Top officials at both Waterbury and Saint Mary’s hospitals said, if the state approves of the plan, the construction of a newly-proposed $400 million facility could begin as early as next year and would possibly bring in as many as 600 construction jobs.
Both hospitals announced Tuesday their intentions to enter a joint venture with LHP Hospital Service Group Inc., the Texas-based company that acquired Saint Mary’s Hospital in March. The proposal to merge the hospitals had been in discussion mode since February, however the deal was finalized Thursday when LHP signed a letter of intent with Waterbury Hospital toward the proposed merger.
Under the agreement, LHP would own 80 percent interest in the joint venture. Also LHP, a for-profit company based in Plano, Texas, would finance the construction of a new state-of-the-art facility in Waterbury.
The new facility, once its completed, could bring in $520 million in revenue, making it the largest hospital in the state, according to a press release. Both hospitals currently service not only Waterbury residents, but residents in numerous area towns including Naugatuck, Middlebury, Woodbury, Southbury, Oxford, Wolcott and Prospect.
The 700,000-square-foot building would be complete with private rooms and would be capable of accommodating 300 patients a night, which is the total combined number of patients per night at both Waterbury and Saint Mary’s hospitals, said Darlene Stromstad, Waterbury Hospital CEO. The hospitals are considering three possible sites: the grounds of Waterbury Hospital, the grounds of Saint Mary’s Hospital, or a completely new site for the new building, Stromstad said.
Daniel Moen, CEO of LHP, said construction could begin as early as 2012. The construction period would be between 40-45 months, making the hospitals’ completion date somewhere around 2016, Moen said.
Under the agreement LHP would assume all debts and pension liabilities from both hospitals, he said.
“When the deal closes, I feel comfortable we’ll be as good a capitalized hospital as any,” Moen said.
As a hospital company, which finances the construction of such facilities, LHP “saw the opportunity” with both hospitals, he said.
“And, to be honest with you, it’s a good opportunity, in Connecticut in general and Waterbury,” he said.
A new joint board will oversee the new hospital. While LHP would own 80 percent interest in the venture, both Waterbury and Saint Mary’s hospitals would own 10 percent each.
“Once we get the definitive agreement signed… there will be equal representation from each side because of block voting,” said Robert Mazaika, chairman of the task Saint Mary’s task force that dealt with the merger. “LHP would have six board members, Waterbury (Hospital) would have three and Saint Mary’s (Hospital) would have three.”
The Waterbury and Saint Mary’s board members will vote as a block, or six-member group, alongside the six LHP members.
“So,” he added, “There’s a significant amount of local control even though there’s 80 percent control with LHP.”
The next step for both hospitals is a planning and approval process. Moen said LHP has to obtain a Certificate of Need from the Department of Public Health, which is required for the construction of a new hospital. Also, because one of the hospitals is a Catholic-based facility, the backers need approval from the Vatican to go ahead with the merger, Mazaika said.
“That process was started by the archbishop (Henry J. Mansell), and it will take several months,” Mazaika said.
Construction of the new hospital would take between three to four years and it could bring in as many as 600 construction jobs, Moen said. When asked if the merger would result in job losses — in terms of medical staff being laid off due to the merger — Moen said officials hadn’t spent as much time on that aspect.
But he pointed back to the construction effort, saying in the short run there would be a “net positive” with the job flow, meaning construction jobs could offset job losses of hospital staff.
“In the long run a new hospital would stop the out migration of patients leaving the area that want to have a private room, for example,” he said.
The hospital officials said they haven’t planned out what will happen with the old buildings once the new hospital is built. Moen said the possibilities for the old buildings could be converting them into assisted living facilities, nursing facilities or educational campuses.