Prospect Medical Holdings – Owner Of 3 Connecticut Hospitals – Files For Bankruptcy

by Viktoria Sundqvist CTNewsJunkie

The owner of three Connecticut hospitals with financial difficulties has filed for Chapter 11 bankruptcy and state officials say they are watching the matter closely to protect patient care and safety.

Prospect Medical Holdings, a private-equity group that owns Connecticut’s Waterbury Hospital, Manchester Memorial Hospital, and Rockville General Hospital, said it is “proceeding on a strategic pathway to realign its organizational focus outside of California” and that it plans to rededicate itself to its original mission of serving the community.

Gov. Ned Lamont said his administration has been preparing for this possibility and that he will continue to hold Prospect accountable for providing quality care to the communities that rely on its facilities.

“The three hospitals remain open,” Lamont said in a news release Sunday. “We have a cross-agency team in place to ensure hospital operations continue uninterrupted and that employees and vendors continue to be compensated, as required by court orders.” 

The company, which owns 16 hospitals in four states including Pennsylvania, Rhode Island, and California – bought the three Connecticut hospitals and their related networks in 2016 for nearly $300 million. Waterbury is part of the Greater Waterbury Health Network and Manchester and Rockville are part of the Eastern Connecticut Health Network.

Since then, there have been ongoing complaints that the three hospitals are struggling to pay bills under Prospect’s ownership, including paying vendors, healthcare providers, and local property taxes. Officials have said that the company also owes state taxes and is behind on pension payments.

Two years after buying the hospitals, Prospect took out a $1.12 billion mortgage against the Connecticut properties to pay dividends to investors and executives, according to a CT Insider investigation.

In 2022, Yale New Haven Health signed a purchase agreement with Prospect to buy the three hospitals for around $435 million, but Yale later sought to lower the price based on deteriorating conditions at the hospitals. The two companies have since been embroiled in lawsuits over the potential sale.

The Office of Health Strategy must approve a certificate of need for all hospital mergers, and lawmakers and medical staff have urged the state to move along the approval process for the sale.

Lamont said the state will continue to evaluate opportunities to transfer these institutions to a new operator.

“As part of this response, we are in touch with management at these local hospitals, representatives for hospital staff, and local elected officials,” Lamont said Sunday.

The state has an independent monitor overseeing operations at Waterbury Hospital and will increase oversight at Manchester Hospital, the governor said.

“Our number one priority remains maintaining safety and quality of care at Prospect’s three Connecticut hospitals,” he said.

Attorney General William Tong said his office is monitoring the situation and that he intends to actively participate in the proceedings to protect the interests of the state and that of patients and employees.

“I am disappointed that Prospect Medical Holdings has decided to file for bankruptcy,” Tong said. “However, this changes nothing with regard to their obligations to patient care and safety.”

Tong’s office in 2023 launched an investigation into Prospect’s financial practices. It is unclear if that investigation has concluded.

State Sen. Saud Anwar, a South Windsor Democrat who co-chair’s the legislature’s Public Health Committee, is also a practicing doctor of pulmonary medicine and critical care for ECHN. He released a statement Sunday calling news of Prospect’s bankruptcy disturbing and deeply disappointing.

“It sends ripples of uncertainty through the three hospitals affected, as well as the communities and families who rely on these institutions. I am working to determine how this will impact our state and am adamant that care cannot be compromised now more than ever,” Anwar said. “State leadership, including Governor Ned Lamont, Attorney General William Tong, and my fellow state legislators is deeply engaged in this issue and in close contact with Prospect Medical Holdings’ leadership to address this situation with urgency and clarity.”

Anwar echoed Lamont’s comments about prioritizing the well-being of patients and the employees who care for them.

“Our top priority is – and always will be – our patients and healthcare workers. These are the people at the heart of our healthcare system, and they deserve our unwavering support,” Anwar said. “We are committed to doing whatever it takes to ensure continuity of care, safeguard jobs, and maintain the quality and accessibility of healthcare in the communities served by these hospitals.”