Medical Properties Trust, the nation's largest hospital landlord, said its deal to secure $375 million in new financing from third-party lenders for Prospect Medical Holdings was completed, but the company did not mention that a California state regulator put the transaction on hold, The Wall Street Journal reported Aug. 18.
Prospect said in a filing that a subsidiary of MPT had acquired a 49 percent stake in Prospect's parent company and that the deal didn't need the regulator's advance approval because it wasn't a change in control. The deal was put on hold July 20 as the state regulator was concerned over how much control MPT would have over Prospect Health Plan.
But Medical Properties Trust "didn't disclose the regulator's order when it reported second-quarter results, or in its quarterly report with the Securities and Exchange Commission," according to the publication.
"Information is being provided to the relevant agencies, and MPT continues to expect to complete the transactions," Drew Babin, a company spokesperson, told the Journal.
Los Angeles-based Prospect Medical told the Journal it was "in no position right now" to answer questions about the California state regulator's July 20 order.
The Prospect Medical Holdings deal, announced May 24, was made to provide Prospect's hospital operations with liquidity and capitalize its managed care business for growth and value creation.
The deal was also made to alleviate some financial stress for the organization and MPT, according to the publication.
Mr. Babin told the publication that the deal is "proceeding through a normal regulatory review process that was expected and is not controversial."
When it comes to healthcare, MPT has played a large hand in private equity firms' push into healthcare facilities.
The Journal reported that MPT "used cheap, plentiful financing to buy more than 400 hospitals."
Now some of MPT's hospital tenants — like Watsonville (Calif.) Community Hospital — have had to close facilities and cut services. Prospect and Dallas-based Steward Health Care, according to the Journal, have also been receiving financial support from MPT due to financial losses.
On May 1, Steward shuttered its San Antonio-based Texas Vista Medical Center, saying its losses came from treating low-income patients.