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CT to issue decision on Prospect hospital deal as talks with Yale Health break down

Waterbury Hospital is one of three hospitals owned by Prospect Medical Holdings. Yale New Haven Health has moved to purchase the hospitals, but has asked for a lower purchase price and state funds to support the deal.
Waterbury Hospital is one of three hospitals owned by Prospect Medical Holdings. Yale New Haven Health has moved to purchase the hospitals, but has asked for a lower purchase price and state funds to support the deal.

Talks between state officials and Yale New Haven Health over its bid to purchase three ailing Connecticut hospitals have broken down, prompting the state to move ahead on a final decision over whether to approve the acquisition, officials with Connecticut’s Office of Health Strategy said Tuesday.

Tina Kumar Hyde, a spokeswoman for OHS, which is overseeing the certificate of need process for the purchase, said Yale and Prospect Medical Holdings, which owns the three hospitals Yale New Haven Health has agreed to purchase, do not want to keep negotiations confidential.

Yale made a bid to acquire Prospect’s three Connecticut facilities — Waterbury, Manchester Memorial and Rockville General hospitals — but now wants to renegotiate the terms of its agreement because of deteriorating conditions at the hospitals.

“In an attempt to move the transfer-of-ownership process to a resolution, the Office of Health Strategy reached out to the Yale/Prospect [certificate of need] applicants to initiate discussions on an agreed settlement,” Kumar Hyde said in a statement. “As is routine with this type of negotiation, OHS requested that the substance of the negotiations remain confidential while discussions were ongoing. Yale and Prospect have chosen not to agree to confidential negotiations, and therefore, to keep the process moving as expeditiously as possible, OHS will prepare and issue a Proposed Final Decision on the certificate of need.

“If the parties are interested and willing to resume confidential settlement discussions, OHS will reconvene those as well. OHS has also completed the Cost and Market Impact Review as required by law and has shared it with the applicants and the Office of the Attorney General.”

Kumar Hyde said OHS is not required to keep negotiations confidential, but the agency prefers to do so. “We routinely carry out our agreed settlement discussions in a confidential manner,” she said.

OHS officials did not say when they will issue a final decision on the acquisition.

In an emailed statement Tuesday, Dana Marnane, a spokeswoman for Yale New Haven Health, said: “We continue to be ready and willing to meet with OHS and any appropriate state officials to bring this transaction to a successful conclusion.”

Spokespeople for Prospect Medical, Waterbury Hospital and Eastern Connecticut Health Network, which operates Manchester and Rockville hospitals, did not return calls seeking comment Tuesday night.

A spokeswoman for Gov. Ned Lamont declined to comment on the development. Earlier in the day, Lamont said he has not taken a position on the sale.

“I’m neutral. I want to make sure we have the best quality of health care in Waterbury and beyond. Yale stepped up, they put an agreement on the table, [a] signed deal. If they want to change their mind on it, there were two other bidders,” he said during a press conference in Bristol, although he did not elaborate.

Yale had agreed in 2022 to buy the hospitals, along with imaging equipment and the hospitals’ equity interests in certain joint ventures, for $435 million. But following a recent cyberattack at the Prospect-owned facilities, Yale sought a lower purchase price and asked the state to contribute taxpayer funds to the deal.

Yale asked the state to provide $16 million per year for five years, or as much as $80 million total, to help with recovery efforts from the cyberattack, to update computer systems and to address “deteriorating” conditions across the hospitals.

Asked about the possibility of contributing state funds to the deal, Lamont said Tuesday: “This is an agreement between Yale New Haven and Prospect. I don’t know why they need the taxpayers to step in, but we’ll be talking.”

Officials from Yale, Waterbury Hospital and ECHN have been urging the state to speed up its approval of the acquisition, saying the financial situation at the Prospect-owned facilities is dire.

In a meeting with about 30 legislators late last month, hospital executives said they are struggling to pay bills and, if the deal with Yale New Haven Health is not approved, the facilities may not remain financially viable or functional, according to peoplein attendance.

The executives have said they owe millions to vendors and physicians contracted to provide care at the hospitals.

ECHN alone owes $42 million in taxes to the state, $5.18 million to physicians, and $5.9 million to local vendors, sources have said.

Yale officials are concerned about the software at the Prospect-owned hospitals following the cyberattack, which began in early August and lasted for nearly six weeks. At the meeting with legislators, the computer system used by the hospitals was described as outdated.

More than 24,000 employees of Prospect Medical Holdings in Connecticut may have had some of their personal information, including Social Security numbers, exposed during the recent cyberattack that paralyzed many operations in the hospitals.

Prospect notified employees and the state Attorney General’s office of the breach in late September.

Prospect also told the Attorney General’s office that 63 Connecticut residents who were patients at Prospect hospitals in California may have had their information breached, including patient names, health insurance and financial information. Of those breaches, 13 had Social Security numbers involved, according to the Attorney General’s office.

Connecticut Mirror Writer Mark Pazniokas contributed to this report.

This story was first published Oct. 18, 2023 by Connecticut Mirror.

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