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Diving briefs:
Bankruptcy Prospect Medical Holdings may need to find another buyer in the Connecticut Hospital portfolio after Yale New Haven Health, which signed an agreement to acquire the three facilities in 2022. A Yale New Haven spokesman said the transaction was infeasible due to prospect's failure to pay vendors on time, investment in the facility and record of mismanagement. Connecticut Governor Ned Lamont said in a press conference Monday that a buyer who could be named Connecticut and out of state could be named in the coming weeks, according to a report from registered citizens.
Dive Insights:
He filed for bankruptcy in January, citing the need to restructure amid ongoing financial difficulties.
The Los Angeles-based operator said he would be trying to sell his East Coast portfolio, focusing on relatively healthy California-based facilities.
But prospects have already tried to sell their Connecticut portfolio, including Manchester Memorial, Waterbury and Rockville General Hospital without success for years. In 2022, it signed an agreement to sell the facility to Yale New Haven for $435 million.
Yale sues the contract in May, saying it placed the facility in “disastrous” financial position and abolished the terms of sale. In June, prospects tried to keep Yale on the condition.
The lawsuit is still ongoing, but a Yale New Haven spokesman said Prospect's bankruptcy filing was “proof of investment and mismanagement.”
“We've said it for almost 18 months and as detailed in the lawsuit, prospects were not in a position to close transactions under the terms set for the October 2022 asset purchase agreement,” the spokesman said.
The prospect did not respond to requests for comment by press time.
The health system is under pressure from state regulators to quickly sell hospitals while facilities continue to earn operating losses.
Prospect and Yale New Haven are debating who should run the facility, but Connecticut regulators say patients are suffering.
In a bankruptcy filing in February, the state's attorney said the “real victims” of the legal dispute are state residents who do not have a clear path to accessing medical care. They said their top priority is keeping the facilities open and that the state works with prospects to find new operators.
“It's important to move Connecticut Hospitals to a new operator. Hospitals ensure that the hospitals are properly funded and run safely,” the lawyer said. “To be very clear, that operator is not a prospect.”
As Connecticut tackles the fallout from Prospect's bankruptcy, lawmakers are moving forward with a bill that will allow regulators to monitor more than medical transactions involving private corporations.
Prospect was previously owned by Leonard Green & Partners. In a vicious Senate report issued earlier this year, Congressman said the financial strategies adopted by PE companies, including sales leaseback transactions, could have contributed to the financial decline of prospects.
The state hospital association has opposed the bill, adding unnecessary review layers and saying it will delay medical deals.
