Two struggling community hospitals in Connecticut — Rockville General and Manchester Memorial — only attracted one bidder in a recent auction to acquire the facility from its bankrupt owner, Prospect Medical Holdings.
Hartford HealthCare (HHC) was awarded the bid to purchase the two facilities from private equity-funded firm Prospect Medical Holdings for $86.1 million. But any hospital takeover must be approved by the state’s Office of Health Strategy (OHS). An exception was made to expedite the approval process and OHS is required to make a decision by Dec. 30.
Amy Porter, acting commissioner at OHS, said during an emergency hearing Tuesday the state’s considerations in the sale include the anticipated effect of the hospital's transfer of ownership on access, cost and quality of health care in the Manchester and Rockville communities. That includes an assessment of health care access for Medicaid recipients.
“When issuing a final decision, we must also consider the effect of the hospital's bankruptcy on the patients and communities served by the hospital and the applicant's plan to restore viability,” Porter said.
A pitch for local care and local jobs
HHC had previously announced its intent to invest more than $300 million in both hospitals.
Testifying in favor of the deal at Tuesday’s emergency hearing, Jeffrey Flaks, president and CEO of HHC, said some of that money would add a “significant number of jobs within the community.”
He also said the purchase would bring local care back for patients.
“There are tremendous numbers of people today within the Manchester and Rockville communities who receive health care outside of these local communities,” Flaks said.
Both the Manchester and Rockville hospitals were gutted by out-of-state private equity investors who drew down on the hospitals’ earnings, leaving them in debt after selling land they once owned to a real estate investment firm, according to a Senate committee report.
That report cited reporting by Connecticut Public about staffing shortages at Waterbury Hospital, another Prospect-owned hospital that is now currently in a sale deal with state-owned UConn Health.
Connecticut Public also reported on patient abuse, rusty operating room equipment, and unpaid bills at Prospect-owned hospitals. Prospect said it put corrective actions in place after being cited by the state and has since passed subsequent state inspections.
State lawmakers have since urged caution in approving deals with companies funded by private equity.
“Private equity ownership is often characterized by short time horizons and high levels of debt financing, which can create incentives to reduce staffing and service levels, as well as increase financial risks and the likelihood of bankruptcy for acquired health care facilities,” Rajiv Sharma, professor of economics at Portland State University, said in an emailed statement.
Sharma said the short time horizon also creates incentives to extract revenue from acquired facilities in the form of fees, and to sell hospital assets.
“Research has not identified any consistently beneficial impacts of private equity ownership in health care on quality of care for patients or on health care costs for patients and payers,” he said.
The state previously took 16 months to approve a previous sale deal for the three Prospect-owned hospitals, including Waterbury Hospital. Yale New Haven Health then backed out of that deal, saying conditions at the hospitals had sharply deteriorated.
Local leaders expressed optimism during Tuesday’s emergency hearing about the state’s expedited timeline for the sale.
“Hartford HealthCare will be good for Vernon and for all of our surrounding towns,” Dan Champagne, mayor of Vernon, said. “I truly support this application, and I hope this doesn’t get held up.”
