Three Connecticut hospitals now set to be acquired by the Yale New Haven Health system contribute millions in municipal taxes to their host cities and towns, an arrangement likely to change if the facilities shift to nonprofit status under Yale New Haven’s ownership.
Yale New Haven Health last week announced plans to acquire Manchester Memorial Hospital, Rockville General Hospital in Vernon and Waterbury Hospital from Prospect Medical Holdings, a for-profit company headquartered in California. Prospect’s for-profit status means its properties can be taxed in a manner unlike many other hospitals in the state, including Yale New Haven’s, which have not-for-profit status.
Local officials shared tax-related information with the Hartford Business Journal over the last several days but largely said they could not predict how exactly the prospective deal would impact municipal revenues until they had more information.
Vin Petrini, Yale New Haven Health’s senior vice president of public affairs, in a statement said: “Yale New Haven is and will remain a nonprofit organization and as such is not subject to local property taxes. We certainly appreciate the issue and are hopeful that, with an anticipated increase in [payment in lieu of taxes or PILOT] payments, those revenues would be offset at least in part.”
He continued: “Of course, this would hold true for any nonprofit affiliation of these hospitals. Our ultimate goal is to ensure that these hospitals remain vibrant points of access to critical healthcare services for the local community.”
Manchester Memorial
Prospect was the fourth-largest taxpayer in Manchester in 2021, according to the town’s grand list published in January, with a net assessment of $56.2 million.
Director of Assessment and Collection John Rainaldi said Manchester Memorial’s location at 71 Haynes St., accounts for just under $1.7 million in real estate taxes annually. Rainaldi said the town isn’t sure how the proposed sale would affect tax payments if the hospital turns into a not-for-profit, as it used to be.
“We don’t know yet,” he said. “In the past there was [payment in lieu of taxes] for hospitals but I don’t know if that would apply or not.”
Manchester Memorial was an exempt entity until 2016, when it was purchased by Prospect and became taxable. The facility then had a three-year tax break with the town from 2016 to 2018.
“It’s going to take a while for us to figure this out and I think it’s going to take a while for these properties to close, too. It’s not going to happen next week or anything,” Rainaldi said.
Manchester Memorial reported an operating surplus in fiscal 2020 of $19.3 million, according to data from the Office of Health Strategy. It reported operating surpluses in the previous three fiscal years as well.
Rockville General
Vernon Town Administrator Michael Purcaro said Rockville General, which has a staff of 350 people, paid its 2020 tax bill in full, the second half of which was due last month.
Rockville General’s 2020 personal and real estate property had a total assessed value of $17.5 million.
The assessed value for the 2021 tax bill will be higher, Purcaro said, adding that the town welcomes the potential new ownership but stressed the importance of Yale New Haven being transparent and active in the community.
“My hope is that they will be interested in taking part in public forums about the acquisition transition,” he said. “We want them to be engaged and transparent; that’s the way we operate here in Vernon.”
Rockville General posted an operating loss of $4.8 million in fiscal year 2020, according to the Office of Health Strategy.
Waterbury
The Waterbury tax collector’s office said that Waterbury Hospital, which has its campus on Robbins Street, most recently paid $4.6 million in real estate and property taxes.
Waterbury reported an operating surplus of $19.5 million in fiscal year 2020, according to OHS data. It also reported operating surpluses in the previous three fiscal years as well.
Prospect purchased what was then known as the Greater Waterbury Health Network — which included the hospital — in 2016, around the same time it acquired Manchester and Rockville.
The network had endured financial struggles for years and attempted to orchestrate previous buyouts, all of which fell apart. Town leaders had been generally supportive of the Prospect acquisition, viewing it as an opportunity to put Waterbury Hospital back on a solid financial footing.
Yale New Haven and Prospect will have to get clearance from state and federal regulators before moving forward with their prospective deal. Still, the would-be partners said they believe the transaction will be completed later this year.
