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December 1, 2023

CT presents draft settlement in YNHH-Prospect hospitals sale

SHAHRZAD RASEKH / CT MIRROR Waterbury Hospital is one of three facilities owned by Prospect Medical Holdings in Connecticut. The hospitals were hit with a cyberattack in August.

State officials have presented a draft settlement agreement to parties involved in Yale New Haven Health’s bid to purchase three Connecticut hospitals owned by Prospect Medical Holdings, and hospital executives are exchanging proposals with the state, a spokeswoman for Office of Health Strategy told The Connecticut Mirror.

“In-person meetings are taking place, and the state continues to advocate for a settlement that ensures access, quality, equity and affordability for the residents in the impacted areas,” the spokeswoman, Tina Kumar Hyde, said.

Dana Marnane, a spokeswoman for Yale New Haven Health, confirmed that settlement proposals were exchanged and that hospital officials are “engaged in discussions” with the state.

“While we remain hopeful that a settlement can be reached, any conditions to the [certificate of need] must account for the recent cyber-attack and its ongoing detrimental impact on the Prospect hospitals,” she said. “Yale New Haven Health has responded to OHS’s proposals and looks forward to continuing to negotiate an agreement that will allow us to operate the Waterbury and ECHN hospitals safely while ensuring access to affordable, high-quality health care.”

Representatives for Prospect Medical and Eastern Connecticut Health Network, which owns Manchester Memorial and Rockville General hospitals, could not immediately be reached for comment Thursday. A spokeswoman for Waterbury Hospital declined to comment.

Hospital leaders agreed last month to keep the negotiations with OHS confidential. They have been meeting regularly and are scheduled to meet again next week, sources said.

Hospital executives, legislators, health care workers and local officials have called on the state to expedite its approval of the YNHH-Prospect deal, which has been pending for more than a year.

Records show that the acquisition has already taken longer to gain state approval than several other Connecticut hospital mergers. YNHH’s purchase of Milford Hospital in 2019 took 204 days from the time a certificate of need was filed, Hartford HealthCare’s acquisition of Saint Vincent’s Medical Center the same year took 267 days, YNHH’s purchase of the Hospital of Saint Raphael in 2012 took 147 days, YNHH’s merger with Lawrence + Memorial Hospital in 2016 took 337 days, and Hartford HealthCare’s 2017 acquisition of Charlotte Hungerford Hospital took 351 days.

As of Thursday, the YNHH-Prospect deal has gone 373 days without state approval.

Meanwhile, as the months pass, hospital executives, legislators and local officials say the threat of closure is growing, with the Prospect hospitals owing tens of millions of dollars to vendors and physicians and in taxes.

Surgeries have been postponed because health care providers don’t have the needed resources. Contracts with traveling nurses and technicians are in jeopardy and remain in place only on a “week-to-week” basis, physicians at the hospitals said. An anesthesiologist group is suing over nonpayment of more than $3 million. The hospitals were also hit with a cyberattack over the summer that crippled operations and set them back further financially.

But Kumar Hyde has said the current deal is more complex than any the agency has dealt with over the past decade.

While many certificate of need applications were approved more quickly, some — such as Hartford HealthCare’s acquisition of Charlotte Hungerford Hospital — are similar in length to the YNHH-Prospect deal, she noted.

“There are three hospitals involved in this transaction, while most other transactions in the past 10 years have only involved one hospital. The process has involved three times the data collection, analysis and synthesis,” Kumar Hyde said.

“OHS’ obligation in reviewing Transfer of Ownership applications is to ensure that the statutory requirements of addressing quality, access and cost effectiveness are met. Our obligation is to ensure we have adequate information to address those concerns, and to protect the interests of the public in every transaction reviewed. It is not unusual for complex hospital acquisitions that require multiple layers of review to take a year or more to complete.”

Sources have told CT Mirror that YNHH officials are seeking $16 million per year over five years, or $80 million total, from the state to help with recovery efforts from the recent cyberattack across the three Prospect-owned hospitals, to update computer systems and to address “deteriorating” conditions at the facilities. YNHH has also asked Prospect Medical to adjust the previously agreed upon purchase price of $435 million.

In the meantime, the hospitals are struggling. In a meeting with about 30 legislators in September, ECHN and Waterbury Hospital executives said they are behind on paying bills and, if the deal with YNHH is not approved, the facilities may not remain financially viable or functional, according to people in attendance.

The executives have said they owe millions to vendors and physicians contracted to provide care at the hospitals.

Yale New Haven Health officials are concerned about the software at the Prospect-owned hospitals following the cyberattack, which began in early August and lasted for nearly six weeks. At the meeting with legislators, the computer system used by the hospitals was described as outdated.

Earlier this month, lawmakers and health care workers from Waterbury Hospital and ECHN also rallied at the state capitol in an effort to speed up the deal.

“This is the first time I’m seeing a real scenario, I’m sorry to say, that these hospitals could close,” said Dr. Saqib Naseer, a cardiologist who has worked in the Eastern Connecticut Health Network. “This has dragged on too long to the extent that we are worried if they put enough conditions on Yale, they could walk away because they are under no obligation to do this. If Yale walks away, there is no other buyer for these hospitals.”

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