Yale New Haven Health Scraps Acquisition of Three Connecticut Hospitals Owned by Prospect Medical Holdings
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Yale New Haven Health is on the verge of abandoning its plans to acquire three Connecticut hospitals owned by Prospect Medical Holdings, citing the deal as “impossible” due to mismanagement at the Prospect facilities, which resulted in Prospect filing for bankruptcy protection recently.
In a statement, Yale New Haven stated, “While YNHHS had hoped to acquire these assets and enhance the clinical care for the impacted communities, Prospect’s failure over several years to pay vendors and State and local taxes and to fund their pension obligations have made this transaction impossible. The bankruptcy filing is proof of their disinvestment and mismanagement.”
Impact of the Decision
State senators were in the process of debating legislation this week to expedite the state’s approval process for acquiring hospitals that have filed for bankruptcy. The bill aims to shorten the timeline if a new buyer expresses interest in the three Prospect hospitals – Waterbury, Manchester Memorial, and Rockville General. Both the state’s House and Senate have approved the bill.
In 2022, Yale New Haven had tentatively agreed to purchase the three Prospect facilities for $435 million. However, the health system stated, “Prospect has never been in a position to close the transaction on the terms set out in the October 2022 Asset Purchase Agreement.”
The Larger Trend
According to reports, Prospect Medical has faced challenges for some time, starting with a cyberattack in 2023 that disrupted operations nationwide. The presidents of Prospect’s Connecticut hospitals highlighted the dire financial situation at the facilities to the governor and state legislators the following month. Legal disputes over the hospitals’ values ensued last year.
Jeff Lagasse is the editor of Healthcare Finance News. For inquiries, reach out via email at jlagasse@himss.org. Healthcare Finance News is a HIMSS Media publication.
