‘Everyone Was Shocked’: Investment Committee Members Resign After Hartford HealthCare Fires Staff, Hires Morgan Stanley

The $4.3 billion healthcare fund’s sudden pivot to an outsourced CIO model has raised questions about its governance.

Victor J. Blue/Bloomberg

Victor J. Blue/Bloomberg

Five members of Hartford HealthCare’s investment committee have stepped down after the organization suddenly terminated its entire investment staff and hired Morgan Stanley to serve as its outsourced chief investment officer.

Wesleyan University CIO Anne Martin, General Electric CIO Harshal Chaudhari, Cynthia Steer, City of Hartford director of investments Gary Draghi, and committee chair David Roth all resigned from their seats within a day and a half, according to Roth.

“Everyone was shocked,” Roth said of the investment committee by phone. “Watching people’s faces, I think people couldn’t believe what was going on.”

The investment committee learned that HHC’s board had decided to hire an OCIO and terminate staff on Tuesday — the same day that Institutional Investor initially reported that HHC had let some staffers go and was planning a pivot to the model.

In his resignation email seen by II, Roth called the process “unacceptable.”

“Despite the subcommittee’s delegated responsibilities, jurisdiction, and duties, we were never informed, engaged, or consulted as to the determination of changing to an outsourced CIO and investment office model, nor after that decision was made the question of who should be considered and selected as OCIO,” Roth said in the email.


“There was a total lack of transparency and a deliberate bypassing of the subcommittee and usurpation of its role,” He added. “Personally, as chair, I was not even granted the courtesy of being informed and given the opportunity to address the issue.”

HHC’s former CIO, David Holmgren, could not be reached for comment. Morgan Stanley declined to comment on the news.

“Hartford HealthCare’s investment funds have performed well over many years,” a spokesperson for the hospital system said via email. “The 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.”

The choice to go the OCIO route is an unconventional one, industry experts say. Hartford HealthCare manages about $4.3 billion in assets and has a complicated portfolio with partnerships, niche managers, and illiquid assets that will be challenging to unravel, especially with no staff remaining to onboard the new OCIO.

The timing is also noteworthy: Less than a year ago, Hartford HealthCare brought on junior staffers to help manage its investments. The team also recently moved into a new office space.

“Our portfolio will benefit from Morgan Stanley’s deep bench of research analysts, market strategists, and investment managers,” the spokesperson said in a statement. “A dedicated team will provide HHC with a full suite of investment management, fiduciary oversight, and operational services.”

Roth said that he was not previously aware that Morgan Stanley had an OCIO division.

As for Holmgren and his team, they appear poised to find attractive opportunities elsewhere. Hartford HealthCare posted positive returns for the fiscal year ending June 30, 2022 — an impressive feat for most investment organizations during the same time period.

Former board members, meanwhile, remain concerned about the hospital’s future.

“I still believe in the care the hospital gives, but I am concerned that sophisticated donors will question the stewardship of their dollars,” Roth said.

—Julie Segal contributed to this reporting.