Home Care In Prospect, CT

The financial practices of Prospect Medical Holdings are under investigation by the Connecticut attorney general's office as the for-profit health care company is attempting to sell three hospitals in the state to Yale New Haven Health.

Elizabeth Benton, spokeswoman for Attorney General William Tong, confirmed that Tong's office is conducting an investigation into "the financial practices of Prospect Medical Holdings."

Citing an ongoing investigation, she would not comment further regarding the specifics of the investigation that began in April.

Prospect is in the process of selling Waterbury, Rockville General, and Manchester Memorial hospitals to Yale New Haven health for what was initially $435 million.

The economic fallout resulting from a cyberattack and deteriorating conditions at the hospitals has led Yale New Haven Health officials to seek to reduce the price tag, though officials have not revealed what the revised asking price is.

In October 2016, Prospect purchased Rockville General and Manchester Memorial hospitals for $105 million, with the promise of an additional $75 million in upgrades to the facilities, which are operated by Eastern Connecticut Health Network. Prospect also purchased the Greater Waterbury Health Network at the same time for $45 million, along with an agreement to spend $55 million on capital projects there.

At almost every stage in the buyout, residents and some lawmakers spoke out against it, citing Prospect's track record in California and ECHN's own history of mismanagement.

While ECHN had lost a combined $23 million in its last year of operation as a nonprofit system before the purchase, Rockville and Manchester hospitals did not fare well under Prospect either.

Although Waterbury Hospital ended with close to $15.4 million in revenue in Prospect's first full year of ownership, Rockville and Manchester's profits were down by about 14 percent and 2.5 percent in 2017, respectively.

The two hospitals were among just five out of 28 in the state at the time to lose money, and also lost roughly $9 million each in 2019.

That same year, Prospect announced its plans to sell and lease back its Connecticut, California, and Pennsylvania real estate to Alabama-based Medical Properties Trust Inc. in a billion-dollar deal. The health care company used the cash infusion to settle its loan debts.

Prospect is a privately held entity and therefore does not make its financial information available to the public. Quarterly and annual reports are available only to lenders.

State officials have presented a draft settlement agreement to parties involved in Yale New Haven Health’s bid to purchase three Connecticut hospitals owned by Prospect Medical Holdings, and hospital executives are exchanging proposals with the state, a spokeswoman for Office of Health Strategy told The Connecticut Mirror.

“In-person meetings are taking place, and the state continues to advocate for a settlement that ensures access, quality, equity and affordability for the residents in the impacted areas,” the spokeswoman, Tina Kumar Hyde, said.

Dana Marnane, a spokeswoman for Yale New Haven Health, confirmed that settlement proposals were exchanged and that hospital officials are “engaged in discussions” with the state.

“While we remain hopeful that a settlement can be reached, any conditions to the [certificate of need] must account for the recent cyber-attack and its ongoing detrimental impact on the Prospect hospitals,” she said. “Yale New Haven Health has responded to OHS’s proposals and looks forward to continuing to negotiate an agreement that will allow us to operate the Waterbury and ECHN hospitals safely while ensuring access to affordable, high-quality health care.”

Representatives for Prospect Medical and Eastern Connecticut Health Network, which owns Manchester Memorial and Rockville General hospitals, could not immediately be reached for comment Thursday. A spokeswoman for Waterbury Hospital declined to comment.

Hospital leaders agreed last month to keep the negotiations with OHS confidential. They have been meeting regularly and are scheduled to meet again next week, sources said.

Hospital executives, legislators, health care workers and local officials have called on the state to expedite its approval of the YNHH-Prospect deal, which has been pending for more than a year.

Records show that the acquisition has already taken longer to gain state approval than several other Connecticut hospital mergers. YNHH’s purchase of Milford Hospital in 2019 took 204 days from the time a certificate of need was filed, Hartford HealthCare’s acquisition of Saint Vincent’s Medical Center the same year took 267 days, YNHH’s purchase of the Hospital of Saint Raphael in 2012 took 147 days, YNHH’s merger with Lawrence + Memorial Hospital in 2016 took 337 days, and Hartford HealthCare’s 2017 acquisition of Charlotte Hungerford Hospital took 351 days.

As of Thursday, the YNHH-Prospect deal has gone 373 days without state approval.

Meanwhile, as the months pass, hospital executives, legislators and local officials say the threat of closure is growing, with the Prospect hospitals owing tens of millions of dollars to vendors and physicians and in taxes.

Surgeries have been postponed because health care providers don’t have the needed resources. Contracts with traveling nurses and technicians are in jeopardy and remain in place only on a “week-to-week” basis, physicians at the hospitals said. An anesthesiologist group is suing over nonpayment of more than $3 million. The hospitals were also hit with a cyberattack over the summer that crippled operations and set them back further financially.

But Kumar Hyde has said the current deal is more complex than any the agency has dealt with over the past decade.

While many certificate of need applications were approved more quickly, some — such as Hartford HealthCare’s acquisition of Charlotte Hungerford Hospital — are similar in length to the YNHH-Prospect deal, she noted.

“There are three hospitals involved in this transaction, while most other transactions in the past 10 years have only involved one hospital. The process has involved three times the data collection, analysis and synthesis,” Kumar Hyde said.

“OHS’ obligation in reviewing Transfer of Ownership applications is to ensure that the statutory requirements of addressing quality, access and cost effectiveness are met. Our obligation is to ensure we have adequate information to address those concerns, and to protect the interests of the public in every transaction reviewed. It is not unusual for complex hospital acquisitions that require multiple layers of review to take a year or more to complete.”

Sources have told CT Mirror that YNHH officials are seeking $16 million per year over five years, or $80 million total, from the state to help with recovery efforts from the recent cyberattack across the three Prospect-owned hospitals, to update computer systems and to address “deteriorating” conditions at the facilities. YNHH has also asked Prospect Medical to adjust the previously agreed upon purchase price of $435 million.

In the meantime, the hospitals are struggling. In a meeting with about 30 legislators in September, ECHN and Waterbury Hospital executives said they are behind on paying bills and, if the deal with YNHH is not approved, the facilities may not remain financially viable or functional, according to people in attendance.

The executives have said they owe millions to vendors and physicians contracted to provide care at the hospitals.

Yale New Haven Health officials are concerned about the software at the Prospect-owned hospitals following the cyberattack, which began in early August and lasted for nearly six weeks. At the meeting with legislators, the computer system used by the hospitals was described as outdated.

Earlier this month, lawmakers and health care workers from Waterbury Hospital and ECHN also rallied at the state capitol in an effort to speed up the deal.

“This is the first time I’m seeing a real scenario, I’m sorry to say, that these hospitals could close,” said Dr. Saqib Naseer, a cardiologist who has worked in the Eastern Connecticut Health Network. “This has dragged on too long to the extent that we are worried if they put enough conditions on Yale, they could walk away because they are under no obligation to do this. If Yale walks away, there is no other buyer for these hospitals.”

Jenna is CT Mirror’s Health Reporter, focusing on health access, affordability, quality, equity and disparities, social determinants of health, health system planning, infrastructure, processes, information systems, and other health policy. Before joining CT Mirror Jenna was a reporter at The Hartford Courant for 10 years, where she consistently won statewide and regional awards. Jenna has a Master of Science degree in Interactive Media from Quinnipiac University and a Bachelor or Arts degree in Journalism from Grand Valley State University.

More by Jenna Carlesso

Officials from Yale New Haven Health, Prospect Medical Holdings and the state’s Office of Health Strategy have resumed negotiations in Yale’s bid to acquire three Prospect-owned hospitals in Connecticut after the health systems agreed to sign a confidentiality agreement to keep the talks private.

“OHS has provided the applicants with a draft settlement agreement and the applicants have agreed to confidential settlement negotiations,” said Tina Kumar Hyde, spokeswoman for the health strategy office. “OHS is unable to comment any further at this time.”

Last week, negotiations broke down after Yale and Prospect indicated they did not want to keep the talks private. Kumar Hyde said at the time that, in the absence of further negotiations, the state would move ahead quickly with a decision on whether to approve the deal. Yale has moved to purchase Waterbury, Manchester Memorial and Rockville General hospitals. Manchester and Rockville hospitals are part of the Eastern Connecticut Health Network.

Kumar Hyde has said OHS is not required to keep negotiations confidential, but the agency prefers to do so. “We routinely carry out our agreed settlement discussions in a confidential manner,” she said.

In a statement Wednesday, Yale spokeswoman Dana Marnane confirmed the health system had agreed to confidential talks.

“We signed the confidentiality agreement because we felt it was very important to continue productive conversations with OHS,” she said.

A spokesperson for Prospect Medical could not immediately be reached for comment.

Sources have told the Connecticut Mirror that Yale is seeking $16 million per year over five years, or $80 million total, from the state to help with recovery efforts from a recent cyberattack across the three Prospect-owned hospitals, to update computer systems and to address “deteriorating” conditions at the facilities.

Yale officials presented a two-page “recovery” plan to state leaders, including Gov. Ned Lamont, as well as representatives from Prospect and Medical Properties Trust Inc., which owns the properties and leases them back to Prospect.

In 2018, Prospect took out a $1.12 billion loan and used the funds to pay its executives and shareholders a $457 million dividend, CBS News reported. To pay back the loan, Prospect sold the land and buildings from hospitals it owns in Connecticut, California and Pennsylvania to a real estate investment trust, then leased back those hospitals from the trust.

“Yale believes the four parties should come together to carry out a recovery plan to preserve the essential community health care resources … represented by the Waterbury/ECHN organizations,” Yale officials wrote in the recovery plan. A copy of the plan was obtained by the CT Mirror.

Yale’s proposal would include state financial support with a guarantee from Yale that the money would go toward the hospitals’ recovery, not the health systems or trust.

“This financial support will not flow to or benefit Prospect Medical, [the properties trust] or Yale New Haven Health,” officials wrote. “It will directly support the Waterbury/ECHN organizations as they recover. The state will provide financial support that goes directly to narrow the financial deficit at Waterbury/ECHN.”

The plan also asks the state to approve the deal as soon as possible with no “conditions or restrictions on YNHH other than those mutually agreed [upon] between YNHH and OHS.”

In exchange, Yale is offering — before the acquisition is even completed — to provide professional management and information technology expertise to “support and stabilize” the three hospitals through a management services agreement.

Under the plan, the properties trust would have to transfer ownership of the properties to Yale and participate in negotiations. Yale also asks Prospect to adjust the previously agreed upon purchase price of $435 million for the hospitals. The document did not specify an alternative price.

In an interview with the CT Mirror last week, Lamont said he sees no reason for the state to chip in taxpayer funds, but Yale is free to renegotiate the purchase price.

“I have it on good information that there are a couple other folks who could step in if Yale doesn’t want to complete the deal,” he said. “I want Yale to complete the deal. I mean, it was just a year-plus ago that they came in, put in place a bid that Prospect accepted. I think now, maybe there are some second thoughts about that bid.”

Lamont said Yale’s ability to demand a new price or walk away would be dependent on whether it could show a “material change” in the value of the hospitals since the deal was done.

“We’ll see whether the last 100 days is really a material change,” he said. “But that doesn’t involve the taxpayers of the state. That’s Prospect-New Haven seeing if they can reach an agreement. And that’d be a good solution for all if they can.”

Officials from Yale, Waterbury Hospital and ECHN have been urging the state to speed up its approval of the acquisition, saying the financial situation at the Prospect-owned facilities is dire. Yale agreed to buy the hospitals in 2022.

In a meeting with about 30 legislators late last month, hospital executives said they are struggling to pay bills and, if the deal with Yale is not approved, the facilities may not remain financially viable or functional, according to people in attendance.

The executives have said they owe millions to vendors and physicians contracted to provide care at the hospitals.

ECHN alone owes $42 million in taxes to the state, $5.18 million to physicians, and $5.9 million to local vendors, sources have said.

Yale officials are concerned about the software at the Prospect-owned hospitals following a cyberattack, which began in early August and lasted for nearly six weeks. At the meeting with legislators, the computer system used by the hospitals was described as outdated.

More than 24,000 employees of Prospect Medical Holdings in Connecticut may have had some of their personal information, including Social Security numbers, exposed during the recent cyberattack that paralyzed many operations in the hospitals.

Prospect notified employees and the state Attorney General’s office of the breach in late September.

Prospect also told the Attorney General’s office that 63 Connecticut residents who were patients at Prospect hospitals in California may have had their information breached, including patient names, health insurance and financial information. Of those breaches, 13 had Social Security numbers involved, according to the Attorney General’s office.

CT Mirror Staff Writer Mark Pazniokas contributed to this report.

Talks between state officials and Yale New Haven Health over its bid to purchase three ailing Connecticut hospitals have broken down, prompting the state to move ahead on a final decision over whether to approve the acquisition, officials with Connecticut’s Office of Health Strategy said Tuesday.

Tina Kumar Hyde, a spokeswoman for OHS, which is overseeing the certificate of need process for the purchase, said Yale and Prospect Medical Holdings, which owns the three hospitals Yale New Haven Health has agreed to purchase, do not want to keep negotiations confidential.

Yale made a bid to acquire Prospect’s three Connecticut facilities — Waterbury, Manchester Memorial and Rockville General hospitals — but now wants to renegotiate the terms of its agreement because of deteriorating conditions at the hospitals.

“In an attempt to move the transfer-of-ownership process to a resolution, the Office of Health Strategy reached out to the Yale/Prospect [certificate of need] applicants to initiate discussions on an agreed settlement,” Kumar Hyde said in a statement. “As is routine with this type of negotiation, OHS requested that the substance of the negotiations remain confidential while discussions were ongoing. Yale and Prospect have chosen not to agree to confidential negotiations, and therefore, to keep the process moving as expeditiously as possible, OHS will prepare and issue a Proposed Final Decision on the certificate of need.

“If the parties are interested and willing to resume confidential settlement discussions, OHS will reconvene those as well. OHS has also completed the Cost and Market Impact Review as required by law and has shared it with the applicants and the Office of the Attorney General.”

Kumar Hyde said OHS is not required to keep negotiations confidential, but the agency prefers to do so. “We routinely carry out our agreed settlement discussions in a confidential manner,” she said.

OHS officials did not say when they will issue a final decision on the acquisition.

In an emailed statement Tuesday, Dana Marnane, a spokeswoman for Yale New Haven Health, said: “We continue to be ready and willing to meet with OHS and any appropriate state officials to bring this transaction to a successful conclusion.”

Spokespeople for Prospect Medical, Waterbury Hospital and Eastern Connecticut Health Network, which operates Manchester and Rockville hospitals, did not return calls seeking comment Tuesday night.

A spokeswoman for Gov. Ned Lamont declined to comment on the development. Earlier in the day, Lamont said he has not taken a position on the sale.

“I’m neutral. I want to make sure we have the best quality of health care in Waterbury and beyond. Yale stepped up, they put an agreement on the table, [a] signed deal. If they want to change their mind on it, there were two other bidders,” he said during a press conference in Bristol, although he did not elaborate.

Yale had agreed in 2022 to buy the hospitals, along with imaging equipment and the hospitals’ equity interests in certain joint ventures, for $435 million. But following a recent cyberattack at the Prospect-owned facilities, Yale sought a lower purchase price and asked the state to contribute taxpayer funds to the deal.

Yale asked the state to provide $16 million per year for five years, or as much as $80 million total, to help with recovery efforts from the cyberattack, to update computer systems and to address “deteriorating” conditions across the hospitals.

Asked about the possibility of contributing state funds to the deal, Lamont said Tuesday: “This is an agreement between Yale New Haven and Prospect. I don’t know why they need the taxpayers to step in, but we’ll be talking.”

Officials from Yale, Waterbury Hospital and ECHN have been urging the state to speed up its approval of the acquisition, saying the financial situation at the Prospect-owned facilities is dire.

In a meeting with about 30 legislators late last month, hospital executives said they are struggling to pay bills and, if the deal with Yale New Haven Health is not approved, the facilities may not remain financially viable or functional, according to people in attendance.

The executives have said they owe millions to vendors and physicians contracted to provide care at the hospitals.

ECHN alone owes $42 million in taxes to the state, $5.18 million to physicians, and $5.9 million to local vendors, sources have said.

Yale officials are concerned about the software at the Prospect-owned hospitals following the cyberattack, which began in early August and lasted for nearly six weeks. At the meeting with legislators, the computer system used by the hospitals was described as outdated.

More than 24,000 employees of Prospect Medical Holdings in Connecticut may have had some of their personal information, including Social Security numbers, exposed during the recent cyberattack that paralyzed many operations in the hospitals.

Prospect notified employees and the state Attorney General’s office of the breach in late September.

Prospect also told the Attorney General’s office that 63 Connecticut residents who were patients at Prospect hospitals in California may have had their information breached, including patient names, health insurance and financial information. Of those breaches, 13 had Social Security numbers involved, according to the Attorney General’s office.

Staff Writer Mark Pazniokas contributed to this report.

Jenna is CT Mirror’s Health Reporter, focusing on health access, affordability, quality, equity and disparities, social determinants of health, health system planning, infrastructure, processes, information systems, and other health policy. Before joining CT Mirror Jenna was a reporter at The Hartford Courant for 10 years, where she consistently won statewide and regional awards. Jenna has a Master of Science degree in Interactive Media from Quinnipiac University and a Bachelor or Arts degree in Journalism from Grand Valley State University.

More by Jenna Carlesso

Nurses, physicians and legislators — frustrated at the length of time the state has taken to approve the acquisition of three Connecticut hospitals by Yale New Haven Health — rallied at the state Capitol Monday in an effort to expedite the deal.

YNHH wants to purchase Waterbury, Manchester Memorial, and Rockville General hospitals — a move lawmakers and hospital executives said is crucial to the hospitals’ survival. The heads of Waterbury Hospital and Eastern Connecticut Health Network, which includes Manchester Memorial and Rockville General, have told legislators and Gov. Ned Lamont that their financial situation is dire, that vendors and physicians under contract are owed money, and that if the deal with Yale falls through, the hospitals may not remain financially viable.

The hospitals are currently owned by Prospect Medical Holdings, which purchased them in 2016. YNHH moved to buy the hospitals in 2022.

“I never would have thought in my life that I would come across a situation like this. Patients in the office will say, ‘Dr. Gandhi, I heard that Rockville is [going to] close. I heard that Manchester hospital is closed. I never thought I would hear that,” said Dr. Dushyant Gandhi, a cardiologist and president of the medical staff at ECHN.

“Cardiologists, general surgeons, vascular surgeons are making phone calls — they are not getting paid for their services, including myself. And we are not talking about only delayed or delinquent payments. In some situations, [it’s] no payment,” he said. “I never thought that would happen in the field of medicine. I always have enjoyed the honor of taking care of patients. But when a colleague says, ‘I probably will not take calls … and the reason is nonpayment,’ that is not acceptable. I believe the situation is deteriorating fast. We are in a dire situation. We need to be resuscitated.”

Anne-Marie Cerra, a registered nurse at Manchester Memorial and president of the Manchester Hospital Nurses Union, urged state officials to speed up their approval of the sale.

“Just because Prospect [Medical] has put us in a chokehold every single day, I still see nurses and doctors do their absolute very best for patient safety and great outcomes. I don’t want this to be forgotten, even though we’re struggling right now to stay viable,” she said. “The fact that I have to be here today and beg that it stays open … it’s just bewildering to me.

“All of my life has been spent taking care of patients and I can’t even imagine if [the hospital] closes. It will be an injustice that profit comes before patients, that the state can’t get behind the deal to Yale New Haven Health. It’s what we need.”

Tina Kumar Hyde, a spokeswoman for the state Office of Health Strategy, which is overseeing the ‘certificate of need’ process and weighing approval of the sale, said it is not unusual for a “complex” hospital acquisition like this one to take a year or longer.

“In this matter, there are three hospitals involved in this transaction (Manchester Memorial Hospital, Rockville General Hospital and Waterbury Hospital), while most other transactions in the past have only involved one hospital,” she said. “Additionally, unlike many other hospital acquisition applications, there is a sister application for the transfer of ownership of a medical group. OHS has needed to consider that application both individually and as it relates to the hospital application.

“Despite all these factors, OHS’ process for this application is still well within the statutory guidelines. … OHS understands the concerns expressed by affected citizens and is processing the various components as quickly as possible.”

The state recently insisted that all parties sign a confidentiality agreement barring them from discussing the status of talks on the sale.

A spokesperson for Lamont could not immediately be reached for comment Monday.

“Today’s rally was neither coordinated nor sanctioned by ECHN’s or Waterbury Hospital’s leadership or Prospect Medical. However, we understand that some members of our medical staff and other employees felt compelled to participate in this event due to its relevance to the hospitals’ future,” Prospect Medical officials said in a statement. “While we respect the rights of our employees to engage in civic activities, patient care remains our utmost priority. We continued to provide quality, compassionate care to our patients today, as we do every day.”

Sources have told the Connecticut Mirror that YNHH officials are seeking $16 million per year over five years, or $80 million total, from the state to help with recovery efforts from a recent cyberattack across the three Prospect-owned hospitals, to update computer systems and to address “deteriorating” conditions at the facilities. YNHH has also asked Prospect Medical to adjust the previously agreed upon purchase price of $435 million.

In the meantime, the hospitals are struggling. In a meeting with about 30 legislators in September, ECHN and Waterbury Hospital executives said they are behind on paying bills and, if the deal with YNHH is not approved, the facilities may not remain financially viable or functional, according to people in attendance.

The executives have said they owe millions to vendors and physicians contracted to provide care at the hospitals.

ECHN alone owes $42 million in taxes to the state, $5.18 million to physicians, and $5.9 million to local vendors, sources have said.

Yale New Haven Health officials are concerned about the software at the Prospect-owned hospitals following a cyberattack, which began in early August and lasted for nearly six weeks. At the meeting with legislators, the computer system used by the hospitals was described as outdated.

On Monday, lawmakers said the longer the deal awaits approval, the more that services are at risk.

Sen. Saud Anwar, D-South Windsor, a co-chair of the Public Health Committee and a physician under contract at Manchester Memorial, said contracts with traveling nurses and technicians are in jeopardy and remain in place only on a “week-to-week” basis.

“There’s a chance that if the money is not paid, some of the nurses and staff who are providing travel services would go away,” he said. “That’s a problem. Whatever services they provide would have to be decreased.”

Anwar said surgeries at some of the facilities have been postponed because of issues obtaining anesthesia services.

“Things are very, very limited and difficult, and literally people are making decisions on a single day [basis] at times,” he said. “It’s almost to the point that it’s at the brink and suddenly things [can] fall to the point of being unsafe.”

Rep. Jason Doucette, D-Manchester, called the situation “untenable” and the state’s approval process “never-ending.”

“It’s been extremely frustrating,” he said. “The only thing that should be a play in the [Certificate of Need] process is what is in the public interest, what is in the interest of delivering health care. … We’ve suffered as this process has went on for far too long.

“Private equity has no place in the health care business. The sooner we can get this transaction done and the sooner we can get Prospect Medical out of the state, the better. The alternative is, frankly, something I don’t even want to think about.”

Rep. Kevin Brown, D-Vernon, asked state officials to “treat this [sale] as the emergency that it is.”

“I can’t imagine where we will be if any of these hospitals were to close,” he said. “Those communities need them. My community needs Rockville General Hospital. We need to prioritize this.”

Jenna is CT Mirror’s Health Reporter, focusing on health access, affordability, quality, equity and disparities, social determinants of health, health system planning, infrastructure, processes, information systems, and other health policy. Before joining CT Mirror Jenna was a reporter at The Hartford Courant for 10 years, where she consistently won statewide and regional awards. Jenna has a Master of Science degree in Interactive Media from Quinnipiac University and a Bachelor or Arts degree in Journalism from Grand Valley State University.

More by Jenna Carlesso

Dave does in-depth investigative reporting for CT Mirror. His work focuses on government accountability including financial oversight, abuse of power, corruption, safety monitoring, and compliance with law. Before joining CT Mirror Altimari spent 23 years at the Hartford Courant breaking some of the state’s biggest, most impactful investigative stories.