Alternative Investment

Hartford HealthCare investment advisers quit over termination of staff and outsourcing of operations – Hartford Courant

Five of seven members of the group overseeing Hartford HealthCare’s $4.3 billion investment portfolio resigned abruptly this past week after being informed by management the investment staff was terminated and its work will be done by New York investment management giant Morgan Stanley.

David Roth, chairman of the Investment Subcommittee of Hartford HealthCare’s Finance Committee, said he was shocked by the announcement by top management in a phone call Tuesday. He said he does not know how many on the investment staff are affected by the decision.

“We acknowledge the board’s right to do it, but we don’t know why,” he said Friday in a phone interview.

Hartford HealthCare said in a statement it reorganized its investment department and related functions after “careful review” and with the Board of Directors’ approval to select a full-time investment firm to manage its portfolio.

“We are confident that Morgan Stanley, a respected multinational investment management and financial services company that manages $6.5 trillion in client assets, will be a valued partner,” Hartford HealthCare said.

The sprawling health care organization, which operates Hartford Hospital and six other acute care hospitals, behavioral health and physician organizations and other outlets, provided no details. Roth said management gave no reason for its decision.

He criticized the process in which the investment oversight subcommittee was not consulted or informed. He said he wrote Thursday to Chief Executive Officer Jeffrey Flaks, telling him the process was unacceptable. He said he has not heard back.

“We were not engaged, informed or consulted,” Roth said. “I can only guess at things, and I don’t want to do that.”

The Investment Subcommittee, a group of volunteers, meets quarterly to review Hartford HealthCare’s investment portfolio performance, occasionally meets other times, reviews market analyses and must be familiar with alternative assets and other details, Roth said.

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Roth, a lawyer by training who first got involved in finance with then-state Treasurer Francisco Lopes Borges, who served from 1987 to 1993, has been a member of Hartford HealthCare’s advisory committee for nine years and chairman for three years.

He said the decision to terminate the staff is particularly difficult to understand because Hartford HealthCare is the No. 1 performing health care organization in the U.S. In the last five or six years, it has generated as much as $750 million in additional earnings from its investments, Roth said.

Hartford HealthCare said its “investment team’s acumen has earned national recognition from investment industry experts.”

“We are grateful for their many contributions of these colleagues and will support them through this transition, either into new roles within the organization or to positions outside of Hartford HealthCare,” it said in a statement.

Roth, who has been active in numerous organizations, including the Jewish Community Foundation, Connecticut Children’s Medical Center, Hartford Symphony Orchestra and Bushnell Center for the Performing Arts, will not be lacking in civic activities.

“I’ve got a million things going,” he said.

Stephen Singer can be reached at ssinger@courant.com.

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