Yale-New Haven’s plan to buy three hospitals owned by Prospect Medical Holdings, a troubled private equity group, is reportedly on the rocks.
Publicly, all the players claim they remain committed to the sale. But in private meetings with the Governor and legislators, the three hospitals are reportedly complaining that they can’t pay their bills. And Yale New Haven now reportedly has concerns about buying the deteriorated assets. The three hospitals want the state to rush and approve the sale, with no conditions to preserve care, or very bad things will happen. It’s a mess.
It’s also an old story. Hospitals claim financial troubles and look for deep pockets to bail them out. A few years later, those benefactors have broken their promises of increased investments, raided the assets, neglected needed upkeep, stopped paying their bills, and the hospitals are looking for a new deep pocket. In the end, patients and communities are the losers.
Connecticut was warned. Problems with private equity taking over healthcare facilities are not new. The legislature’s insurance committee held a forum two years ago and heard warnings from other states and calls to protect patients and communities. In 2020, ProPublica documented Prospect’s track record of buying hospitals, borrowing against the assets, stripping out dividends and fees, and leaving hospitals without enough funds to fix broken elevators, gas up ambulances, or buy medical supplies. The 2016 purchases of Waterbury, Manchester, and Rockville Hospitals by Prospect Medical Holdings were summarily approved by the state with little review.
To add to the mess, all 16 Prospect-owned hospitals across the US experienced a cyberattack in August that lasted six weeks. The attack caused Prospect hospitals in Connecticut to postpone outpatient services, elective surgeries, blood drives, and other services. Waterbury Hospital had to rely on paper records for at least two weeks and divert trauma and stroke patients to St. Mary’s Hospital. Manchester and Rockville hospitals had to rely on a temporary phone system.
It’s unfortunate that it got to this place – the lack of oversight is stunning. At this point, letting Yale buy the three hospitals seems the best of the terrible options. But if the state approves Yale’s application, it will have eight hospitals on ten campuses, expanding their monopoly across more of the state. Hospital consolidation is a prime driver of rising healthcare prices and the resulting unaffordable premiums for residents and employers across the state. It’s a real mess.
The state has to make this right and preserve access to care in the three affected communities. But it’s maddening to be in this entirely predictable mess. Rushing the process and approving the sale with no guardrails just invites even more problems down the road. The best deals are never made with a gun to your head. Soon after the sale, the hospitals will likely be back pleading with the state for a bailout to cover what was lost to private equity investors.
There must be conditions for the sale, and they must be meaningful. At a minimum, the state should require long-term commitments to maintain access to care, expand community benefits to improve the health of local residents, restore facilities, ensure safe staffing levels, secure patient record privacy, and keep prices at current levels. With 2021 profits of $642 million in the state’s last report, this shouldn’t be a problem for Yale-New Haven.
