Connecticut is officially backing Yale New Haven Health Systems’ ongoing negotiations to acquire three hospitals from Prospect Medical Holdings, an affiliate of hospital real estate firm Medical Properties Trust.

The Connecticut Office of Health Strategy approved the provider’s certificate of need application to buy Waterbury Hospital, Rockville General Hospital, and Manchester Memorial Hospital, reported the Yale Daily News. Following this, negotiations between YNHHS, Prospect, and Connecticut’s Office of Health Strategy became confidential to ensure they continued smoothly, but details are available about the CON, which outlines 46 requirements that must be met, including:

• Employing and financing an independent monitor for five years to report to the OHS
• Rehire all non-management employees and minimize individual job elimination
• Accept all bargaining agreements between hospital employees and the previous management
• Appoint community representatives to the YNHHS board of directors
• Hold community meetings to keep the public up-to-date on hospital activities
• Conduct a Community Health Needs Assessment with local health organizations
• Integrate culturally and linguistically appropriate services at hospitals

In a statement, Connecticut Governor Ned Lamont said the agreement will ensure continued “local access to essential medical care” and preserve “the jobs of the employees who provide care” at these facilities.

Negotiations have been ongoing since October 2022 and have only gained further support from healthcare professionals, legislators, and health policy experts due to Prospect’s ongoing financial challenges, which many attribute to its private equity model. Prospect owes the state at least $67.39 million in health provider taxes that date back to March 2022, and its financial troubles have also plagued other Connecticut providers, according to the Yale Daily News.

Calls for the sale grew following a six-week cyberattack last August that prevented all three hospitals from being able to bill their patients, receive Medicare reimbursements, or pay suppliers for months, and forced the state to issue a $7 billion bailout. The attack also resulted in data for over half a million individuals being sold for $1.3 million on the dark web. Following this, YNHHS proposed a recovery plan that lowered the original $435 million it was willing to pay and asked the state to provide financial assistance.

Under YNHHS, all three hospitals will continue to offer Medicare services while adopting the health system’s financial assistance policies and transitioning to nonprofits. Northeast Medical Group, the medical foundation associated with YNHHS, will offer semiannual reports on Medicaid patients’ access to specialty treatments, and YNHHS will invest $6 million in behavioral health services for mental health and substance use disorder treatments.

“The private equity model of doing business in healthcare, together with [Prospect’s] inability to refinance certain company debts, then compounded by the cyber attack in mid-2023, created a dire situation where the bills simply weren’t getting paid,” Rep. Jason Doucette, D-Manchester, told the Yale Daily News. “Most of the people I speak to in the community are hopeful that the acquisition by Yale will bring a significant overall improvement to the Eastern Connecticut Health Network system, generally.”

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