Public Health Committee
JOINT FAVORABLE REPORT
Bill No.: SB-238
AN ACT INCREASING OVERSIGHT OF MERGERS AND ACQUISITIONS OF
Title: GROUP PRACTICES.
Vote Date: 3/31/2021
Vote Action: Joint Favorable Substitute
PH Date: 3/29/2021
File No.: 553
Disclaimer: The following JOINT FAVORABLE Report is prepared for the benefit of the
members of the General Assembly, solely for purposes of information, summarization and
explanation and does not represent the intent of the General Assembly or either chamber
thereof for any purpose.
SPONSORS OF BILL:
The Public Health Committee
REASONS FOR BILL:
This bill addresses certificates of need (CON) approval for certain ownership transfers of
group practices from 8 or more physicians to a group practice of any size. However, CON
approval is not required if both parties are physician groups not affiliated with a hospital,
insurer, or similar entity as currently written in state law.
Additionally, this bill also requires group practices of any size instead of those with 30 or
more physicians to report certain information on practice size, scope, location, etc., to the
Office of the Attorney General and the Office of Health Strategy annually. This requirement
will continue to apply to group practices not affiliated with a hospital. This bill also eliminates
the current presumption in favor of approval for specific CON applications for group practice
transfers.
RESPONSE FROM ADMINISTRATION/AGENCY:
Senator Martin Looney, Senate President Pro Tempore:
I am in full support of SB 238, which would improve oversight of healthcare consolidation
involving group practices. Connecticut's bipartisan healthcare reform efforts are consistent
with recommendations of a recently published study on state efforts to regulate healthcare
consolidation.
The passage of this bill would require all group practices to meet the following three filing
requirements with both the state Attorney General's office and the Office of Health Strategy:
 1. The names and specialties of each physician in said practice.
2. The practice locations and services provided at each location.
3. The names of the business entities that provide services as part of the group
practice.
Currently, only group practices with 30 or more physicians and group practices owned by
hospitals are required to file the information. This information will help the Attorney General
and the Office of Health Strategy get a more accurate image of Connecticut's healthcare
landscape.
SB 238 would also change the Certificate of Need approval threshold from an eight physician
to a two-physician practice size subject to acquisitions and mergers requirements. It would
eliminate the current presumption in favor of these transactions, which exist when the
applications are related to group practices.
The Committee should add language to clarify that the Certificate of Need for group practices
should be required at the discretion of the Office of Health Strategy based on the statutory
criteria while also considering their staffing and budget realities. Also, I look forward to
working with this Committee and the Office of Health Strategy on these issues.
Victoria Veltri, Executive Director, Office of Health Strategy:
The Office of Health Strategy (OHS) supports the proposed language in SB 238 to require
group practices to file annual reports to the states Attorney General Office and the OHS
regardless of the practice size. This change will provide a cost-effective method to monitor
anti-competitiveness issues and provide a better view of the healthcare market. Connecticut
currently ranks sixth in the nation in healthcare spending, and it is our mission to monitor and
develop policies ensuring access to cost-effective health care services.
There has been an increase in group practice acquisitions in Connecticut. According to the
notice of material change reports sent to the Attorney General and OHS, there were 55 group
practices acquisitions in the last six years. However, only three group practice acquisitions
were subjected to Certificate of Need (CON) approval under OHS because current law did
not require the other 52 to go through the process. The consequences of increased group
practice acquisition without appropriate review could potentially result in increased market
power.
Requiring CON approval of transfers of ownership of group practices consisting of 2 or more
physicians may discourage smaller, independent primary care practices from combining and
competing against larger practices. We have heard from independent providers concerned
about the ongoing acquisitions of small group practices and their ability to compete with
larger practices.
OHS would like to point out that additional staff is needed to review and analyze these
reports and that the agency would require increased state resources. Discussions are
underway with the Office of the Attorney General to utilize existing resources and to make
recommendations to strengthen the CON criteria or otherwise amend the state statutes to
ensure adequate resources to monitor the ongoing horizontal and vertical acquisition of
physician practices by our offices.
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NATURE AND SOURCES OF SUPPORT:
None
NATURE AND SOURCES OF OPPOSITION:
Connecticut State Medical Society (CSMS):
Connecticut State Medical Society (CSMS) strong opposition to this bill as it is a textbook
example of legislative overreach.
Senate Bill 238 proposes to reduce the current Certificate of Need (CON) requirement for
transfer of ownership for all group practices from eight or more physicians to two or more
physicians. This bill would require a CON for acquisitions of all group medical practices and
proposes to remove the statutory presumption in favor of CON approval.
Many small group medical practices in Connecticut are barely surviving. The COVID-19
pandemic has only compounded the numerous financial difficulties they face. It is not the
purview of the legislature to dictate under what circumstances physicians may decide to sell
their practice. There is a plethora of reasons that a group of physicians may want to sell their
medical practice to a hospital system or medical foundation, including, but not limited to:
Financial assistance
Freedom from running a small business
Reduced working hours
Semi-retirement
Access to more comprehensive insurance networks
The CON process in Connecticut is already costly, cumbersome, and time-consuming without
any guarantee of success. Removing the presumption in favor of the granting of the CON will
only acerbate this process. This action will inherently de-value the medical group given the
financial investment in attorneys and other medical experts needed to help pursue the CON.
