Home Care In Prospect, CT

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.

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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.”

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.”

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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.

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“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.”

March 19, 2025

Business Reporter

Liese Klein is a business reporter with CT Insider focusing on the Hartford area. She has covered business in Connecticut for 15 years and previously worked at New Haven Biz, Business New Haven, the New York Daily News and the Asahi Evening News in Tokyo.

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 filed for bankruptcy in January, citing a need to restructure amid ongoing financial difficulty.

The Los Angeles-based operator said it would attempt to sell its East Coast portfolio to focus on its comparatively healthier California-based facilities.

However, Prospect has already been trying to sell its Connecticut portfolio, which includes Manchester Memorial, Waterbury and Rockville General hospitals, for years without success. In 2022, it signed a deal to sell the facilities to Yale New Haven for $435 million.

Yale sued to get out of the deal in May, saying Prospect had reneged on sale conditions by leaving the facilities in “dire” financial condition. In June, Prospect countersued in an attempt to hold Yale to the terms.

The litigation remains ongoing, but a spokesperson for Yale New Haven said Prospect’s bankruptcy filing is “proof of disinvestment and mismanagement.”

“As we have been saying for almost 18 months, and detailed in our lawsuit, Prospect has never been in a position to close the transaction on the terms set out in the October 2022 Asset Purchase Agreement,” the spokesperson said.

Prospect did not respond to a request for comment by press time.

The health system is under pressure from state regulators to sell the hospitals quickly while the facilities continue to rack up operational losses.

While Prospect and Yale New Haven argue about who ought to operate the facilities, Connecticut regulators say patients are suffering.

In a February bankruptcy filing, lawyers for the state said the “real victims” of the legal dispute were state residents who did not have a clear path toward receiving healthcare. They said their first priority was keeping the facilities open, and that the state would work with Prospect to find a new operator, Yale or not.

“It is critical that the Connecticut Hospitals be transitioned to a new operator, one who will ensure that the hospitals are adequately funded and safely run,” the attorneys said. “To be very clear, that operator is not Prospect.”

As Connecticut grapples with the fallout from Prospect’s bankruptcy, lawmakers are advancing a bill that would give regulators more oversight over healthcare transactions involving private equity firms.

Prospect was formerly owned by Leonard Green & Partners. In a scathing Senate report issued earlier this year, federal lawmakers said financial strategies employed by the PE firm, including sale-leaseback transactions, may have contributed to Prospect’s financial decline.

The state’s hospital association has opposed the bill, saying it adds unnecessary layers of review and would delay healthcare transactions.

This story has been updated.

Several critical services at Rockville General Hospital in Vernon have remained closed since March 2020, according to a report filed in federal bankruptcy court Monday.

The closures at Rockville — one of three Connecticut hospitals owned by Prospect Medical Holdings, which filed for bankruptcy in January — appear to violate state law governing approvals of major health care transactions. In Connecticut, providers must obtain state permission, known as a “certificate of need,” before making substantial changes in the health care sector, including terminating services.

State law defines a termination of services as “the cessation of any services for a period greater than one hundred eighty days.” Termination of services by a hospital without state approval can result in civil penalties of up to $1,000 per day.

Deidre Gifford, director of the Office of Health Strategy, the agency that oversees the certificate of need process, stopped short of saying the closures at Rockville violated state law. But in an emailed statement Tuesday, she acknowledged the office is conducting an investigation into service cuts at the hospital.

“The Office of Health Strategy (OHS) is conducting an ongoing inquiry regarding service terminations at Rockville General Hospital,” Gifford said in the statement.

The court-ordered report, conducted by the appointed patient care ombuds Suzanne Koenig, found that surgical services, as well as the intensive care and medical-surgical units at Rockville General, have remained closed since March 2020. Rockville still operates an emergency department where patients can get stabilized, the report noted, but those in need of admission are being transferred to Manchester Memorial Hospital, roughly 20 minutes away. Rockville also still operates inpatient psychiatry units, according to the report.

A spokesperson for Prospect Medical Holdings said that Rockville Hospital has “proceeded with full transparency regarding the service offerings at its hospitals” and any assumption that it did not go through required legal processes before terminating services is “false.”

In March 2020, Rockville obtained an emergency waiver from the state to temporarily halt surgical services in order to free up space for COVID patients. The waiver only applied to surgical services and expired on July 21, 2021, at which point all services should have resumed, a spokesperson with OHS confirmed in late 2023.

The service cuts by Prospect were originally highlighted in an October 2023 investigation published by the Connecticut Mirror, which also found that the state had been aware of the terminations since as far back as 2021.

