Ten things to know:
1. Los Angeles-based Prospect’s bankruptcy is the “latest chapter in a history of mismanagement and plunder stretching back to 2016,” when the health system bought three Connecticut hospitals, the state attorney general’s office said in court documents. The hospitals are:
- Manchester Memorial Hospital
- Waterbury Hospital
- Rockville General Hospital (Vernon)
2. The for-profit, private equity-backed system promised “robust investment and careful quality control,” protection of patients’ protected health information as well as improving the hospitals’ facilities and expanding their services. “Prospect broke each of these promises,” the office of the state attorney general said in a Feb. 11 statement.
3. Instead, Prospect “took the Connecticut hospitals private and then sold the ground out from under them to fund dividends to its shareholders,” according to a statement from the state attorney general’s office. “Those shareholders profited from Prospect throttling Connecticut’s healthcare infrastructure, stiffing vendors and staff, shortchanging Connecticut through material unpaid taxes, and — worst of all — endangering its residents through compromising on vital medical care.”
4. Yale New Haven Health System planned to buy the three hospitals from Prospect for $435 million but last year sued to get out of the deal. The health system alleges Prospect engaged in irresponsible financial practices and breached its contract by not paying rent and taxes on time, letting the hospitals deteriorate. Prospect accused Yale New Haven Health of waging “an aggressive campaign” in the courts and via the media to delay the closing of the transaction and “drive down the value of the hospitals in hopes of extracting a lower purchase price,” ta spokesperson for the system said in an Oct. 17 statement shared with Becker’s.
5. Connecticut officials argue Prospect’s alleged neglect of the hospitals led to serious consequences, including:
- Patient deaths potentially due to mishandling of their treatment
- Delayed testing where the health system had refused to timely pay the vendor
- Delayed and rescheduled surgeries
- Borrowing medications from other facilities to fill patient orders where Prospect failed to fund disbursements
- Inability to print prescriptions and discharge instructions after failing to pay a vendor
- Inability to run criminal background checks on applicants
- Inoperable elevators requiring patients to be carried up and down stairs
- Delays in patient care caused by the refusal to fund necessary software upgrades
- Failing to meet pension plan obligations
6. On July 31, 2023, a hacker gained access to Prospect’s IT systems and deployed a ransomware code that locked the company out of its own systems and compromised the private data of 212,369 Connecticut residents. A cyberattack on Aug. 3 caused emergency departments to close, ambulances to be diverted, and other medical services to cease operations.
7. “Connecticut is committed to ensuring that the Connecticut hospitals can be transitioned to a responsible, appropriate operator (or operators),” according to the Feb. 11 statement by the state attorney general’s office. “That is the only way for the citizens of Connecticut to receive the care they need and deserve. But at the appropriate time, the debtors and relevant non-debtors must also be accountable for the substantial harm they have caused in Connecticut.”
8. Prospect filed for Chapter 11 bankruptcy protection in January. The company operates seven hospitals in California, three in Connecticut, two in Rhode Island and four in Pennsylvania, which were recently taken over by a receiver.
9. Earlier this month, FTI Consulting, took control of Crozer Health from Prospect. The Upland, Pa.-based system, which Prospect struggled to find a buyer for, has four hospitals in Pennsylvania.
10. Prospect aims to offload six more of its 16 hospitals. The company aims to restructure and exit the hospital markets in Connecticut, Rhode Island and Pennsylvania, focusing solely on California.
Prospect did not respond to Becker’s request for comment.
