After years of negotiations over the proposed sale of three Connecticut hospitals owned by Prospect Medical Holdings to Yale New Haven Health, officials with Yale said Tuesday the deal appears “impossible.”
California-based Prospect, which owns hospitals in four states, filed for bankruptcy protection last month.
In a statement Tuesday, a spokesperson for Yale said the health system continues to monitor Prospect’s bankruptcy proceedings, but the company’s “mismanagement” had all but ruined chances of inking the deal.
“While YNHHS had hoped to acquire these assets and enhance the clinical care for the impacted communities, Prospect’s failure over several years to pay vendors and State and local taxes and to fund their pension obligations have made this transaction impossible,” Dana Marnane, of Yale New Haven Health, said in an emailed statement. “The bankruptcy filing is proof of their disinvestment and mismanagement.”
Marnane’s statement came as state senators were debating legislation Tuesday that would create an expedited state approval process for the acquisition of hospitals that have filed for bankruptcy. The bill specifically seeks to shorten the timeline if a new buyer emerges for Prospect’s three hospitals, Waterbury, Manchester Memorial and Rockville General.
The House passed the measure Monday and the Senate approved it late Tuesday.
“We came in to do this,” Ritter said Monday. “There’s talk that there are buyers. I don’t know the names, but the governor’s office was like, ‘We need this done by March 1.’”
The state’s approval process for major health care transactions, known as the certificate of need, requires providers to obtain approval from the Office of Health Strategy before making any major changes, such as mergers, large purchases of equipment or facilities, or shuttering services.
House Bill 7067 calls for an expedited timeline for the acquisition of hospitals that have filed for bankruptcy — requiring OHS to, among other provisions, issue a final decision within 60 days from when the application is deemed complete.
OHS and the Lamont administration faced criticism over the time required to approve the pending deal for Yale New Haven Health to acquire the three Prospect-owned hospitals. Last month, the governor said he’d like to see the Yale acquisition go through, but he said he’s open to other buyers.
“We can only confirm that we continue to have conversations with possible buyers. Aside from that, we cannot comment further at this time,” Rob Blanchard, a spokesperson for Gov. Ned Lamont, said in a statement Monday.
Blanchard didn’t respond to follow-up questions regarding Yale’s statement in time for publication Tuesday.
OHS commissioner Deidre Gifford said the agency supports the legislative proposal as “a critical process to allow flexibility for emergencies and ensure continuity of health care access to communities.” Gifford added that a hospital declaring bankruptcy is “rare” and the office doesn’t anticipate the emergency certificate of need process will be used frequently.
Yale New Haven Health first reached a tentative agreement to purchase the three facilities from Prospect for $435 million in 2022. But the deal has been mired in complications since then, including lawsuits and, most recently, Prospect’s bankruptcy.
But even before that, the success of the deal was tenuous at best.
In August 2023, a cyberattack crippled operations at Prospect’s facilities around the country. The following month, the presidents of Prospect’s Connecticut hospitals warned the governor that the financial situation at all three hospitals was dire. Last year, the parties sued and countersued each other over the true value of the three hospitals.
n her statement Tuesday, Yale’s Marnane stopped just shy of confirming that the health system intended to withdraw its bid, adding that “Prospect has never been in a position to close the transaction on the terms set out in the October 2022 Asset Purchase Agreement.”
A spokesperson for Prospect Medical Holdings did not respond to multiple requests for comment.
This story was originally published in the Connecticut Mirror.
