Executive Summary Mandate and Purpose

In late spring 1999, the General Assembly passed Special Act 99-10, which included a mandate for the Office of Health Care Access (OHCA) to conduct a study of the health of the Connecticut hospital system and the factors that influence the financial condition of hospitals.This mandate was based on the premise that hospitals in Connecticut were facing increasing financial challenges during the late 1990s. Most visibly, operating income dropped to the point that by the end of the decade half of the state’s hospitals realized negative operating margins.Hospital efforts to reduce internal costs and broaden corporate alliances were partially successful, but many turned to the government for financial relief.This request put policy makers in a quandary given the policy of deregulation legislated in 1994. If intervention was somehow necessary, what would best justify and determine the type of relief, the amount, and the recipient? This study provides a detailed analysis of the financial health of Connecticut’s hospitals in terms of the past,present and future drivers that determine financial outcome.