Home Care In Prospect, CT

HARTFORD — With Prospect Medical Holdings owing the state of Connecticut more than $100 million in delinquent taxes, a state senator is calling for Medicaid payments to the for-profit health care system to be halted until its taxes are paid.

Gov. Ned Lamont has said that Prospect owes the state more than $100 million, and payment is likely not coming any time soon as the California-based private equity firm filed for bankruptcy in January.

In order to recoup what is owed to the state, Sen. Saud Anwar, D-South Windsor, a pulmonologist and the senate chairman of the legislature's Public Health Committee, is recommending the state cut off Medicaid payments to Prospect.

"For Prospect to listen to the state of Connecticut and behave according to the moral principles that we live by in the state of Connecticut, I would be a proponent to stop the Medicaid payments for Prospect until they pay our taxes or they change their behavior," Anwar said.

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A spokesperson for Prospect did not immediately respond to a request for comment.

Lamont spokesman Rob Blanchard said that issues such as payment of delinquent taxes, including to municipalities and other entities, are still being negotiated in bankruptcy court.

In the meantime, the state "will continue to hold Prospect accountable to ensure they provide quality care to the communities who rely on these institutions," Blanchard said. "Our number one priority remains maintaining safety and quality of care at Prospect's three Connecticut hospitals."

Attorney General William Tong said that the state has been "actively engaged at every step of the bankruptcy process to protect both the state's financial interests and patient care."

Prospect's bankruptcy, he said, is the result of "years of mismanagement and private equity plunder, enriching shareholders at the expense of patients, health care providers, and the state."

As noted in court filings, Tong said that the state is committed to transitioning Prospect's Connecticut hospitals "to a responsible operator" and that patients continue to receive the care they deserve.

"At the same time, those responsibly for the substantial harm to Connecticut must be held accountable," he said.

While Yale New Haven Health agreed to buy Waterbury, Manchester Memorial, and Rockville General hospitals from Prospect for $435 million, Yale officials said last month that any deal with Prospect is now "impossible" following Prospect's bankruptcy filing.

Lamont echoed Yale's comments earlier this month saying he believes the transaction is "over."

Anwar places the blame on Prospect for the deal falling through, particularly its for-profit business model, which led to Prospect "devaluing the asset" by bilking the hospitals for their own profit.

"This is a classic textbook case of how private equity works," he said. "That's their strategy — to maximize their profits at the cost of the wellbeing of the institutions."

State legislators are considering several proposals that would address private equity in Connecticut health care systems, including potentially prohibiting new entities coming into the state.

Rep. Cristin McCarthy Vahey, D-Bridgeport, house chairwoman of the Public Health Committee, agrees that private equity firms have no place in health care.

"In my perfect world, there would be no private equity in health care. Period," she said during a public hearing this week.

People have lost access to care "because of people's greed," and because "profits were very clearly put above patients," McCarthy Vahey said.

In written testimony to the Public Health Committee, Office of Health Strategy Commissioner Deidre Gifford said that the definition of a private equity company may be too broad as currently written in proposed legislation.

This, she said, could prevent groups such as doctors organized as a partnership or limited liability companies that collect revenue from its members from operating health care systems in the state.

Written testimony from the Connecticut State Medical Society also raised some concerns about a complete prohibition on private equity in health care in the state.

While saying that Prospect's ownership of its three hospitals in the state "has been nothing short of a disaster," not all private equity investments follow the same path, as they are capable of providing more capital to modernize systems, recruit staff, and expand access to care.

Department of Public Health Commissioner Manisha Juthani submitted written testimony noting that one proposal seeks to prohibit direct or indirect ownership by private equity or a real estate investment trust, such as Medical Properties Trust, Prospect's landlord.

However, as currently written, MPT or other real estate investment trusts, would be able to enter into lease-buyback transactions like the one in which Prospect mortgaged it's Connecticut hospitals for $1.12 billion.

Despite some objections from state agencies, Anwar is standing his ground.

"Nothing good has come out in the hospital arena with private equity, so why not just ban them?" he said during this week's public hearing. "They are profit-driven, they are only in it for money, they are not helping the community."

