Yale New Haven Health is set to pay $45 million to settle a protracted legal dispute with Prospect Medical Holdings over the failed acquisition of three hospitals in Connecticut: Waterbury, Rockville General, and Manchester Hospitals. This settlement agreement marks the end of a lengthy court battle that involved complex negotiations concerning the future of these healthcare facilities.
In 2022, Yale New Haven Health initially struck a tentative deal to buy the three hospitals for $435 million. However, the agreement fell apart earlier this year, which Yale attributed to what they termed “mismanagement.” Prospect Medical Holdings then filed for Chapter 11 bankruptcy in January, further complicating the situation.
According to a motion filed by Prospect regarding the settlement, the agreement will help both parties avoid the costly and time-consuming litigation that had been ongoing. It states, “This resolution allows the debtors and their advisors to better focus on other pressing issues in these chapter 11 cases.”
Yale New Haven Health expressed optimism about the settlement, stating that it will effectively resolve all pending litigation with Prospect, permitting both entities to concentrate on future plans. A spokesperson noted, “We look forward to continuing to grow critical services across our region.”
Despite this settlement, it appears that Prospect’s hospitals are on the verge of new ownership. On September 19, Hartford HealthCare announced it has reached an agreement to purchase Manchester Memorial Hospital and Rockville General Hospital for $86.1 million. The organization emphasized its commitment to improving healthcare access and affordability in the region, stating that entering into this agreement aligns with their mission to enhance health equity and excellence.
Additionally, UConn Health has expressed intentions to submit a bid for Waterbury Hospital. Dr. Andrew Agwunobi, CEO and Executive Vice President for Health Affairs at UConn Health, remarked, “We are excited about the potential to assist the State in preserving access to care in the Waterbury region.” He highlighted UConn’s reputation for high-quality patient care and specialty services as valuable assets for the communities it aims to serve.
The mediation efforts involving MPT (Prospect’s landlord), Yale New Haven Health, and Prospect Medical Holdings were overseen by Judge Harlin Hale, as noted in court documents. At a status conference on September 16, the involved parties announced they had reached a potential resolution regarding their disputes.
Prospect Medical Holdings, a private equity firm based in Los Angeles, has been struggling financially in recent years, facing significant issues related to delayed payments to vendors and the recruitment of healthcare providers. State and federal officials have raised concerns that the company has prioritized profits at the expense of patient care, leading to criticism from both officials and hospital staff.
Concerns from nurses and unions at Prospect’s Connecticut hospitals have also been mounting, particularly regarding the implications for patient care under Prospect’s management. Last November, the Connecticut Department of Public Health levied a $60,000 fine against Waterbury Hospital for regulatory violations related to staffing and patient safety policies. Following the fine, the department mandated the hospital to reassess its policies and required oversight from an independent compliance contractor.
Dana Marnane, Yale New Haven Health’s director of public relations and communications, previously commented on the complications surrounding the acquisition, stating that “Prospect’s failure over several years to pay vendors and state and local taxes to fund their pension obligations have made this transaction impossible.”
Local leaders have reacted positively to the prospect of UConn Health and Hartford HealthCare becoming involved with the hospitals. Waterbury Mayor Paul Pernerewski Jr. commended the interest from UConn Health, indicating that having a non-profit institution could lead to better patient care. He stated, “I think UConn can be a very good partner to have in the city of Waterbury.”
Similarly, Vernon Mayor Dan Champagne expressed relief at the news of Hartford HealthCare acquiring Rockville and Manchester hospitals, saying, “I am happy that we have a buyer that is a well-known and well-respected organization.” The settlement and prospective purchases signify a potentially transformative phase for healthcare services in Connecticut as both parties look toward a healthier future for the region.
