“Monopolitis” May Kill Temple Medical

Christopher Peak PhotoA nine-story medical office building downtown has gone into cardiac arrest.

Once seen as a pioneering model of healthcare delivery when it was built in 1978, the building —Temple Medical Center, located at 40 Temple St., 60 Temple St. and 200 George St. — might not survive this latest scare, after bleeding out thousands of its patients to other medical campuses.

The prognosis: The place could be emptying out within months once tenants’ leases expire.

The diagnosis? The building caught a bad case of “monopolitis,” the disease of decreased competition that’s infecting doctor’s offices across the country as medical groups swallow up private practices and hospital networks merge into larger systems.

Temple Medical Center first came down with the infection in 1994, when Yale-New Haven Health Services Corp. acquired the Temple Radiology Group, a previously independent network of specialists that took X-rays before surgery. That made YNHH the largest tenant in the building.

Under Yale-New Haven Hospital, Temple Medical focused on operations that don’t require an overnight stay, a lower-cost option known as ambulatory surgery. Last year, doctors performed about 85 of these outpatient surgical procedures each week. They also offered a suite of tests, including gastric motility studies, blood draws and high-powered imaging.

Then the “monopolitis” was dormant until 2012, when Yale-New Haven Hospital took over financially-hemorraghing Hospital of Saint Raphael, creating the country’s fourth-largest medical institution with two main campuses (on York Street and at St. Raphael’s Chapel Street complex).

By this spring, the Temple Medical Center will have a big vacancy. Yale-New Haven Hospital plans to consolidate services at its York Street and St. Raphael campuses, yanking all its outpatient services and sending the radiologists and anesthesiologists elsewhere. (Many physicians from the Yale University faculty group who work in the building plan to stay.) The state has already approved a Certificate of Need for YNHH to terminate outpatient services at Temple Medical Center.

“The building is aging and has physical limitations that require significant capital investment to upgrade it to the YNHH standards of a modern outpatient facility,” Cynthia Sparer, the vice-president of Yale-New Haven Health, told the state in a regulatory filing. “The Temple lease expires in May, 2019, and YNHH does not intend to renew.”

So far, no new tenants have expressed interest in moving in, the property-owners told the city. The city’s Litigation Settlement Committee at a meeting last month approved a drop in the building’s assessment in hopes of luring a buyer, despite opposition from the president of the Board of Alders. A state judge subsequently approved the deal.

The lack of interest in the property is not a surprise, healthcare analysts said, as independent medical groups disappear nationwide, a trend that has been even more rapid in Connecticut.

“Who are the customers left who want to operate that facility?” asked Jill Zorn, a senior policy officer at the Universal Health Care Foundation of Connecticut. “There may not be any big medical groups that could take that on. Never mind that the facilities are out of date, there’s parking problems. Who’s left? You need a lot of capital to fix it up, and I’m not sure that there’s a lot of independent medical groups [with the money to do that] in a state that never had a lot of medical groups anyway.”

No Buyers Yet

Tom Breen PhotoTemple Medical is owned by a partnership led by the Fusco Corporation and neurosurgeon Alvin Greenberg. They have tried to keep the medical center alive by putting it on the market at a steeply discounted price, three-fifths of what appraisers think it’s worth. But so far no buyer has bitten.

Even at an $18 million listing price, “they were unable to get an offer at that price and go through their due diligence,” said Karen Kravetz, a lawyer hired to represent the city in negotiations. “They had two offers that fell through.”

With what could soon be a corpse on their books, the landlords filed a tax assessment appeal in state court in June 2017.

Like a paramedic delivering a final jolt with a defibrillator, the city has now offerered to knock $7.9 million off the medical center’s $30.9 million valuation. That will provide about $240,000 in relief from what’s been around a $930,000 tax bill annually.

The city’s attorneys argued that they’re still getting a good deal. The building could end up being worthless if no buyer steps up, they noted.

