State officials offered assurances to residents and employees Monday that three Connecticut hospitals owned by Prospect Medical Holdings would remain open and operating, despite their parent company filing for bankruptcy late Saturday night.
The California-based hospital operator, which also owns facilities in California, Pennsylvania and Rhode Island, filed for chapter 11 in the U.S. Bankruptcy Court in Northern Texas. In a statement, representatives for the company said the filing would allow Prospect to “proceed on a strategic pathway to realign its organizational focus outside of California.”
Speaking at the Capitol Monday, Gov. Ned Lamont said the hospitals would stay open and that officials would hold Prospect accountable to providing high-quality care.
“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, reiterating that the hospitals will “stay open, stay managed.”
The state of Connecticut is listed as one of the top 30 creditors in the bankruptcy filing. Prospect owes the state more than $100 million in taxes, according to a state official at Monday’s event.
It’s unclear what the bankruptcy will mean for the pending agreement Prospect signed in 2022 to sell its three Connecticut hospitals to Yale New Haven Health for $435 million. The deal is currently mired in legal disputes, as the parties have sued and countersued over the true value of the three hospitals.
Early on at Monday’s press conference, Lamont made comments suggesting the sale process had failed, but walked them back when asked for clarification.
“We’ve worked our hearts out over the last two years trying to get this arrangement done between Prospect and Yale New Haven, just couldn’t get there,” Lamont said during opening comments. He added that his administration would be focused on quality of care while “trying to figure out who the next owner and operator of these [three] amazing hospitals is going to be.”
Later, when asked whether the deal had fallen through, he said there was still a possibility it could happen. “I’d like to see the deal get done,” Lamont said. “Yale New Haven has an agreement to purchase these hospitals. We’ll see whether that goes forward.”
Lamont also said he still doesn’t see a need for the state to provide funds to help the hospitals remain open. “Closures aren’t imminent,” Lamont said, adding that the hospitals are “doing very well” under the leadership of Deborah Weymouth, the CEO of Prospect’s Connecticut hospitals.
“I don’t see the need for taxpayer subsidies here,” he said.
But reports about conditions at the hospitals, which Prospect acquired in 2016, found worsening financial and operational problems in recent years. And in August 2023, a cyberattack crippled operations at Prospect’s facilities around the country. The following month, the presidents of Prospect’s Connecticut hospitals warned the governor that the financial situation at all three hospitals was dire.
In October of last year, the Connecticut Office of Health Strategy launched an investigation into service cuts at Rockville General Hospital in Vernon, exploring whether the cuts violated state law. Prospect was hit with federal liens for failure to pay into the pension plan for its Connecticut employees. State inspectors have also documented rusting equipment in operating rooms at Waterbury Hospital. Payments to physicians at Manchester Memorial Hospital have reportedly been delayed.
The state currently has an independent monitor overseeing operations at Waterbury Hospital. Department of Public Health Commissioner Manisha Juthani said during the press conference that the state intends to “monitor each of the facilities more in depth than they have been to date.”
“I’m just really concerned that the employees are going to see this as an unstable situation and start looking for someplace else to work,” Tammy Nuccio, R-Tolland, whose district includes Rockville General Hospital, said during an interview with the Connecticut Mirror ahead of the press conference.
Weymouth, the CEO of Prospect’s hospitals in Connecticut, said employees would continue receiving payment. “I can assure you that payroll will be made, but I cannot go any further to give you the additional details,” she said, noting Prospect is “a privately held organization.”
Attorney General William Tong referenced an ongoing investigation his office launched into Prospect in 2023, but did not provide specifics on the status of that investigation.
“The Governor and I have been working closely together, arm in arm in an effort to keep these hospitals open,” Tong said. “If I think that litigation is the best way to achieve that goal, I will not hesitate for a second to sue.”