The health system signed a deal in 2022 to acquire Waterbury (Conn.) Hospital, Manchester (Conn.) Memorial Hospital and Vernon, Conn.-based Rockville General Hospital from Prospect for $435 million. In May, Yale New Haven filed a lawsuit seeking to exit the deal, alleging Prospect breached its contract because it did not pay rent and taxes on time, letting the three hospitals deteriorate. Prospect in July filed a countersuit demanding that the system honor its contractual obligations.
Prospect filed for Chapter 11 protection in January as it works to sell 10 of its 16 hospitals.
In a statement shared with Becker’s Feb. 26, a Yale New Haven spokesperson said that while the health system had hoped to acquire the hospitals, “Prospect’s failure over several years to pay vendors and state and local taxes and to fund their pension obligations have made this transaction impossible.”
“The bankruptcy filing is proof of their disinvestment and mismanagement,” the statement said. “As we have been saying for almost 18 months, and detailed in our lawsuit, Prospect has never been in a position to close the transaction on the terms set out in the October 2022 asset purchase agreement. We continue to closely monitor the bankruptcy proceedings.”
Prospect in October accused Yale New Haven board members 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.”
Messages left with Prospect Medical Holdings were not immediately returned.
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