March 20, 2025

Staff Writer

Eric Bedner is a reporter with the Journal Inquirer. He has been with Hearst Connecticut Media Group since 2023. When not working, he enjoys listening to music, watching movies, and rooting for the New York Giants.

Since Yale New Haven Health has made clear that purchasing three Prospect Medical Holdings hospitals in Connecticut is now ‘impossible,’ a lawmaker and some hospital staff are raising concerns about the fragile state of the hospitals as a new buyer is sought.

State Sen. Saud Anwar, Senate chairman of the Public Health Committee, said because resources are limited, patients may be at risk.

”Because they are eroding all the resources, the quality of care is being impacted and every day we are not getting a real buyer, we are losing ground,” he said.

The impact of private equity in health care has been on display in Connecticut recently as Prospect Medical Holdings, a private equity company filed for Chapter 11 bankruptcy this past January. A United States Senate Committee on the Budget investigation conducted last year that included Prospect found that private equity in health care prioritized profits over patient care.

Prospect, which operates Manchester Memorial, Rockville General and Waterbury Hospital, has faced fiscal challenges in many of its hospitals in the state, from delayed payments to physicians and vendors to a shortage of health care providers.

The state Office of Health Strategy’s latest Annual Report on the Financial Status of Connecticut’s Short Term Acute Hospitals found that Prospect lost $86.4 million in Fiscal Year 2023.

Dana Marnane, director of communications for Yale New Haven Health, said that while Yale New Haven Health had hoped to acquire the hospitals and enhance 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.”

In 2022, Yale New Haven Health agreed in a tentative agreement to purchase Prospect’s three hospitals for $435 million but the deal was mired in stalemates and lawsuits.

Anwar said it is not all doom and gloom and that he is “confident rather than hopeful that any organization that is going to do its due diligence will find (the hospitals) a viable option.”

Waterbury Mayor Paul K. Pernerewski Jr. said he fully expects someone to be interested in bidding on the hospitals.

“It is a lucrative market and there is a great deal of potential there,’ he said.

Profits over care

In the meantime, nurses and unions at several of Prospect’s hospitals in the state told the Courant that their hospitals have been decimated, with some worried about the quality of care as they wait for a new owner to purchase the hospitals.

Ed Gadomski, Connecticut Healthcare Associates Internal Union Organizer, who represents the nurses and technicians at Waterbury Hospital, said almost all of its departments are understaffed with nursing-to-patient ratios well over the appropriate levels set by the Hospital Staffing Committee. He said antiquated supplies are used to treat patients.

Further, he said the Operating Room has a 50% vacancy rate.

“Anytime you are understaffed and nurses are taking on a larger workload along with trying to pick up extra shifts, it leaves them exhausted and overworked, leaving a higher chance of a medical error occurring,” Gadomski told the Courant.

Testifying before the Public Health Committee Monday, Gadomski expressed support for HB 6873, requested by Gov. Ned Lamont, which seeks to strengthen the review of health care entity transactions.

“We are now left in the hands of a beast that provides toxic leadership inhouse, has a blatant disregard for law enforcement, and prioritizes profits over patient care,” Gadomski said in his testimony.

“They have extracted wealth through sale-leaseback transactions, including outsourcing the IT department back in 2020 to India, and have loaded the hospital with debt, only to leave patients, workers, and communities with the consequences,” Gadomski continued. “Staffing levels are greatly understaffed, computers and medical equipment have not been maintained or replaced, and critical services have been threatened. Nurses and technicians are beat-down and mentally struggle with the current working conditions due to non-compliance of legally submitted staffing plans.”

Gadomski said the part that is really “scary about the whole scenario is we can’t stop it.”

In December of last year, an independent monitor was put in place to oversee patient care at Waterbury Hospital after concerns were raised about patient care.

Maura Fitzgerald, chief marketing officer for the Department of Public Health, said the independent monitor remains in place at the hospital.

