Choice of monitor to oversee L+M, Yale New Haven rankles coalition
The selection of an independent monitor to oversee compliance with conditions of the agreement joining Lawrence + Memorial Healthcare and Yale New Haven Health is drawing sharp criticism from a coalition of employee union and health care advocacy groups.
The state Department of Public Health this week approved Yale New Haven’s selection of Deloitte & Touche, a consulting firm with offices in Hartford, New York and other locations, to monitor compliance with conditions of the agreement, approved by the state this fall.
On Friday, the coalition called on the state to rescind its approval and reject the selection, calling Deloitte & Touche a company with “a clear conflict of interest.”
The independent monitor is charged with setting caps on price increases at L+M, as well as verifying compliance with requirements that services at L+M be maintained, and that the larger Yale network make significant capital investments at the New London-based hospital and its subsidiaries.
Officials at the state Department of Public Health could not be reached for comment Friday. Information on its website includes the agreement with the monitor and brief email messages from the state agency to Yale New Haven officials approving the selection of Deloitte & Touche.
Late last month, the coalition asked the state Department of Public Health to allow it to have input into the selection, to ensure that the monitor would be truly independent. State Public Health Commissioner Dr. Raul Pino told the group to make the request to Yale New Haven Health and L+M.
The group had prepared a letter it planned to send to make that request, but the monitor had already been selected. Now, the group is expressing outrage at the choice and at being left out of the selection process.
“We have made clear from the beginning that truly transparent and independent oversight would be needed if state regulators approved Yale-New Haven Health’s takeover of our community hospital,” Ellen Andrews, director of the Connecticut Health Policy Project, said in a statement Friday. “The state’s settlement green-lighting the deal depends on a monitor with full authority to impose civil penalties and even require additional community benefits in the event of noncompliance. Without that, the conditions for true oversight and enforcement simply do not exist.”
Dana Marnane, spokeswoman for YaleNew Haven Health, confirmed the selection of Deloitte but was unable to provide answers to questions about how the choice was made, among other issues.
The agreement on the state agency’s website states that Yale-New Haven Health will pay Deloitte $180,000 to $190,000 during the first year of the monitoring project, and $150,000 to $160,000 for years two through five. It was unclear whether the second fee is annual or for the entire four-year span. An official at Deloitte on Friday confirmed that the company has been selected as the monitor but was unable to answer questions late Friday.
Deloitte also notes in the agreement that Yale New Haven Health is already a client. The company provides “regulatory/compliance and merger & acquisition services” to the hospital network.
“We do not believe that the proposed services impair the objectivity for D&T to perform the proposed services,” the company said.
The coalition, however, said there are significant conflict-of-interest issues. Tom Swan, executive director of the Connecticut Citizen Action Group, said that Deloitte has been “one of Yale-New Haven’s top five outside contractors for the past 10 years, earning more than $30 million over that time.
“There is no credible definition under which the consultant that Yale-New Haven has chosen to fill this role could be seen as either transparent or independent,” he said.
He also noted that Deloitte was charged in July 2015 by the Securities and Exchange Commission with violating auditor independence rules, and that the company paid $1 million to settle the charges.
“That doesn’t strike us as the right credentials for the important task of overseeing the transformation of our region’s health care,” he said. “The state health department should reject Yale’s proposal to assign any consultant with such a clear conflict of interest or a record of violating independent auditing rules."
Andrews said the choice of monitor is critical to ensuring that health care access is preserved in southeastern Connecticut. She said the coalition has made its position clear over the past month and in recent outreach to Yale New Haven Health and L+M.
“The risks of approving a less-than-vigorous monitor are significant,” she said. “They could lead to deterioration of access to health care, and will certainly erode the public’s confidence … in the process.”
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