“As hard as that is to swallow, there’s 250,000 square feet of medical office space that’s going to be vacant,” Kravetz said. “Typically, when you’re looking at a rental property [appraisal], you have to consider the market. You don’t usually look only at the tenant you have, because you recognize the tenant might be gone. If Yale leaves when they’re legally allowed to leave, what is your market? That’s when it goes south.”

Board of Alders President Tyisha Walker-Myers dissented in the Litigation Settlement Committee’s 3-to-1 vote. She said the deal lacks any guarantee that Yale-New Haven Hospital wouldn’t reverse course and keep the center alive, potentially shortchanging the city in the process. But the hospital isn’t likely to change its plans, after already gaining permission from state regulators to pull out of the center.

$1.46M Saving

Tom Breen PhotoYale-New Haven Hospital began making moves to consolidate in 2016 after reviewing operations across its newly acquired sites. It gradually relocated six operating rooms to Guilford and four endoscopy suites to North Haven. It moved one operating room to a newly opened Center for Musculoskeletal Care at the St. Raphael’s campus on Chapel Street.

The hospital’s latest proposal from June 2018, detailed in a 77-page Certificate of Need application, asked the Connecticut Department of Public Health for permission to terminate any remaining outpatient services at Temple Medical Center by relocating the last two operating rooms to York Street.

Yale-New Haven Hospital reported that it expects to save $1.46 million annually from the move, though it said patients will benefit too by getting worked up in more modern facilities. Throughout the application, the hospital executives repeatedly said the change will respond to “patient needs” and cut out “unnecessary duplication.”

Christopher Peak Photo“The proposal involves no changes to services offered, staff, hours of operation or payer mix,” Sparer told the state in the Certificate of Need process. “The same services will be provided in a manner that improves patient experience and is more cost-effective for the state health care system.”

Sparer added that the efficiencies “in scheduling and patient flow” might enable more patients to visit, and the “coordination of care” all in one building could reduce the need for multiple follow-up appointments.

Temple Medical Center isn’t shutting down because patients don’t want the services. In fact, even greater demand is expected in the future.

“With advancing technology, the shift to outpatient procedures is expected to continue to grow,” Sparer said, noting that Yale-New Haven Hospital performed 30,000 ambulatory surgeries last year.

After reviewing the application, Zorn agreed that the move likely wouldn’t limit patients’ access to care locally. “They’re not taking every doctor in New Haven putting them in the suburbs,” she said. “They have major facilities in the city and that isn’t going to change.”

The Department of Public Health’s Office of Healthcare Access approved the termination of outpatient services at Temple Medical Center without a hearing.

Rapid Consolidation

Bulletin of the American College of SurgeonsJust as is occurring across the nation, medical operations here are increasingly being consolidated into large hospital campuses. That trend has been even more rapid here because of state policies, said Matthew Katz, the executive vice-president of the Connecticut State Medical Society.

“Just a few years ago, the majority of physicians were not employed by hospitals; they had their own private practices in buildings they owned or leased,” he said. “Today, because of that rapid consolidation, many of them — in fact, the majority — are now employed by hospitals, and many of these doctors end up on the hospital campuses, no longer in the community in those buildings.”

Katz said that there isn’t a “blame” here: The consolidation “makes sense” from the hospital’s perspective, both financially and administratively. But he said the problem is that new doctors aren’t moving in to fill the vacancies.

“If you’re serving the same community, why have different sites with the same doctors? Why not put them, for efficiency, in one place, so you can have one administrator and one rent?” he said. “What’s happened so fast, especially in Connecticut, is that we’re in the top five in the number of doctors we train but we’re in the bottom five for retaining them. We are not seeing doctors come in and taking those offices or leases. Many of them are either retiring or becoming employed by the hospitals.”

Katz said that the state government could tweak its policies and fund existing programs to encourage doctors to open up private practices after they finish up their training.

He pointed to a tough licensing process to establish need for a private practice, restrictions on the use of medical devices, and taxes on independent surgical centers as roadblocks.

He said that Connecticut could emulate its neighbors, like Massachusetts and Rhode Island, by offering loan forgiveness or forbearance to attract doctors and by offering a federally recognized disease database.