“Any concerns raised by the monitor would be promptly investigated by DPH,” she said in an email. “DPH is also conducting routine monitoring of all Prospect sites to ensure health care quality and safety is upheld.”

Lauresha Xhihani, director of communications for Waterbury Health, did not return repeated requests for comment.

Anne-Marie Cerra, a registered nurse at Manchester Hospital, told the Courant Wednesday that the hospital’s 300 nurses have the resources to perform their duties on a daily basis.

However, she said there are vacancies in the hospital that have been in place since COVID and that she has seen how private equity in health care has impacted the hospital, with physicians and vendors not being paid. She said physicians have finally been paid due to the bankruptcy.

“The tone of staff is certainly disappointed that the Yale deal fell through,” she said. “We have been at this for three years. It’s upsetting that someone like PMH can have a practice that just decimates health care services throughout our state and other states. People want to hang in there. It is just a terrible situation to be in because of someone else’s greed. That is all that it is.”

She added she hopes the hospital can get their vendors back.

“They have poor business practices that just revolve around stuffing their pockets full of money for their shareholders,” she said.

Prospect Medical Holdings also did not return requests for comment.

Cerra said it is hard to show up everyday without wondering what is going to happen in the next three months.

“Hopefully private equity won’t come to the table with the highest bid,” she said.

Decrying private equity’s slash and burn tactics, Connecticut AFL-CIO President Ed Hawthorne, in written testimony supporting HB 6873, described a serious situation at the three hospitals.

“Prospect has ignored the certificate of need process when ceasing to provide services, failed to maintain necessary equipment, delayed payments to physicians and stopped paying into the employee pension plan,” he wrote. “In short, Prospect has hollowed out three community hospitals and put critical healthcare services in jeopardy so it can deliver profits to investors.”

Anwar said Prospect has “taken away the financial resources from the hospitals and not allowed them to invest in the well-being of the employees of the hospital.

“It has a direct effect on the patients,” he said, citing testimony at the committee from those at Waterbury Hospital.

“They shared how quality has eroded at Waterbury Hospital,” he said. “We have a responsibility to make sure we have safe health care in our towns and community and do whatever it takes to protect it.”

Private equity

Other state bills on private equity include SB 469, introduced by Sens. Anwar and Jeff Gordon, which would also restrict private equity firms from the acquisition of hospitals and prohibit real estate investment trust transactions involving hospitals.

Further, SB 567, also introduced by Anwar, would expand the authority of the state attorney general and commissioner of health strategy to regulate health care facilities owned by private equity and restrict property transactions deemed as “self-dealing,” according to a release from Anwar.

The Aging Committee held a public hearing on Feb. 28 on SB 1332 which would prohibit private equity companies and real estate investment trusts from acquiring or increasing any direct or indirect ownership interest in a nursing home or any operational or financial control in a nursing home beginning in October of this year.

The governor recently signed HB 7067, which would create an emergency Certificate of Need Process, specifically addressing hospitals undergoing bankruptcy proceedings.

According to a release from Anwar, the usual Certificate of Need process under current law has a number of potential delay periods. First, the Office of Health Strategy has 30 days to determine if an application is complete followed by a 30-day public comment period, public hearing and further waiting period.

The new Certificate of Need process would shorten many of those time frames, with the period to determine the completion of applications shrinking from 30 to just three days followed by decision deadlines cut in half and public hearings made optional, according to a release from Anwar.

It took more than 16 months for the Certificate of Need to be approved for Yale New Haven Health to buy Prospect’s three hospitals in March 2024.

Anwar said part of that delay was due to Prospect Medical Holdings not completing its application.

Originally Published: March 7, 2025 at 6:00 AM EST

Prospect Medical Holdings secured a key approval in bankruptcy court on Wednesday to move forward with selling Waterbury, Rockville General and Manchester Memorial hospitals.

Bankruptcy court Judge Stacey Jernigan approved a deal with Prospect’s landlord, real estate investment trust Medical Properties Trust, that enables the hospitals to be sold with the land they sit on. She also approved a new plan for selling the for-profit company’s hospitals that would allow Connecticut pension plan representatives and state officials, among others, to sit in on an auction process.

