🔒Shmerling set to retire after decade reshaping Connecticut Children’s

James E. Shmerling retired for the first time 10 years ago, when he was CEO of Children’s Hospital Colorado, one of the nation’s top-ranked children’s hospitals. “So when I left Children’s Colorado, I retired, went home to Nashville and I did not have a plan,” he recalled during a recent interview with Hartford Business Journal. “And I was very bored.” Needless to say, his wife, Debbie, wasn’t thrilled that he hadn’t mapped out his retirement. Shmerling said she eventually laid down the law, telling him to, “Get a job, volunteer, get a life, but get out from under my feet!” He was 61 then and still motivated to work with children’s hospitals, which had been his dream since he was 19. Not surprisingly, that first retirement ended in October 2015, when Shmerling was hired as president and CEO of Connecticut Children’s Medical Center in Hartford. Now, a decade later, Shmerling is retiring again — this time with a plan. As he helps guide the transition to his successor, Shannon Sullivan — president and chief operating officer of Women & Infants Hospital in Rhode Island, who takes over Jan. 12 — he has taken time to reflect on his tenure at Connecticut Children’s. His accomplishments include completing construction of the health system’s new eight-story clinical tower ahead of schedule and under budget, and recently joining a national alliance of children’s hospitals that came with a pledged $50 million donation. “Looking back 10 years,” Shmerling said, “I say we probably exceeded some of my expectations.”

‘Huge potential’

When Shmerling arrived in 2015, Connecticut Children’s was in a far different position. The hospital had endured several years of multimillion-dollar budget deficits, operated out of an aging facility, and lacked the scale of larger pediatric systems. “When I came here I saw huge potential,” Shmerling said. “We already had phenomenal faculty and staff really committed to the mission. We had an aging facility. We are small for a children’s hospital. We didn’t have scale, so we had some challenges.” Those structural challenges included a low Medicaid reimbursement rate. Medicaid patients account for 57% of the hospital’s clientele, yet Connecticut Children’s is reimbursed about 61 cents on the dollar for their care — a rate that hasn’t changed in a decade, Shmerling said. The shortfall amounts to “about $30 million or $40 million” annually, even as costs continue to rise, particularly for drugs, which he described as “skyrocketing.” To counter those financial headwinds, Connecticut Children’s has pursued an aggressive expansion strategy that broadened its reach and improved its payer mix. Over the last several years, the hospital has opened more than 30 satellite locations across Connecticut, Massachusetts and New York, increasing its core patient base by 60% to 1.2 million. Its push deeper into Fairfield County has brought in more privately insured families, improving financial stability and raising the hospital’s profile in a region with significant donor potential. Operating revenue grew from $380.4 million in fiscal 2015 to $668.1 million in fiscal 2023 — an increase of roughly 76%. Those figures reflect the medical center and its various subsidiaries, including physician groups and affiliates. During that same period, the hospital consistently posted operating surpluses, though it reported an operating loss in fiscal 2024 as expenses outpaced stagnant reimbursement rates, Shmerling said. Growth is also underway in Hartford, where Connecticut Children’s will double the size of its main campus with a new patient tower opening Dec. 2. The project adds services such as bone marrow transplants and fetal surgery, along with up to 400 new staff members to its 3,500-employee workforce. Shmerling credits the board and staff for backing the vision that drove these moves. Perhaps because of that ambition — and the system’s momentum — Connecticut Children’s also drew the attention of a billionaire philanthropist focused on supporting pediatric care.

Not a scam

The inquiry from the Golisano Children’s Alliance came out of the blue, Shmerling said. “We received a letter from their foundation asking if we’d be interested in working with them on a naming opportunity,” he said, adding that at first he thought it was a scam. “We Googled them and said: ‘they are for real.’”

What began as an unexpected letter ultimately became one of Connecticut Children’s most significant milestones. In late October, the hospital announced it would join the alliance — a national network of pediatric hospitals backed by billionaire philanthropist Tom Golisano — and receive a $50 million donation, the largest in its history. As part of the affiliation, the medical center will incorporate “Golisano” into its name. The foundation was created by Golisano, an entrepreneur, philanthropist and civic leader who founded Paychex Inc., the nation’s largest human resources company for small and midsize businesses. The alliance already included four member hospitals in upstate New York and Florida before launching a national expansion. As part of the expansion process, the foundation invited Connecticut Children’s to submit a naming-rights proposal, and Shmerling and his leadership team decided to aim high. “We gave them a proposal for a much larger gift,” Shmerling said. “We shot for the moon. We had nothing to lose.” The foundation’s executive director, Erica Dayton, visited Hartford in mid-July and told Shmerling’s team that letters had been sent to 15 hospitals, but only 10 had responded. She added that an invitation to meet with Golisano himself would be a positive sign. Rather than wait, Shmerling and board leaders arranged to visit the University of Rochester-Golisano Children’s Hospital, the first institution supported by the entrepreneur’s philanthropy. The visit took place Sept. 21-22. “They were very gracious and hosted us on a Sunday most of the day,” Shmerling said. To their surprise, Golisano learned they were visiting and asked to meet with them the next day.

‘How about $50 million?’

Seated around a conference table with Golisano, the Connecticut Children’s team presented their proposal. “Right off the bat he said, ‘No, that’s too much,’” Shmerling said. Golisano declined an alternative offer as well, “so we just started talking about the hospital and the relationships we have and what we’re doing,” he said. “And then there was a two- or three-minute pause where he’s just thinking.” They had been warned not to interrupt the silence when meeting with Golisano, so they waited. “And then he looked at us,” Shmerling said, “and he said, ‘I like you people. How about $50 million?’” Shmerling said he wanted to “jump up and kiss him,” but he did his best to control himself. “We had our board chair (Jonathan Rubin) with us, and he played it much better than I would have,” he said. Rubin responded with calm professionalism, thanking Golisano for the offer and noting it would be brought to the board. Ultimately, the board accepted the $50 million pledge. Connecticut Children’s was among six hospitals chosen to join the alliance and receive a share of $253 million in donations. Under the agreement, the naming rights apply only to the medical center, not to the broader health system or the new clinical tower. “We’re still confident we’ll get some additional gifts,” Shmerling said. “In fact, our thinking is that, because it came from Golisano, there will be a perception that we’re worthy.” He noted that the $50 million is not yet in hand; the hospital hopes to receive a first installment — perhaps $10 million — before year’s end. Most of the support will be used to help reduce the burden of the $100 million borrowed to maintain cash flow during tower construction, freeing up resources for other needs. While the Golisano affiliation and donation are a nice way to wrap up his time at Connecticut Children’s, Shmerling said his one regret remains the Medicaid reimbursement issue. As for his second attempt at retirement, Shmerling said he’s far better prepared. He plans to remain active by serving on a couple of boards and is in discussions with Vanderbilt University about a faculty role, since he lives in Tennessee. He will also stay on for a few months to help Sullivan during her transition. Beyond that, he hopes to spend more time with his children and 10 grandchildren. “I’m 71, which is why I say, while I’m healthy and my mind still works, this is when I need to retire, not wait until I can’t enjoy it,” he said.