Or, at the very least, he added, it could fund a $10 million program that the legislature already approved to offer low-interest loans to doctors looking to set up or expand a practice, which has been zeroed out in the last budgets.

“We have had an unfortunate situation here. Everywhere else in the country has seen consolidation, but ours appears to be more rapid,” Katz said. “That’s because of these burdensome and outdated regulations, those additional tax burdens, and the lack of loan forgiveness or forbearance programs to incentivize physicians to go to areas of the state that need additional competition or just simple basic care. On top of all that, even when we create programs to help expand practices, we take away the available funding.”

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posted by: Wooster Squared on January 4, 2019  4:00pm

Good grief. One of the biggest stories out there locally, and not a single comment. Hopefully, the city can get involved and put this plot to good use. There’s still a huge demand for housing downtown and the city knocked it out of the park with 360 State. Perhaps they could use that as a model to redevelop and re-purpose this site.

posted by: Noteworthy on January 4, 2019  4:26pm

This is what happens with a parasite - it occupies, feeds, breeds and departs. What’s left is a hollowed out shell.

As for the tax abatement - good lord. This is another stupid move by the litigation committee. How much has now been given away in the last six months or so? It is millions and millions of dollars. And yet, they hit us for $30 million tax hike to cover their stupidity and arrogance. It never ends. Turn it into apartments. Everything else is.

posted by: Ben Howell on January 4, 2019  4:47pm

I’d push back about some of the comments from folks like Sparer & Zorn quoted above about this not decreasing access. With consolidation YNHH has moved a fair number of outpatient specialty services *out* of New Haven to their locations in Hamden, Guilford, North Haven, & Milford, etc.. Yes, some services are still located at or near the York & Chapel Street locations, but too many services are located *only* in places that are not readily accessible to people who don’t have cars. (for example Sleep Medicine in North Haven, or specialty Neurology, or plans to move Winchester Chest Clinic) This is a *big* access problem for low-income folks from New Haven trying to access specialty YNHH care in the face of them gobbling up most outpatient services in the area.

Also, why can’t YNHH rent space at Temple St for the safety-net outpatient services that are currently slated to be moved to Sargent Drive. Temple St is more centrally located, has better bus & pedestrian access to the Hill & Dwight/Edgewood neighborhoods (where the current clinics live), although unlike Sargent Drive it doesn’t have free parking. It would also be a sign that YNHH isn’t trying to push Medicaid & under-insured patients out into the edges of the city.

posted by: Wooster Squared on January 4, 2019  5:50pm

@Ben Howell

Have you seen the reimbursement rates the government gives for medicaid? What’s surprising is not that YNHH is de-prioritizing these patients, but that they continue to serve them at all.

The medicaid model is badly broken and is driving providers away, YNHH included. Doctors offices can’t charge for no-call, no-show appointments (they way the do for everyone else so you don’t just skip) so patients routinely skip appointments leaving gaps in the schedule and costing the provider money.

Everything is covered at zero cost to the patient. Savvier patients have noticed these perverse incentives and responded accordingly, for example calling an ambulance to go to the hospital when it is not an emergency because medicaid covers 100% of the ambulance cost and the patient doesn’t have to pay for a cab that way (you also typically get seen quickly when you arrive in an ambulance). Under the medicaid model, patients have zero financial skin in the game so they use services in a very wasteful manner compared to people with private insurance.

Until many of the serious structural problems in medicaid are addressed, I suspect we’ll be seeing more and more medical establishments like YNHH turning their back on the medicaid population.

posted by: Stylo on January 4, 2019  5:59pm

The assertion that this could become a worthless fallow building is silly.

It may just have worth as a different use. E.g. housing.

posted by: Ben Howell on January 4, 2019  10:36pm

@Wooster Squared.

Yes, as a primary care physician and health services researcher here in New Haven, I am very aware of Medicaid financing & billing. Perhaps I’m naive that a non-profit institution (YNHH) can act thoughtfully as the safety-net hospital for the community of New Haven that it is. Although, I will agree that there are problems with our health care system & how it is financed in this country, given your comments, I don’t think we would agree on the solutions. Also, I will not address them directly, but I your conceptions & characterizations of people who are on Medicaid & how they use Medicaid are not based in fact.

posted by: THREEFIFTHS on January 5, 2019  12:01am

A nine-story medical office building downtown has gone into cardiac arrest.

