 25,000-square-foot Connecticut Proton Therapy Center in Wallingford, which will become the state’s first to use highly targeted radiological proton therapy to treat cancer.

Ultimately, O’Connor said, Yale New Haven Health’s challenge is to maintain the infrastructure and quality of its services while continuing to improve.

“That’s always our goal at Yale New Haven,” he said.

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