Officials say bidding process delays could endanger CT hospitals. Situation called ‘dire.’

Hartford Courant – Monday, July 21, 2025
By Livi Stanford

As the bidding process for a buyer to acquire Prospect Medical Holdings’ three Connecticut hospitals drags on, the California-based company is facing financial challenges officials warn could increasingly impact patient safety and staffing levels.

“The delay is dangerous,” said Sen. Saud Anwar, co-chair of the state’s Public Health Committee. “We need the right partner at the right time so we can move to the new era of investment and support for these institutions. We have to be worried about Prospect continuing to harm the hospitals and that speaks more about the people out of California who have no interest in providing care and more interest in making money.”

Prospect Medical filed for Chapter 11 bankruptcy this past January and three potential buyers reportedly expressed interest in purchasing the hospitals. An announcement was expected late in June but there has still been no word.

U.S. Sen. Richard Blumenthal said “time is not on our side.

“I am deeply concerned about time passing and morale being damaged and patient care at risk,” he said. “Even though the state has a monitor to ensure quality, there is a larger lesson here. We need urgent reform that will prevent this kind of corporate greed from disastrously affecting health care.”

Dave Hannon, president of Connecticut Healthcare Associates district 1199 National Union of Hospital and Healthcare Employees, said he is hoping a bidder is announced soon citing an otherwise “dire situation.”

“If this drags on for an indefinite period of time, staff numbers will shift away,” he said. “They don’t seem willing to recruit new staff members. It is going to directly impact patient care. The morale level is dangerous. If they continue to bleed staff and they continue to struggle to recruit new staff members, I think that is where the danger is.”

Ed Gadomski, Connecticut Healthcare Associates internal union organizer, who represents the nurses and technicians at Waterbury Hospital, says almost all of its departments are understaffed.

“The longer this goes on with one delay after another, this heightens the anxiety of the staff,” he said, adding that with nurses working overtime and fewer staff, the potential for medical errors increases.

Gov. Ned Lamont’s office said that the sale process for the hospitals is ongoing.

“Keeping the Connecticut hospitals open is a top priority for the governor and we are working very closely with Prospect on the sale process,” the governor’s office said in an email Friday. “Any sale transaction would ultimately be subject to regulatory approval by the relevant state agencies.”

None of the potential buyers’ names have been made public, according to state and health officials, and no official announcement date has been released.

Prospect owns Manchester Memorial, Rockville General and Waterbury Hospital. The private equity company has long faced financial challenges from delayed payments for physicians and vendors to health care provider shortages. State and federal officials say that the private equity company has maximized profits over patient care.

Prospect did not return an email for comment.

Viability of the hospitals

While Vernon Mayor Daniel Champagne expressed optimism that a buyer will be announced in the coming weeks, Waterbury Mayor Paul Pernerewski Jr. and Manchester Mayor Jay Moran shared worries about the viability of the Prospect hospitals in their town as the bidding process stretches on.

Recent bankruptcy court filings show that Prospect Medical received permission to close two Pennsylvania hospitals after no buyer was interested in acquiring the hospitals after the company tried to sell them.

A tentative deal in which Yale New Haven Health would have purchased Prospect’s three hospitals for $435 million was reached in 2022 but fell through due to “mismanagement,” Yale said this past May.

“Prospect’s failure over several years to pay vendors and state and local taxes and to fund their pension obligations have made this transaction impossible,” Dana Marnane, of Yale New Haven Health, said in an emailed statement at the time. “The bankruptcy filing is proof of their disinvestment and mismanagement.”

Officials are hoping for a buyer to return the hospitals to solid footing.

“I am frustrated,” Moran said. “I wish this was solved a while ago. I am concerned how much longer our hospitals can survive. If we don’t straighten this out, it is going to put more burden on the bigger hospitals in the future. People are not going to get the care they need. It is about safety. Morale is low because staff do not know what the future holds.”

Pernerewski also shared his frustrations.

“We are in the middle of July and we do not know who the bidders are,” he said. “This is a unique animal. It is in bankruptcy court. It is going to have to wind its way through. There is not a whole lot to move it along.”

He said Prospect owes the city of Waterbury an estimated $22 million.