Once seen as a pioneering model of healthcare delivery when it was built in 1978, the building —Temple Medical Center, located at 40 Temple St., 60 Temple St. and 200 George St. — might not survive this latest scare, after bleeding out thousands of its patients to other medical campuses.

The prognosis: The place could be emptying out within months once tenants’ leases expire.


He is the real prognosis: From what I heard.When the leases expire.The gentrification vampires have their eyes on this building already.Take your pick.condos or apartments?

posted by: Dennis Serf on January 5, 2019  2:11am

There must be more to this story, because something smells here.

“Even at an $18 million listing price, “they were unable to get an offer at that price and go through their due diligence,” said Karen Kravetz”. The market is telling you it isn’t worth $18 million IN ITS CURRENT CONDITION. Hint: Lower the price!

“The city’s attorneys argued that they’re still getting a good deal. The building that could end up being worthless if no buyer steps up, they noted”. Really? Now, THATS the money quote. It cost more than $1,000 per sq ft to build new. Yet somehow no investor would come in and convert the building to office space (300 George St is 3 blocks away and full), or residences No surprise, the City just gave away $240K after you listen to the city’s attorneys .

“Board of Alders President Tyisha Walker-Myers dissented in the Litigation Settlement Committee’s 3-to-1 vote. She said the deal lacks any guarantee that Yale-New Haven Hospital wouldn’t reverse course and keep the center alive, potentially shortchanging the city in the process.”

When did Walker-Myers start caring about city giveaways? It was OK to hand out tax abatements to the politically connected developers looking to build housing on the RT 34 Connector and it was OK to try to hold the IKEA hotel plan (and more city tax dollars) hostage to union demands. But, when the word Yale comes up all of a sudden the deal gets scrutiny. Let’s face it, she’s pandering to the UNITE Here, Anti-Yale vote. If this were Continuum of Care she wouldn’t have an issue with it.

The appraised value at this time shouldn’t be changed. The rents are still coming in. Do a revaluation once Yale moves out, or the building gets sold.


Dennis Serfilippi
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https://www.ournewhaven.org

posted by: 1644 on January 5, 2019  1:22pm

New Haven’s socialists should be happy.  This center, and its original tenants, were conceived as a means to profit from others’ illnesses by skimming high reimbursement, money making patients from the non-profit hospitals,  leaving the hospitals with fewer patients whose insurance payments would subsidized care for the uninsured and underinsured (Medicaid). Those who want the poor to receive medical care should be happy that the concept failed.  As for the building, it’s not emptying out because of consolidation.  It’s emptying out because its no longer fit for purpose.
  As far as the tax valuation, state law requires it to be appraised valued at fair market value.  If it cannot be sold for the appraised value, the appraisal would be lowered.  If the city didn’t lower the appraisal, the owner could sue and force the city to lower the appraisal to the market clearing price.  Yes, it may be worth more if converted to residences, but such conversion would cost millions, millions which would be deducted from the current market value.
  BTW, Medicaid is great for the beneficiaries,  who have no co-pays and unlimited coverage, but terrible for providers, who provide services far below cost and endure no-show rates of 30% by an unappreciative population.

posted by: TheMadcap on January 5, 2019  8:03pm

“endure no-show rates of 30% by an unappreciative population.”

