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October 12, 2023

Yale seeks state funding, lower price for Prospect Medical hospitals

SHAHRZAD RASEKH / CT MIRROR Manchester Memorial Hospital is one of three hospitals owned by Prospect Medical Holdings that would be sold to Yale New Haven Health under a pending deal.

Yale New Haven Health has asked the state to provide financial assistance in its acquisition of three Connecticut hospitals recently hit with a debilitating cyberattack, and for Prospect Medical Holdings, which owns the hospitals, to lower the $435 million purchase price.

The request from Yale comes less than two weeks after officials from all the hospitals involved in the sale pleaded with Gov. Ned Lamont and a group of about 30 lawmakers to expedite the state’s approval of Yale’s application to purchase the three Prospect-owned hospitals — Manchester Memorial, Rockville General and Waterbury Hospital — citing grave concerns about the financial stability of the Prospect holdings.

“Two weeks ago, in light of the cyberattack at the Waterbury Health and [Eastern Connecticut Health Network] hospitals and the deteriorating conditions at those hospitals, Yale New Haven Health proposed a recovery plan in which Yale New Haven would provide immediate management support to WH and ECHN to help them recover from the cyberattack, and Prospect would adjust the purchase price and the state would provide financial support to the WH and ECHN hospitals to account for their deteriorating conditions,” said Dana Marnane, a spokeswoman for Yale New Haven Health.

“We need all parties, including the state, to join in the recovery plan to make this transaction happen.”

Marnane would not say how much Yale has asked the state to contribute.

“All parties need to sit down together to get a full picture to determine what support is needed,” she said.

Yale announced in 2022 that it had agreed to spend $435 million to purchase the hospitals, along with imaging equipment and the hospitals’ equity interests in certain joint ventures. Completion of the sale and a certificate of need process is pending.

A spokesman for Prospect did not return calls seeking comment on Yale’s request to adjust the purchase price.

Lamont said he expects talks between state and hospital officials to begin this week or next. Part of the discussion could involve speeding up the certificate of need process.

“Everything takes too long around here. But I can tell you that Deidre [Gifford, director of the state’s Office of Health Strategy] has reached out to all the respective players — Yale New Haven, the [Prospect-owned] hospitals and Prospect,” Lamont said Friday after a state bond commission meeting. “They’ve agreed to sit down in a mediation so we can speed up the process, and I’d like to think in the next 60 days or so, they’ve got a green light so Yale New Haven can move forward with their acquisition.”

“It’s a way to discuss all the outstanding issues, to speed up the [certificate of need] process,” he added. “They’ll be sitting down, I think, within a week or two.” 

Lamont did not say whether state officials had ruled out putting taxpayer money into the deal.

“Everybody wants the state to step in, across the board,” he said. “There’s a deal on the table right now between Yale New Haven and the Prospect hospitals, and I hope they implement the deal under the terms that were discussed. We’re doing everything we can to speed up that approval process.”

A spokeswoman for Waterbury Health declined to comment this week on Yale’s request for state money, and a spokesperson for Eastern Connecticut Health Network, which includes Manchester and Rockville hospitals, did not return calls for comment.

Hospital officials with Waterbury and ECHN have described their financial situation as dire. In a meeting with about 30 legislators late last month, the executives said they are struggling to pay bills and, if the deal with Yale New Haven Health is not approved, the facilities may not remain financially viable or functional, according to people in attendance.

“They were talking about almost getting to the point where they’re having difficulty paying for bed linens, things like that,” Sen. Saud Anwar, D-South Windsor, co-chair of the legislature’s Public Health Committee and a physician under contract at Manchester Memorial, said after the meeting. “Between the cyberattack and the current financial situation … they are going through a very significant financial challenge.”

That includes difficulty paying vendors and physicians under contract to provide care at the facilities, he said.

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.

More than 24,000 employees of Prospect Medical Holdings in Connecticut may have had some of their personal information, including Social Security numbers, exposed during the recent cyberattack that paralyzed many operations in the hospitals.

Prospect notified employees and the state Attorney General’s office of the breach in late September.

Prospect also told the Attorney General’s office that 63 Connecticut residents who were patients at Prospect hospitals in California may have had their information breached, including patient names, health insurance and financial information. Of those breaches, 13 had Social Security numbers involved, according to the Attorney General’s office.

Lamont said he is worried about the financial state of the Prospect hospitals.

“I think you’ll find that revenues at our hospitals are as volatile as capital gains. The Office of Health Strategy is working very closely with all the hospitals,” he said. “We’re particularly worried about some of those hospitals related to the Prospect group. Those are the ones that are a real focus right now.”

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