by Viktoria Sundqvist CTNewsJunkie
Waterbury Hospital on Robbins Street in Waterbury, CT, one of three Connecticut hospitals owned by Prospect Medical Holdings. Credit: Viktoria Sundqvist / CTNewsJunkie
The state has agreed to a settlement with Prospect Medical Holdings, which will allow the owner of three Connecticut hospitals to reduce services at one of them and consolidate two of them.
As part of the agreement reached late Friday, Prospect Medical can permanently end all services except for emergency room and behavioral health services at Rockville General Hospital in Vernon and start its consolidation with Manchester Memorial Hospital. But the consolidation would still require approval from the state Department of Public Health.
Prospect Medical Holdings, a private equity group that also owns Waterbury Hospital, entered chapter 11 bankruptcy proceedings in January. State officials – including Gov. Ned Lamont – have repeatedly said the three hospitals will stay open and continue to provide quality care during the proceedings.
Waterbury Hospital is part of the Greater Waterbury Health Network and Manchester and Rockville are part of the Eastern Connecticut Health Network.
“The people of Connecticut deserve better than this,” said state Sen. Jeff Gordon, R-Woodstock, who is a medical doctor and represents Vernon. “This decision by Office of Health Strategy (OHS) Commissioner (Deidre) Gifford once again highlights how out of touch with reality our state government is regarding local health care needs in Connecticut.”
Gifford, however, said in a statement that the settlement “protects critical resources” and ensures the local community access to emergency care.
Gifford, who has led OHS since January 2023 but worked in state government since 2019, has announced she will retire this summer amid criticism over her involvement in an abandoned audit that could have exposed potential Medicaid fraud.
Prospect had already cut back on services at Rockville Hospital without state permission, starting in March 2020, which led to a state investigation last year. As part of this new agreement, those services do not need to be restored and Rockville can instead be converted into a satellite campus of Manchester Memorial, which the company has been hoping to do since October 2020.
As a penalty, Prospect agrees to pay $300,000 to the state through the bankruptcy case. It must also host a community forum about the consolidation within 60 days and must provide financial and census data to the state upon request, according to the settlement.
“Each aspect of this agreement holds the Prospect applicants responsible for their actions and requires the company to notify all potential bidders in the bankruptcy case of the terms of the agreement,” Gifford said in a statement. “As various courts unravel the complex issues surrounding current and future ownership of the Prospect hospitals, our top priority continues to be the health and well-being of the patients and employees.”
State Sen. Saud Anwar, D-South Windsor, who co-chairs the legislature’s Public Health Committee, said it is important to keep Rockville General open, so reopening it with the current level of services will help the local community.
“Ideally, the resumption of all services would be preferable, but in the current financial environment, I do not know if that is possible,” Anwar said. “At this time, for the status quo in the emergency room and behavioral health to remain open, that will help the public.”
The company owes about $105 million in state taxes and is behind on pension payments. There have also 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.
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.
Prospect has 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.
Deborah Weymouth, president and CEO of both Waterbury Health and the Eastern Connecticut Health Network, has said the bankruptcy is not an end, but “a new beginning.”
Earlier this year, Lamont signed legislation to create an emergency application process to preserve continuity of care in the event of a hospital bankruptcy. Public Act 25-2 requires OHS to issue a final decision on a completed emergency Certificate of Need application in 60 days or less.