Vanguard hospital head warns of post-merger layoffs
The top administrator at the biggest hospital complex owned by Vanguard Health Systems — the for-profit company expected to buy the nonprofit Eastern Connecticut Health Network — has warned employees of layoffs following Vanguard’s own acquisition by another company.
Joe Mullany, the president and CEO of Detroit Medical Center, last week sent emails to employees there expressing his excitement about “the great opportunities” posed by the pending purchase of Vanguard, a Tennessee company that owns 28 hospitals, by a Texas company, Tenet Healthcare, which owns 79 hospitals.
Mullany included a list of “frequently asked questions” with answers stating that the merger “will result in some position eliminations, and not all employees will be retained,” and advising workers who leave that they were free to reapply for a job at Tenet in the future.
The Q&A list also contained information about unemployment benefits, the federal law that allows laid-off employees to continue their group health insurance benefits, and the company’s 401(k) retirement plan.
Mullany’s memos were disclosed by the Detroit Free Press, which reported that “another round of layoffs” could be coming at the medical center —about 300 employees were laid off this year — and suggested that employees at other hospitals owned by Vanguard also could lose their jobs.
But Vanguard’s chief development officer, Trip Pilgrim, said this week that the Detroit newspaper had overstepped when it said more layoffs could occur at the medical center, which includes eight acute-care and specialty hospitals that Vanguard purchased for $368.1 million in 2011.
The “questions and answers,” Pilgrim said, were intended for Vanguard’s “corporate employees” rather than the “market employees” like those at the medical center,
“There are no layoffs planned in Detroit as a result of the Tenet transaction,” Pilgrim asserted.
Pilgrim, who is playing a key public role in Vanguard’s bid to purchase ECHN and its Manchester Memorial and Rockville General hospitals, told the Journal Inquirer last week that he expected Tenet’s acquisition of Vanguard to be settled within 45 to 60 days.
That deal, in which Tenet would pay $1.8 billion for Vanguard and assume $2.5 billion in Vanguard debt, would make Tenet the third largest health care network in the country.
It also would make what the New York Times called a “big winner” out of Blackstone Group, the corporate buyout firm that owns 38 percent of Vanguard.
Tenet’s CEO is Trevor Felter, who last year earned $11.2 million in salary, stock awards, options, and incentives.
Felter also is a member of the board of directors at Hartford Financial Services, and two other Tenet directors also have links with Connecticut companies. Karen M. Garrison is a former division president at Pitney Bowes in Stamford, and Edward A. Kangas, a former chairman and CEO at the accounting firm Deloitte Touche Tohmatsu, is a director at United Technologies Corp.
The Tenet board also includes John Ellis “Jeb” Bush, the former Florida governor and oft-mentioned potential Republican presidential candidate, whom Tenet paid $304,743 in 2012.
ECHN has signed a nonbinding letter of intent to affiliate with a joint venture between Vanguard and Yale New Haven Health, the parent corporation of Yale-New Haven Hospital.
Vanguard would purchase ECHN’s assets, converting the regional nonprofit health system into a for-profit operation and managing Manchester Memorial and Rockville General hospitals.
Yale New Haven Health would be a minority partner in the joint venture, contributing what Pilgrim called “intellectual property.”
Vincent Petrini, a senior vice president at Yale New Haven Health, said that meant it would provide “clinical support and oversight,” including “specialty services to supplement” ECHN’s current services.