Creditors including pension funds and Yale New Haven Health had objected to an earlier agreement that Prospect inked with Medical Properties Trust, arguing that the landlord had too much power to claim Prospect’s assets under the deal.

“(Prospect) and MPT are attempting to dictate the terms of a sale that leave the workers who participate in this pension fund high and dry,” said Andrew Costa-Kelser, an attorney representing the Hospital and Health Care Employees Pension Plan of Philadelphia.

Changes were made in the new MPT settlement to give a greater share of the proceeds of any Prospect hospital sales to creditors including the city of Waterbury and the state of Connecticut.

Speaking for the city of Waterbury, which is owed about $22 million in property taxes, attorney Grace Bregard said, “We wanted to make sure that all of the city’s rights and ability to collect those property taxes will be protected.”

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Jernigan said she approved the revised MPT settlement to speed a sale, with the goal of avoiding months of litigation over the hospital properties and a situation where the hospitals would be pushed into bankruptcy again in the future by post-sale property disputes.

“Negotiating with these landlords and figuring out how to deal with them … it can slow down a sale process enormously,” Jernigan said at the hearing in North Texas Bankruptcy Court, which was live-streamed. “While we don't have perfect smooth sailing, we have definitely created the potential for a much easier sale process.”

Wednesday’s hearing also featured an appearance by an attorney for Yale New Haven Health, which is involved in a legal fight with Prospect over a failed bid to buy the Connecticut hospitals for $435 million. Yale said last month that any deal with Prospect is now “impossible,” but the system filed a “reservation of rights” with the bankruptcy court to ensure that Prospect’s auction plans wouldn’t impact the ongoing lawsuit in Connecticut district court.

“We know they can't linger in bankruptcy, and they've got to do something with these hospitals and we're not here to stand in the way of that,” YNHH attorney Stephen Pezanosky said. “We just wanted to make sure that nothing in these bid procedures would somehow affect our rights.”

Prospect’s two Pennsylvania hospitals, which the company said earlier this month were days from closing down, got good news at Wednesday’s hearing. State officials confirmed that they were in the final stages of securing a deal to sell the hospitals and keep them operating in a low-income area south of Philadelphia.

Chief Deputy Attorney General Melissa Van Eck told the judge that an asset purchase agreement could be ready as soon as next week for the sale of the two Prospect hospitals, which were kept operating this month with $7 million in emergency funding from a local foundation.

“We are cautiously optimistic that we will have a long-term plan,” Van Eck said.

The bankruptcy court actions come as Connecticut lawmakers have amplified calls to keep private equity firms and real estate investment trusts like MPT out of Connecticut’s health-care market.

“What happened here in Waterbury and what has happened in Connecticut is an abomination,” U.S. Sen. Chris Murphy said Tuesday at an event in Waterbury.

At a hearing on Monday, members of the Legislature’s Public Health Committee expressed frustration at the fact that any state action to restrict the role of private equity and REITs in health care would come too late for Connecticut’s Prospect hospitals.

“We’re living right now with three bankrupt hospitals,” said state Rep. Cristin McCarthy Vahey, D-Fairfield. “To my chagrin, my sense is the horse has left the barn.”

State Attorney General William Tong filed a “statement of interest” on Tuesday in the bankruptcy case of hospital owner Prospect Medical Holdings, “making it clear that Connecticut expects to have a full seat at the table in ensuring the transition of Prospect’s hospitals in the state to a responsible new owner,” Tong said in a statement.

The filing is also aimed at “protecting and asserting Connecticut’s claims for relief based on Prospect’s prior misconduct,” Tong said.

The fates of Waterbury, Manchester Memorial and Rockville General hospitals are at stake as Prospect confronts the claims of more than 100,000 creditors in a Texas bankruptcy court over debts somewhere between $1 billion and $10 billion.

Prospect’s Connecticut spokespeople did not respond to a request for comment by post time.

State lawmakers and regulators have vowed to keep the hospitals open and providing care at a high standard as California-based Prospect goes through the bankruptcy process.