In February 2022, OHS fined Rockville $118,000 for failing to seek permission for unit closures, but ultimately waived the fines, finding that there wasn’t substantial evidence that the hospital “willfully” terminated services, the threshold required by state law in order to impose fines on a hospital operator.

In October 2024, the office launched another investigation into the cuts, which is still ongoing after six months. Since the previous investigation, the state passed legislation to lower the threshold from “willfully” to “negligently” terminating services, Gifford noted.

Gifford’s statement did not respond to a question about whether the state has plans in place to reopen the units.

Rep. Tammy Nuccio, R-Tolland, a state lawmaker who represents Vernon and was born at Rockville, lamented the state of the hospital in an interview Monday. “Everything that they used to do to provide services to the community are gone,” she said. “It’s a terrible disservice to the towns that used to go there.”

California-based Prospect Medical Holdings filed for Chapter 11 in January in U.S. Bankruptcy Court in Northern Texas. The court appointed Koenig, the patient care ombuds, to ensure that Prospect’s hospitals in Connecticut, as well as its facilities in Rhode Island, Pennsylvania and California, would continue to provide high quality care throughout the bankruptcy proceedings.

Aside from the Rockville Hospital findings, the ombuds reported in Monday’s filing that Prospect hospitals’ administrators and providers remained committed to patients, the facilities continued to provide quality care and there weren’t any issues requiring the immediate attention of the court.

In Connecticut, in addition to the shuttered Rockvilleunits, Koenig’s report noted long wait times at Waterbury Hospital’s emergency department and unsanitary conditions in the kitchen at Manchester Memorial Hospital. But the report added that both issues are being addressed by hospital administrators.

The ombuds will publish further reports on the quality of patient care every 60 days for the duration of the court proceedings. The reports will only investigate current conditions at the facilities and will not review past conditions of the hospitals.

But even before the bankruptcy filing, it was clear Connecticut’s Prospect-owned facilities, which the company acquired in 2016, faced challenges.

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.

In October of last year, Prospect was hit with federal liens for failure to pay into the pension plan for its Connecticut employees. State inspectors have also documented rusting equipment in operating rooms at Waterbury Hospital, and payments to physicians at Manchester Memorial Hospital have reportedly been delayed.

The ombuds report offered some relief that the hospitals continue to provide high quality care. But the question of who will take over hospital operations, in the wake of Prospect’s bankruptcy, remains unclear.

In 2022, Yale New Haven Health reached a deal with Prospect to purchase the three facilities for $435 million, but the deal has since been mired in legal disputes, with the health systems suing and counter suing each other over the true value of the facilities. In February, a spokesperson with Yale said that reaching a deal appeared “impossible.”

A spokesperson with Yale New Haven Health declined to respond Monday to questions regarding the status of that deal and whether the system is considering a revised bid to purchase Prospect’s Connecticut hospitals for a lower price.

A spokesperson for Governor Ned Lamont did not respond to a request for comment about the status of conversations with other potential buyers.

The governor has promised that the hospitals will stay open, despite bankruptcy and the search for a new buyer.

An agreement between Yale and Prospect, brokered by OHS in 2023 following the systems’ acquisition announcement, sought to consolidate Manchester Memorial and Rockville General Hospitals under one license and allowed for the permanent closure of Rockville’s medical surgical inpatient and ICU services.

Nuccio said she was unaware of the arrangement.

“Why is OHS siding with these big hospitals to close services in rural areas and not looking out for what is in the best interest of residents and health care delivery?” Nuccio asked.

In response to an emailed question about whether OHS considered the closures of the units against patient needs in the area, Gifford said that the agency “weighs healthcare access, affordability, equity and quality in all agreed settlements” and the Statewide Health Care Facility and Services Plan “guides every assessment.”

“Any potential sale of Rockville General Hospital will include considerations of supply of and demand for services in the service area,” Gifford said.

Correction:

An earlier version of this story misattributed an emailed response from Office of Health Strategy Director Deidre Gifford to the agency’s spokesperson, Wendy Fuchs.

Katy Golvala is CT Mirror's health reporter. Originally from New Jersey, Katy earned a bachelor’s degree in English and Mathematics from Williams College and received a master’s degree in Business and Economic Journalism from the Columbia Graduate School of Journalism in August 2021. Her work experience includes roles as a Business Analyst at A.T. Kearney, a Reporter and Researcher at Investment Wires, and a Reporter at Inframation, covering infrastructure in Latin America and the Caribbean.

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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