This change will strip a medical practice of the equity the physicians have worked to build. If
this legislation passes, small group practices will abandon and dissolve their existing
practices only to become employed by a hospital system or medical foundation. This bill will
only result in fragmented and disjointed care for patients.
Connecticut Hospital Association (CHA):
CHA opposes this bill. SB 238 would require hospitals, health systems, and other non-
physician organizations (including insurers and practice management companies) to obtain a
Certificate of Need (CON) to acquire a group practice of two or more physicians. Current law
requires a CON for the acquisition of group practices of eight or more physicians.
This legislation would require small practices and individual physicians considering retirement
or want to sell their practice to work for a hospital or another entity to get approval from the
state before doing so. This change will create a disadvantage to the policies outlined in SB
1087, An Act Concerning the Recruitment and Retention of Health Care Providers in the
State.
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Eliminating the presumption in favor of approval of a CON when a hospital or other non-
physician entity responds to a request for proposal or similar voluntary offer for sale will limit
choices for physicians and physician groups. CHA is concerned that the execution of the
CON rules would no longer be a reasonable check to ensure high quality and safe care but,
instead, an unreasonable burden on physicians.
SB 238 would require all group practices, no longer just large group practices or practices
affiliated with a hospital or health system, to submit an annual report to both the Office of the
Attorney General and the Office of Health Strategy. The CON is an extensive report. It
requires the names and specialties of each physician practicing medicine with the group
practice; names of the business entities that provide services as part of the group practice
and the address for each location where services are provided; a description of the services
provided at each location; and the primary service area served by such location. This new
requirement will increase the regulatory burden on medical practices in Connecticut,
specifically the smaller practices.
Connecticut physician practices are struggling, as are countless others across the nation due
to the pandemic. Now is not the time to place additional burdens on physician practices.
Dr. Jeff Cohen, Colorectal Surgeon, Hartford Health Care:
As a surgeon who formerly held a private practice for 23 years and now the head of clinical
operations for Hartford HealthCare (HHC), I testify in opposition to SB 238. Passage of this
bill will limit patients access to physicians, especially primary care doctors.
HHC is not in the business of seeking out practices to acquire; rather, these practices
approach us with a proposal. These are typically mid to late-career physicians faced with the
financial and administrative burdens of maintaining a medical practice. There are three
reasons physician practices seek a move to larger entities such as health systems and
hospitals: increased costs of running a medical practice with little or no access to capital;
curtailing of non-emergent medical procedures and the financial downturn due to COVID; and
large organizations like HHC bring efficiencies that small practices can never achieve due to
their size.
When small practices align with a larger organization, the benefits to quality and standards of
care are greatly improved for patients. Access to capital allows for the purchase of electronic
health records, real-time access to imaging, and care coordination services by nurses and
pharmacists. Recruitment of physicians is essentially impossible for small practices as they
lack the capital to pay young physicians right out of training. Todays medical school
graduates are less interested in working for a small practice or dealing with running a
business.
Increasing regulatory requirements of physician acquisition will not stop this process, as it is
truly market-driven. Creating more obstacles for smaller practices to align with health
systems could lead to less access to clinicians.
Reducing from eight to two the threshold that would trigger a Certificate of Need (CON)
review would make many small practices simply close their offices as a CON review can
typically take up to a year, and most small practices cant wait that long as their financial
burden increases. If youre a physician in your late fifties, early sixties, retirement is more
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financially sound than waiting a year while the practice goes further into debt.
Since the January 2018 CON statute went into effect, HHC has acquired 30 practices with
less than eight physicians. There were only a few practice acquisitions with eight or more
physicians, and the CON process incurred costs between $60,000 to $70,000 each. With
only a few medical practices with eight doctors, changing the threshold will require increased
state resources to conduct CON's. It will ultimately lead to fewer physicians in the community
and less access for patients to care.
Michael Aronow, MD, President, Connecticut Orthopaedic Society:
I am testifying on behalf of the more than 200 members of the Connecticut Orthopaedic
Society who oppose SB 238. The change in the definition of a group practice to two or more
physicians will mandate just about every physician group practice in Connecticut to report
specific data to the Attorney General and Office of Health Strategy.
Not only is this an extreme overreach by government agencies into small independent
businesses, but it is solely targeting physicians without a defined need or clear and concise
objectives. It is important to note that this overreach is currently not required for other
professionals with small businesses, such as attorneys and smaller law firms.
This mandate places another unnecessary administrative burden on practices with two or
more physicians who are already dealing with the constraints of the pandemic. Furthermore,
there is no indication as to why the Attorney Generals office and the Office of Health Strategy
would mandate the collection of this information, how they will ensure the privacy of the data,
and the general use of the data. The lack of information and clarification on the purpose of
this expanded mandate on physician practices of two or more physicians, the infringements
on the free marketplace, and the burden of reporting are among the many reasons we
oppose this bill.
Reported by: Beverley Henry Date: April 27, 2021
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Statutes affected:
Committee Bill:
PH Joint Favorable Substitute:
File No. 553:
APP Joint Favorable: