Home Care In Prospect, CT

The state has agreed to a settlement with Prospect Medical Holdings, which will allow the owner of three Connecticut hospitals to reduce services at one of them and consolidate two of them.

As part of the agreement reached late Friday, Prospect Medical can permanently end all services except for emergency room and behavioral health services at Rockville General Hospital in Vernon and start its consolidation with Manchester Memorial Hospital. But the consolidation would still require approval from the state Department of Public Health.

Prospect Medical Holdings, a private equity group that also owns Waterbury Hospital, entered chapter 11 bankruptcy proceedings in January. State officials – including Gov. Ned Lamont – have repeatedly said the three hospitals will stay open and continue to provide quality care during the proceedings.

Waterbury Hospital is part of the Greater Waterbury Health Network and Manchester and Rockville are part of the Eastern Connecticut Health Network.

“The people of Connecticut deserve better than this,” said state Sen. Jeff Gordon, R-Woodstock, who is a medical doctor and represents Vernon. “This decision by Office of Health Strategy (OHS) Commissioner (Deidre) Gifford once again highlights how out of touch with reality our state government is regarding local health care needs in Connecticut.”

Gifford, however, said in a statement that the settlement “protects critical resources” and ensures the local community access to emergency care.

Gifford, who has led OHS since January 2023 but worked in state government since 2019, has announced she will retire this summer amid criticism over her involvement in an abandoned audit that could have exposed potential Medicaid fraud.

Prospect had already cut back on services at Rockville Hospital without state permission, starting in March 2020, which led to a state investigation last year. As part of this new agreement, those services do not need to be restored and Rockville can instead be converted into a satellite campus of Manchester Memorial, which the company has been hoping to do since October 2020.

As a penalty, Prospect agrees to pay $300,000 to the state through the bankruptcy case. It must also host a community forum about the consolidation within 60 days and must provide financial and census data to the state upon request, according to the settlement.

“Each aspect of this agreement holds the Prospect applicants responsible for their actions and requires the company to notify all potential bidders in the bankruptcy case of the terms of the agreement,” Gifford said in a statement. “As various courts unravel the complex issues surrounding current and future ownership of the Prospect hospitals, our top priority continues to be the health and well-being of the patients and employees.”

State Sen. Saud Anwar, D-South Windsor, who co-chairs the legislature’s Public Health Committee, said it is important to keep Rockville General open, so reopening it with the current level of services will help the local community.

“Ideally, the resumption of all services would be preferable, but in the current financial environment, I do not know if that is possible,” Anwar said. “At this time, for the status quo in the emergency room and behavioral health to remain open, that will help the public.”

The company owes about $105 million in state taxes and is behind on pension payments. There have also been ongoing complaints that the three hospitals are struggling to pay bills under Prospect’s ownership, including paying vendors, healthcare providers and local property taxes.

In 2022, Yale New Haven Health signed a purchase agreement with Prospect to buy the three hospitals for around $435 million, but Yale later sought to lower the price based on deteriorating conditions at the hospitals. The two companies have since been embroiled in lawsuits over the potential sale.

Prospect has said it is “proceeding on a strategic pathway to realign its organizational focus outside of California” and that it plans to rededicate itself to its original mission of serving the community.

Deborah Weymouth, president and CEO of both Waterbury Health and the Eastern Connecticut Health Network, has said the bankruptcy is not an end, but “a new beginning.”

Earlier this year, Lamont signed legislation to create an emergency application process to preserve continuity of care in the event of a hospital bankruptcy. Public Act 25-2 requires OHS to issue a final decision on a completed emergency Certificate of Need application in 60 days or less.

Connecticut officials reached a settlement with Prospect Medical Holdings clearing a path for the operator to permanently shutter all services aside from the emergency room and behavioral health at Rockville General Hospital in Vernon, according to an agreement published on May 23.

Rockville is one of three hospitals in Connecticut owned by Los Angeles-based Prospect Medical Holdings, which filed for bankruptcy in January.

The settlement signed on Friday between Prospect and the state of Connecticut concludes an ongoing state investigation into unauthorized service cuts at Rockville launched in October of last year. Prospect agreed that Connecticut will have a $300,000 claim included in the bankruptcy case as a result of the termination of services, subject to approval by the court.

The terms require Prospect to maintain emergency services at Rockville for three years and keep existing inpatient behavioral health services “at or within 30 miles of their current location on the RGH campus.” However, it doesn’t require the operator to reopen services that were cut without state permission.

The agreement also grants Prospect permission from the state's Office of Health Strategy, or OHS, to terminate Rockville’s status as a full-service acute care hospital and convert it into a satellite campus of Manchester Memorial Hospital, located 20 minutes away. Prospect must now also obtain permission for the consolidation from the Department of Public Health, which oversees hospital licensing, Wendy Fuchs, a spokesperson for OHS confirmed.

A spokesperson for the Department of Public Health did not immediately respond to a request for comment late Friday.

In a Friday press release, OHS Commissioner Deidre Gifford said the agreement “protects critical resources” for patients and families in the area.

“The agreement also holds the Prospect applicants accountable to the community, requiring public notice of past terminations and development of a strategic plan for the consolidated hospital. The plan must be developed with community input and presented to the community in a public forum,” Gifford's statement read.

The agreement requires Prospect to announce the consolidation of Rockville with Manchester Memorial publicly, create an interim strategic plan for services at Rockville and hold a community forum within 60 days.

Spokespeople with Prospect Medical Holdings and Eastern Connecticut Health Network, which owns Rockville General and Manchester Memorial, did not respond to a request for comment.

In March, Suzanne Koenig, a bankruptcy-court appointed patient care ombuds reported that, during a visit to Rockville General, she found that surgical services, as well as the intensive care and medical-surgical units at the hospital had remained closed since March 2020. The company did not receive state permission to permanently close any of those services in advance of doing so.

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.

The unauthorized cuts were the subject of an October 2023 investigation by the Connecticut Mirror.

When Prospect filed for bankruptcy earlier this year, state officials offered assurances that its three Connecticut hospitals would remain open and operating.

??“Some people think bankruptcy means the lights go out and the party’s over. That’s not true at all. These hospitals are very successful,” Lamont said during a press conference in the days following the bankruptcy announcement.

Although Rockville General will technically remain operational, it will no longer be a stand-alone, full-service acute care hospital.

A spokesperson for Lamont did not return a request for comment.

Rep. Tammy Nuccio, R-Tolland, whose district contains Rockville General Hospital, said Friday that the state had failed her residents.

“Profit over people. That’s what I think we’ve come to expect here unfortunately from OHS and the state when it comes to health care for residents that are not in large cities,” Nuccio said.

The agreement with the state will be binding for any future buyers of Prospect’s Connecticut hospitals.

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. In February, Yale said it would be “impossible” to close the deal.

An auction process for the Prospect-owned hospitals will take place through bankruptcy court.

In the state’s Friday announcement, OHS said the process is “ongoing.” In court documents, the sale hearing was tentatively scheduled for June 5, but no notice of hearing has been officially posted and spokespeople for Prospect and their lawyers have not responded to multiple requests regarding the auction timeline.

HARTFORD — A renewed push to regulate private equity ownership of hospitals in Connecticut succumbed to the same knotty complications that frustrated last year's first attempt to reach a consensus at the state Capitol.

The second setback leaves the state legislature and Gov. Ned Lamont to try a third time to forge some agreement on how to better manage private equity's role in the health care sector in Connecticut in the 2026 legislative session.

"It is incredibly complex and where we go from here is we have to continue this conversation," said state Rep. Cristin McCarthy-Vahey, D-Fairfield, the House chairwoman of Public Health Committee. "We need to stay at the table and figure out how we can adequately address this because the issue is not going away."

A California-based private equity company's ownership of Waterbury Hospital, Manchester Memorial Hospital and Rockville General Hospital presents a case study for Connecticut.

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Prospect Medical Holdings Inc. purchased the three hospitals for a combined $205 million in 2016. Prospect made some initial investments and then siphoned off hundreds of millions and profited immensely, according to court documents.

Prospect consequently encountered serious financial troubles and decided to sell its Connecticut operations, and finally filed for Chapter 11 bankruptcy in January after Yale New Haven Health sued to get out a $435 million deal to buy the Prospect-owned hospitals claiming Prospect's irresponsible financial practices, severe neglect and general mismanagement left those medical institutions a shell of what they were when Yale agreed to acquire them.

Now, the three Connecticut hospitals are being sold through a bankruptcy auction. There are widespread concerns that another private equity buyer could purchase the hospitals.

Waterbury Mayor Paul K. Pernerewski Jr. is someone who does not want to see that happen following Prospect's ownership of Waterbury Hospital, one of the two hospitals serving his city.

"I will say that from our perspective here, just having lived through this, I'm hoping the next owner is not a private equity owner. I don't think they will be," he said.

Pernerewski said he has heard unofficially that there are at least three interested bidders for the Connecticut hospitals and none are private equity firms.

State senator blames Lamont for inaction

Lamont said he was surprised that no legislative action was taken in the 2025 session to increase oversight of private equity investment in hospitals and other health care facilities, health systems and medical practices.

But state Sen. Saud Anwar, D-South Windsor, the Senate chairman of the Public Health Committee, blamed the inaction on the governor's resistance to stronger restrictions that he and other legislators advocated.

"We had a bill. It is a robust bill. We negotiated it. We had frank conversations and held public hearings. We heard everybody's interests and perspectives," said Anwar, a medical doctor specializing in pulmonary and critical care medicine and chairman of the Department of Internal Medicine at Manchester Memorial and Rockville General Hospitals.

One of the legislation's central proposals would have prohibited private equity companies or real estate investment trusts from outright ownership of hospitals, but would have permitted private equity companies to participate in joint ventures as junior partners and minority owners. This provision was intended to prevent the type of business and financial practices that many believe have put Prospect-owned hospitals in jeopardy.

In 2019, Prospect under the ownership of private equity firm Leonard Green & Partners sold the land of the hospitals it owns in Connecticut, California and Pennsylvania to Medical Properties Trust for $1.4 billion, and then leased back those properties from the Alabama-based real estate investment trust. The sale funded a $457 million dividend for Prospect's executives and investors.

The MPT deal is widely seen as contributing to the financial struggles of the three Prospect-owned hospitals because they were paying tens of millions in monthly rent while Prospect remained current. The company is also contractually owed $355 million of the $435 million sales price Prospect and Yale negotiated.

Anwar said he is deeply disappointed the legislation failed due to Lamont's apparent opposition because there is nothing in state law to prevent private investors from buying hospitals and engaging in the same business practices that Prospect followed.

"We were ready to run the bill and we had the votes for it, but then we heard the House did not want us to run the bill because what I heard secondhand was the governor's office did not want us to run the bill," he said.

Anwar said the legislature must continue to try to translate the hard-learned lessons from Prospect's troubled ownership and management of its Connecticut hospitals into legislative actions.

"I believe the right thing to do is to continue the work on this bill. We should have done this during the legislative session," he said. "If people want to have more conversations, they're welcome to do so. I am ready and open."

Good private equity versus bad private equity

The policy disagreement between Lamont and state legislators like Anwar and McCarthy-Vahey boiled down to their approaches — more restrictions on private equity investment versus more oversight of private equity investment in hospitals, health systems, and medical practices.

"I think it is a problematic issue because, on the one hand, you want to protect private equity from coming in and pillaging our hospitals," said House Minority Leader Vincent J. Candelora, R-North Branford. "On the other hand, you want to make sure good private equity is here investing in our hospitals, and all health care, not just hospitals, but physician offices. It is really a tough needle to thread."

The Connecticut Hospital Association and the Connecticut State Medical Society also expressed the opinion that there are positives to private equity-backed investment and the hospital association advised that blanket prohibitions on certain activities are generally not the cure.

The two Democratic leaders of the Public Health Committee favored restricting the acquisition of hospitals by private equity firms and prohibiting sale-leaseback agreements between hospitals and real estate investment trusts like a 2019 deal Prospect and MPT did.

"It is going to take a lot more negotiation because the monied interests are really powerful," McCarthy-Vahey said. "Private equity's role and goal is to create a profit and health care is to provide health care, and we need to make sure that we're keeping in line with providing safe, accessible health care for our patients."

But Lamont viewed restrictions and outright prohibitions on private equity investment as too heavy-handed. He advocated increasing oversight of private equity investment in the health care sector.

"I thought we had a pretty good middle ground, which is we get a right to opine on any change in structure in a hospital that involves private equity," Lamont said.

The governor proposed changes to the existing “notice of material change” statute to give state attorney general's office and the state Office of Health Strategy greater authority and more notice to scrutinize proposed transactions and expand the transactions subject to this greater regulatory scrutiny, including a corporate merger, the sale of a hospital’s property to a real estate investment trust, or the sale of a majority share of a physician practice to a private equity firm.

Pernerewski, the Waterbury mayor, said he sympathizes with the goals of Anwar, McCarthy-Vahey and liked-minded legislators in his heart, but his head believes the governor proposed a better, more practical and balanced approach.

"The simplest thing, but I'm not necessarily sure it would always be the right thing, but the simplest thing would have been to simply say you can't do it, and then there is no issue around it," he said.

"But I think the more realistic approach has to be to make sure your oversight is sufficient in place to see what is going on to make sure that there are mechanisms in place to keep the kind of things that happened here, which is the wholesale selling of the assets to a third party and creating these burdensome leases and the rest, are not happening."

Pernerewski said statutory restrictions and prohibitions that legislators were contemplating could have impeded Pennslyvania-based PAM Health from opening a $35 million, 42-bed inpatient rehabilitation hospital for acute care on Harper's Ferry Road in Waterbury.

"So, there is always the danger that you react to this incident, which was horrific, but in doing so you could take a player like PAM Medical out of the picture," he said.

The Office of Health Strategy last July approved a required certificate of need for PAM Health at Waterbury LLC, a joint venture that is 70% owned by PAM and 30% owned by Prospect Waterbury Inc., the Prospect subsidiary that owns Waterbury Hospital, according to state filings.

McCarthy-Vahey said administration representatives, state legislators, health care industry leaders and other stakeholders need to use the lead-up to the 2026 legislative session to continue working on trying to find middle ground and lay the groundwork for enacting legislative solutions next year.

"I am hoping to start in the late summer," she said.

With the bidding process underway for a buyer to acquire Prospect Medical Holdings’ three hospitals in the state, three buyers have expressed interest but an official announcement is not expected until later this month.

None of the buyers’ names have been made public, according to state and health officials.

But there is anticipation and hope that a buyer will be found to keep the hospitals on solid footing after Prospect, a private equity company, filed for Chapter 11 bankruptcy this past January.

Bankruptcy court proceedings are occurring in the Northern District of Texas Dallas Division and Yale New Haven Health announced last month that no deal was possible to acquire the hospitals due to “mismanagement.”

Julia Bergman, a spokesman for Gov. Ned Lamont said the “governor believes these hospitals are valuable institutions that provide quality health care to the communities they serve.

“He looks forward to their continued success in the future under a new operator,” she said.

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.

Waterbury Mayor Paul Pernerewski Jr. said he learned that there are several bidders interested and expects to know more in the coming weeks.

He said given what has happened with Waterbury Hospital under the ownership of Prospect, it “would be helpful if the new buyer is not a private equity company.”

There is a call in the legislature to restrict private equity in response to the effect of Prospect Medical Holding’s impact on its three hospitals and state officials have raised concerns about profits being maximized over patient care.

Connecticut lawmakers are considering legislation to restrict private equity’s role in Connecticut hospitals but time is drawing down on the session.

SB 1507 would prohibit private equity companies and real estate investment trusts from acquiring or increasing direct or indirect ownership interest in or operational or financial control over a hospital or health system, according to the bill’s analysis.

Sen. Saud Anwar, Senate chairman of the Public Health Committee, said it is integral to pass legislation.

“We are trying to get everyone on the same page,” he said. “We need to make sure we have a plan to protect our citizens from people who are dedicated to making money for themselves at the cost of patients.”

Prospect

There was hope for a buyer for Prospect’s hospitals in 2022 when Yale New Haven Health agreed in a tentative agreement to purchase Prospect’s three hospitals for $435 million but that deal has been bogged down in lawsuits, with Yale deciding that the deal was not possible.

Dana Marnane, director of public relations and communications for Yale New Haven Health, declined to comment for this article.

Nurses and unions at several of Prospect’s hospitals in the state have told the Courant that their hospitals have been decimated, with some continuing to cite concerns about patient care as they wait for a new owner to purchase the hospitals.

This followed a state Department of Public Health consent order issued in November of last year fining Waterbury Hospital $60,000 for violations of state law and called on the hospital to develop, review and revise policies and procedures related to staffing levels, abuse prevention, implementation of physician orders, timely initiation of Emergency Department triage protocol, among other policies. The consent order also called for an independent expert compliance contractor of the hospital.

Brittany Schaefer, public information officer for the Department of Public Health, said in an email Monday that the consent order remains active.

“The independent expert compliance contractor continues to monitor the items outlined in the consent order and submit monthly reports to DPH and Waterbury Hospital leadership regarding this,” Schaefer said, adding that the contractor also meets regularly with DPH and Waterbury Hospital leadership to discuss reports/items outlined in the consent order.

Bankruptcy court filing shows recently that Prospect Medical received permission to close two Pennsylvania hospitals trying to sell them but no one was interested.

Robert White, distinguished practitioner in residence at Quinnipiac University School of Law, said in an email that Prospect will need an infusion of cash from somewhere soon.

“You may see more closings,” he said. “They are trying to sell assets.”

Meanwhile, the state Office of Health Strategy approved a settlement allowing Prospect to seek approval of the consolidation of the Rockville General and Manchester Memorial hospital licenses from the Department of Public Health.

The settlement also cleared a path for the operator to permanently shutter all services aside from the emergency and behavioral health at Rockville General Hospital in Vernon, The CT Mirror reported.

“This isn’t just a failure – it’s a disgrace,” said Sen. Jeff Gordon, R-Woodstock, in a statement. “Once again, OHS has shown it is completely out of touch with the real health care needs of Connecticut families and seniors.

Quality of care

Ed Gadomski, Connecticut Healthcare Associates internal union organizer, who represents the nurses and technicians at Waterbury Hospital, continues to state that almost all of its departments are understaffed with nursing to patient ratios well over the appropriate levels set by the Hospital Staffing Committee. He continues to wait on the outcome of a complaint he filed with the Department of Public Health charging that the hospital is violating the Hospital Staffing Law.

Suzanne Koenig, president of SakHealthcare and the patient care ombudsman for Prospect’s hospitals, stated in her report, according to court filings, that “overall patient care and safety are being maintained at the ECHN hospitals (Manchester Memorial Hospital and Rockville and Waterbury).

“The ombudsman did not observe any staffing issues that put patients in immediate danger or jeopardized their care,” Koenig said in her report.

She did however report that staffing remains challenging.

“Specifically, MMH and Waterbury have had several registered nurses (each an “RN”) call out sick or no-show,” Koenig said in her report. “The hospitals, however, have done a good job finding replacement RNs for shift coverage, often on short notice. The hospitals are also actively recruiting and offering sign-on and referral bonuses as incentives.”

But Gadomski said he continues to hear of staff members leaving the hospital.

“Morale is non existent,” he said. “We are keeping our heads above water and waiting for the new ownership.”

Koenig noted in her report that the Emergency Department at Waterbury Hospital was crowded and the need for expansion as planned was evident.

Rockville General Hospital must have a 24/7 emergency department and must offer inpatient behavioral health services for three years, according to the agreement.

MANCHESTER, Conn. — Prospect Medical Holdings and the state of Connecticut have come to an agreement that Rockville General and Manchester Memorial hospitals can seek consolidation, but 24/7 emergency services must be made available for the time being.

Los Angeles-based PMH filed for Chapter 11 bankruptcy this past January, leaving residents and hospital staff in northeastern Connecticut anxious over what would become of the area hospitals.

The state Office of Health Strategy on Friday approved the company's request to seek consolidation of the hospital licenses of Rockville General Hospital in Vernon and Manchester Memorial Hospital in Manchester.

Once the licenses are consolidated and the state Dept. of Public Health issues a new license, the Rockville General Hospital campus must have a 24/7 emergency department and must offer inpatient behavioral health services for three years, according to the agreement.

Prospect must also give advance notice to the Office of Health Strategy of any decisions to relocate inpatient beds or relocate outpatient services, and they must be relocated within 30 miles of the Rockville General campus.

The public must also be informed of any service terminations through a circulated newspaper and on Rockville General's website after obtaining the new hospital license.

Prospect must also disclose all potential bidders in the bankruptcy case, and the buyer would take on all responsibilities of the agreement.

Read the full agreement here.

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Yale was a potential buyer of Rockville General and Manchester Memorial last year, but went into litigation with Prospect, and the deal fell through.

Saturday evening, state Sen. Jeff Gordon (R-Woodstock), who represents Vernon, issued a release expressing his disappointment that Prospect is, from his point of view, clearing a path for the operator to permanently shut down all services other than the emergency room and behavioral health center at Rockville General Hospital.

"This decision by Office of Health Strategy Commissioner [Deidre] Gifford once again highlights how out of touch with reality our state government is regarding local health care needs in Connecticut," Gordon said. "It took years before OHS investigated the unauthorized closure of needed patient care services by Prospect Medical Holdings at Rockville General Hospital. Now, it sides with an out-of-state private equity firm that puts profits over patients? Terrible!"

Gordon asked in his release where Gov. Ned Lamont, Attorney General William Tong and Comptroller Sean Scanlon have been during this process.

"The people of Connecticut deserve better than this," Gordon said. "As a state senator and a doctor, I have been fighting for the people of Connecticut. I proposed meaningful reform of certificate of need and OHS, not only to prevent private equity from destroying the hospitals it owns, but also to preserve good paying health care jobs and provide proper oversight."

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