Prospect Medical Holdings is the third suitor to announce plans to acquire the financially strapped Waterbury Hospital.
Darlene Stromstad, President and CEO of Waterbury Hospital, said the Los Angeles-based Prospect Medical Holdings was chosen because of its “coordinated regional care” approach to healthcare, which will strengthen and enhance access to and the delivery of high quality, cost-effective services for the community.
Financial terms of the acquisition were not disclosed Tuesday. The deal comes several months after Texas-based Tenet Healthcare Corp. withdrew its proposal to purchase Waterbury Hospital, Saint Mary’s, and three other hospitals in Connecticut.
Tenet Healthcare Corp. walked away from the negotiating table in December over “excessively onerous” conditions placed on the company by state regulators. LHP Hospital Group was the first to try to acquire Waterbury Hospital and Saint Mary’s, but that deal fell apart, mainly over the issue of reproductive rights.
Prospect Medical Holdings operates 13 hospitals and 40 clinics and outpatient centers in California, Texas, and Rhode Island, and is much smaller than the hospital’s two previous suitors.
As of Tuesday they still had not filed paperwork with the Office of Health Care Access, but that’s not unusual since the company just signed a letter of intent with the Greater Waterbury Health Network on Friday.
Acknowledging the stumbling blocks in the past, Stromstad noted in a press release that Prospect was chosen partly because it has a proven track record of moving through the regulatory process successfully. She cited its experience “in the highly regulated Rhode Island healthcare market.”
Paul Filson, political director for SEIU 1199, said the union has some experience with the company in California and Rhode Island. The unions have been told by the hospital that Prospect will assume all labor contracts.
Barbara Simonetta, president of Connecticut Health Care Associates, said what she’s read about the company “doesn’t make the hair on the back of her neck stand up.” She said she’s going to meet with officials from the company on Monday and plans to talk with her union counterparts in Rhode Island to get a feel for their experience with Prospect.
SEIU and AFSCME, which represent the certified nurse assistants, janitors, food service workers, registered nurses, and technicians at Waterbury Hospital, have been closely involved in hospital conversion legislation making its way through the General Assembly.
It’s unclear at the moment what rules Prospect Medical Holdings would need to follow in order to acquire Waterbury Hospital, because legislation dictating those rules is still being debated by the General Assembly.
Filson said that under the old process they would have to file an intent to buy the hospital with the Office of Health Care Access and then hearings would be organized. Filson said he assumed that all was going to happen, but it’s unclear exactly what regulations the private hospital chain will have to follow.
“They don’t know what rules they’ll be playing by at this point,” Filson said.
According to a press release Tuesday from Waterbury Hospital, once the deal is completed the hospital plans to expand its range of outpatient services to the communities it serves while making upgrades to the hospital’s main campus.
With a signed letter of intent, the two organizations will now work on creating an agreement they will need to begin the “certificate of need” process, which is the first step in receiving approval from the Office for Health Care Access and the Attorney General. The transaction also will require approval from federal regulatory agencies.
There are 29 acute care hospitals in Connecticut and all but one operate as nonprofits.
Last year, the General Assembly passed legislation it felt would make it easier for these for-profit hospital chains to acquire non-profit hospitals. After going through that new process, Tenet withdrew its application after spending at least two years trying to acquire Connecticut hospitals.