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Yale New Haven Health deal to purchase three CT hospitals on life support

Rockville General Hospital is one of three hospitals in Connecticut owned by Prospect Medical Holdings.
Shahrzad Rasekh
CT Mirror
Rockville General Hospital is one of three hospitals in Connecticut owned by Prospect Medical Holdings.

Three community hospitals are on life support after Yale New Haven Health (YNHH) filed a lawsuit against Prospect Medical Holdings for breach of contract by defaulting on rent and tax liabilities, allowing its facilities to deteriorate, mismanaging assets, and refusing to negotiate in good faith. But YNHH hasn’t pulled the plug on the purchases — yet.

A YNHH spokesperson said Yale is not obligated “to close the transaction on the original terms,” leaving to interpretation that the deal may yet go through if the terms are changed.

YNHH initially agreed to buy Manchester Memorial Hospital, Rockville General Hospital, and Waterbury Hospital for $435 million in 2022, but says financial conditions have since further deteriorated.

But State Rep. Kevin Brown, D-Vernon, says the hospitals could close if the deal falls through.

“I don't see how we can allow these hospitals to fail,” he said. “The banks at one point were deemed too big to fail, this is too big to fail. This is literally life and death. And so we may have to entertain finding a way to help subsidize this.”

Los Angeles-headquartered Prospect Medical Holdings purchased hospitals across the country, driving them into debt after Prospect’s investors drew profits from the sale of hospital real estate to a corporate landlord, who rented the properties back to the hospitals, driving up costs, according to the Private equity Stakeholder Project.

Yale says the deal, as it now stands, risks the sustainability of its own health system.

Lawmakers say they are pulling all stops to bring Yale and Prospect back to the negotiating table.

“At the center of this deal are about almost half a million Connecticut citizens,” State Sen. Saud Anwar, chair of the Public Health Committee, said. “And there are thousands of jobs that are linked with these three hospitals. We have to intervene, we have to figure out how we can bring them back to the table. I do not believe the deal is dead.”

Meanwhile, Prospect says Yale is in breach of the contract and Prospect will push Yale on legal grounds to complete the transaction.

Sujata Srinivasan is Connecticut Public Radio’s senior health reporter. Prior to that, she was a senior producer for Where We Live, a newsroom editor, and from 2010-2014, a business reporter for the station.