No show rates are staggeringly high across the medical industry as a whole and you just have a grudge against poor people

posted by: missthenighthawks on January 5, 2019  10:03pm

I don’t agree with the consolidation theory they talk about.  There are new outpatient centers, including day surgical centers, popping up all over New Haven county.  I’ve personally been to two of them, one in North Haven and one in Hamden. I suspect the real reason has more to do with the tax rate than anything else.  As we keep raising taxes we’re forcing residents and businesses out of the city. And then there’s always the issue of transportation. Outpatient centers need parking, preferably free, not only for the patients, but also for the staff.  As much as we’d like to promote public transportation or bike paths, they just don’t work for medical patients.

posted by: 1644 on January 6, 2019  10:53am

Madcap:  No show rates at 800 Howard are about 30%.  At YNHH’s suburban clinics in places like Milford and Guilford, they are under 10%, and most days every patient shows.  I have participated in clinics outside of the US, for truly poor people, and the contrast in patient attitudes is amazing.  Patients outside the US travel long distances, often accompanied by family members, and wait hours to be seen for free care.  In the New Haven area, many patients take free care for granted, and show-up late or not at all.

MissNightHawks:  Hamden’s mill rate is higher than New Haven’s.  Hamden and North Haven are closer to a better insured population, and the parking issue is likely a big attraction of the suburbs. (As bad as New Haven’s financial management is, Hamden’s is worse, reflected in its bond rating.  New Haven’s mill rate is about the same as Hamden, West Haven, and Woodbridge.). The “new” Hamden center, also, appears to be a recycled St Ray’s facility, likely acquired at a good price. The Hamden center is part of a chain. http://www.hartfordbusiness.com/article/20180523/NEWHAVENBIZ/180529965/outpatient-surgery-center-to-open-in-hamden-this-fall

posted by: TheMadcap on January 6, 2019  2:35pm

Next up, 1664 compares the fact American students stay home from school while kids in rural Nepal walk 2 hours to school.

But anyways, while you’re disparaging the poor(and often disabled/homeless/addicted population Medicaid serves) by trying to compare them to some of the state’s wealthiest towns, you seem to be ignoring the huge lines that form outside places like the free dental clinic, or Project Mothercare

posted by: LookOut on January 6, 2019  2:36pm

A simple case of a business that did not keep up with the times and stay competitive.  There are so many med facilities in the area that are doing fine but Temple can’t make a go of it? 

I had a few weeks of Physical Therapy at Temple this past summer.  For every one hour session, I either had to pay the steep parking rates for their dark and dreary garage or try to find street parking.  Either way, my next step involved crossing through garage traffic to get to the entrance in the middle of the garage…not the most pleasant experience.  The therapists were OK but I soon decided to switch to a place that I could access easily and not pay for parking.

posted by: ebw1957 on January 7, 2019  9:12am

Maybe the new governor can follow his predecessor’s strategy and find a muti-billion dollar business to relocate to New Haven for gobs of tax incentives?

posted by: BhuShu on January 7, 2019  11:06am

It is pitiful Yale has consolidated. As it stands their other campuses are overcrowded. They say they are updated?!! Saint Rafael’s wards are rediculusly old and outdated as are the overcrowded ER’s. Not to mention that it’s widly known that Temple Meducal had the best most qualified nurses doctors surgical staff of all three campuses. I see their consolidation as being totally self-serving and not serving their clients ... the patients. Yale has forced doctors hands to join their ranks or if not, they get booted out of using their surgical facilities. Let’s be real here about what’s going on. Greater new haven patients have fewer and fewer choices of who to use for medical care. Yale is not the savior ... it has become the Oligarch!!

posted by: BhuShu on January 7, 2019  11:26am

It is pitiful Yale has consolidated. As it stands their other campuses are overcrowded. They say they are updated?!! Saint Rafael’s wards are rediculusly old and outdated as are the overcrowded ER’s. Not to mention that it’s widly known that Temple Medical had the best most qualified nurses doctors surgical staff of all three campuses. I see their consolidation as being totally self-serving, not serving patient needs and not serving the poor. Yale has forced doctors hands to join their ranks and if not, they get booted out of using their surgical facilities. Let’s be real here about what’s going on. Greater new haven patients have fewer and fewer choices of who to use for medical care. Yale is not the savior ... it has become the Oligarch!!

posted by: Kathy on January 8, 2019  12:33am

@ben Howell Don’t worry about Yale and them turning their backs on the “Medicare/Medicaid population” Yale is getting 340 b pricing for serving that very population and making Millions! They have hundreds of useless positions and have little if ANY obligation to the very city their hospital resides.