Private equity-funded Prospect Medical Holdings in California, the owner of three financially troubled hospitals in Connecticut, filed for bankruptcy late Saturday night. The bankruptcy impacts Waterbury Hospital, Manchester Memorial Hospital and Rockville General Hospital.
Prospect is embroiled in a protracted lawsuit with Yale New Haven Health (YNHH) over the stalled $435 million sale of those hospitals.
In a statement, Prospect said the bankruptcy proceedings were to expedite the sale of two of its hospitals, the Roger Williams Medical Center and Our Lady of Fatima Medical Center in Rhode Island.
The company says it is also negotiating the sale of Crozer-Chester Medical Center in Pennsylvania.
“Divesting our operations outside of California will ensure that they receive necessary financial support so that the communities that rely on those facilities will maintain continued access,” Von Crockett, CEO of Prospect, said.
In Connecticut, lawmakers reacted to the news of the bankruptcy proceedings with concern.
“The news of Prospect Medical Holdings declaring bankruptcy is both disturbing and deeply disappointing,” State Sen. Saud Anwar, chair of the state’s Public Health Committee, said. “It sends ripples of uncertainty through the three hospitals affected, as well as the communities and families who rely on these institutions.”
Anwar said Gov. Ned Lamont and Connecticut Attorney General William Tong and state legislators are “in close contact with Prospect Medical Holdings' leadership to address this situation with urgency and clarity.”
Tong said he was disappointed that Prospect has decided to file for bankruptcy, but “this changes nothing with regards to their obligations to patient care and safety” and that he intends “to actively participate in the proceeding to protect the interests of the state, Prospect’s patients, employees, and the communities that rely on its services.”
The bankruptcy filing comes following a recent U.S. Senate committee investigation that blasted Prospect for draining the hospitals of finances and saddling them with debt. U.S. Sen Richard Blumenthal of Connecticut said Prospect had turned the hospitals into its “personal piggy banks.”
The Senate report cited Connecticut Public’s reporting on staffing shortages at Waterbury Hospital. Connecticut Public also reported on patient abuse, rusty operating room equipment and unpaid bills at Prospect-owned hospitals. Prospect said it put corrective actions in place after being cited by the state and has since passed subsequent state inspections.
“The administration has been preparing for the possibility that Prospect Medical Holdings would file for Chapter 11 bankruptcy,” Gov. Ned Lamont said in a statement, noting the group’s three Connecticut hospitals remain open.
"We will continue to hold Prospect accountable to provide quality care to the communities that rely on these institutions," Lamont said.