Yale New Haven calls Prospect deal ‘impossible’

Photo: Morsa Images/Getty Images

Yale New Haven Health appears close to calling off a proposed acquisition of three Connecticut hospitals owned by Prospect Medical Holdings, saying the deal appears “impossible.”

The health system based its decision on what it called “mismanagement” at the Prospect facilities, which led to Prospect filing for bankruptcy protection last month.

“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,” said Yale New Haven in a statement. “The bankruptcy filing is proof of their disinvestment and mismanagement.”

WHAT’S THE IMPACT

According to the CT Mirror, state senators were debating legislation just this week that would expedite the state’s approval process for acquiring hospitals that have filed for bankruptcy. Specifically, the bill would shorten the timeline if a new buyer comes forward and expresses interest in the three Prospect hospitals.

The three hospitals are Waterbury, Manchester Memorial and Rockville General. The state’s House and Senate have both approved the bill.

In 2022, Yale New Haven reached a tentative agreement to purchase the three Prospect facilities for $435 million. 

“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,” said Yale New Haven. “We continue to closely monitor the bankruptcy proceedings.”

THE LARGER TREND

According to CT Mirror, goings have been rough for Prospect Medical for a while, starting with a 2023 cyberattack that ground operations to a halt across the country.

The next month, the presidents of Prospect’s Connecticut hospitals told the governor and a gathering of state legislators that the financial situation at the facilities was dire. Last year, the parties sued and countersued each other over the hospitals’ values.

Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.