In addition to an estimated $100 million in state taxes, Prospect Medical Holdings and its landlord, Medical Properties Trust, owe a total of about $23.6 million in overdue local taxes to the towns of Manchester, South Windsor, Vernon and Waterbury.

Tong took the new court filing as an occasion to lambaste for-profit Prospect’s management of its three Connecticut hospitals on Tuesday.

“Prospect took the Connecticut hospitals private and then sold the ground out from under them to fund dividends to its shareholders,” Tong said. “Those shareholders profited from Prospect throttling Connecticut’s healthcare infrastructure, stiffing vendors and staff, shortchanging Connecticut through material unpaid taxes, and – worst of all – endangering its residents through compromising on vital medical care.”

Yale New Haven Health struck a deal to buy the three hospitals before attempting to back out amid claims of Prospect’s mismanagement.

“Tong’s statement of interest underscores the egregious mismanagement we have been discussing for months,” Yale New Haven Health spokesperson Dana Marnane said Tuesday.

Under bankruptcy law, the hospitals could be sold at auction in what is called a 363 sale, used to quickly pay off creditors. Saint Francis Care, now part of Trinity Health of New England, bought Johnson Memorial for $32.9 million in a 363 sale in 2015 after the Stafford Springs hospital filed for bankruptcy.

In a sign of what may be coming for Connecticut, Pennsylvania Gov. Josh Shapiro said this week that $10 million in state funds may go to a third party to oversee operations of Prospect’s Crozer Health amid the bankruptcy proceedings, according to MSN.

“Connecticut is committed to ensuring that the (Prospect) Connecticut hospitals can be transitioned to a responsible, appropriate operator (or operators),” Tong said, quoting from the court filing. “But at the appropriate time, the debtors and relevant non-debtors must also be accountable for the substantial harm they have caused in Connecticut.”

This is a developing story and will be updated.

A last-minute deal was reached in Pennsylvania to keep two hospitals owned by Prospect Medical Holdings open, but the fate of the organization’s hospitals in Connecticut is still uncertain following the collapse of a deal with Yale New Haven Health in February.

Lawmakers in Pennsylvania at a public hearing this month discussed keeping the two Prospect hospitals running in that state. The hearing came after Prospect filed for bankruptcy in January.

A deal was reached Sunday that will allow the Pennsylvania hospitals to remain open while a restructuring of the health system is worked out.

The deal “is not a permanent fix,” said Mary Bugbee, health care director at Private Equity Stakeholder Project, a nonprofit tracking private equity investments in health care.

“But it brings a lot of relief to the health care workers and the patients and the community served by Crozier Health in Delaware County," she said. "Because those hospital closures would be absolutely devastating."

In Connecticut, Prospect-owned Waterbury Hospital, Manchester Memorial Hospital and Rockville General Hospital remain at risk of closure should a buyer fail to step in at bankruptcy court.

Bugbee remained cautious about any new buyer, saying it still could be driven to chase profits for its investors at the expense of local care.

“For example, Glenwood Regional Medical Center in Louisiana, that new operating company had ties to Medical Properties Trust,” she said. “There's a risk that a new operating company that's interested in these hospitals might not be a big improvement from Prospect itself,” she said.

In Connecticut, the real estate investment firm Medical Properties Trust owns land that once belonged to the three Prospect-owned hospitals. The hospitals now pay rent in a sale leaseback arrangement by Prospect.

Workers at the hospitals are also raising concerns about any future buyer.

“Any sale must include the adoption of our collective bargaining agreements, as well as those of SEIU 1199 and AFT, to protect workers and maintain stability in patient care,” said Edmund Gadomski, executive secretary of the Waterbury Hospital union. “Our priority is securing a responsible operator committed to both the workforce and long-term investment in these hospitals.”

Across the U.S., at least six hospitals owned or previously owned by private equity announced plans to close, or have closed since January, according to the Private Equity Stakeholder Project. The hospitals were funded by private-equity investors including Cerberus Capital, Patient Square Capital and Apollo Global Management in Pennsylvania, Florida and Colorado.

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