“The most critical thing for the city is to see the hospital survive and get sold and continue to operate,” Pernerewski said. “If that were not to happen that would be devastating.”

Nurses and unions at Prospect’s Connecticut hospitals have told the Courant that their hospitals have been impacted under the company, with some voicing concerns about patient care.

In November of last year, the state Department of Public Health fined Waterbury Hospital $60,000 for violations of state law and called on the hospital to develop, review and revise policies and procedures related to staffing levels, abuse prevention and other policies. The consent order also called for an independent expert compliance contractor to monitor the hospital.

Robert White, distinguished professor of law at Quinnipiac University School of Law, said the fact that there are no deadlines for the bidders concerning the sale of the hospitals suggests “the negotiations are very difficult.”

“There is interest but we do not know if the buyers can be satisfied that they can run the hospitals with whatever resources they have,” he said.

Bankruptcy court proceedings concerning Prospect are occurring in the Northern District of Texas Dallas Division. On July 9, U.S. Bankruptcy Judge Stacy Jernigan approved a loan of $30 million for the private equity company.

“According to their budget, Prospect, with its 50 entities, will still need more money despite the $30 million,” said White.

Attorney General William Tong filed a proof of claim in the ongoing proceeding for Prospect Medical Holdings, “asserting claims for negligent misrepresentation, unjust enrichment, negligent performance of duties, violations of privacy laws and violations of the Connecticut Unfair Practices Act,” according to information from the Attorney General’s Office.

The Attorney General’s office said that the “claim ensures that Connecticut continues to have a full seat at the table in facilitating the transition of Prospect’s Connecticut hospitals to a responsible new owner, and that Prospect is held accountable through the bankruptcy proceeding for the harm it has inflicted on the state and its patients.

“Nothing good happens when private equity is allowed to strip mine our local hospitals and health care institutions and we will continue to press for legislation to strengthen oversight and transparency around these transactions and acquisitions,” Tong told the Courant.

Inadequate staffing

Staffing levels are already raising alarm with high turnover rates at Waterbury Hospital and understaffing in nearly every department, according to the Connecticut Healthcare Associations internal union for Waterbury Hospital nurses and tech unions. The Department of Public Health in a Plan of Correction report cited Waterbury Hospital this year for inadequate staffing resulting in a patient seen on Jan. 6 ending up in the ICU.

In a DPH Plan of Correction report dated May 8 for a survey on Jan. 22, the state health agency said “the hospital failed to ensure adequate staffing resources in the emergency department resulting in a delay in obtaining electrocardiograms and troponin levels in accordance with practitioners orders and hospital safety.”

The report further states “that although Patient #100 had orders for an EKG and troponin levels they were not completed due to inadequate staffing.”

“The patient was found unresponsive in the ED waiting room, experienced a heart attack. Required a cardiopulmonary resuscitation, was intubated and subsequently admitted to intensive care unit.”

The incident resulted in a finding of immediate jeopardy for the hospital, according to the report. Immediate jeopardy “represents a situation in which noncompliance by providers, suppliers or laboratories has placed the health and safety of recipients in its care at risk for serious injury, serious harm, serious impairment or death,” according to the Centers for Medicare & Medicaid services.

The immediate jeopardy designation was later removed, according to the report.

Brittany Schaefer, public information officer for DPH, said a revisit was conducted and that “the hospital was in substantial compliance at the time of survey.”

Union officials say they’re concerned that DPH is not enforcing state-mandated nurse-to-patient staffing ratios, claiming that nearly all of Waterbury Hospital’s departments are understaffed and have been for more than two years.

“They seem to be relying on the hospital’s word,” Hannon said. “What is really missing is the enforcement mechanism. DPH seems unwilling to fine these hospitals.”

Schaefer said that while the hospital certified that they have been in compliance with at least 80% of the nursing assignments outlined in the hospital’s nursing staffing plan, “DPH does not have specific data available regarding staffing levels/numbers.”

“DPH continues to conduct onsite visits to monitor staffing, care and services,” she said.

Lauresha Xhihani, Connecticut regional director of communications and public relations for ECHN and Waterbury Health said “In response to those findings, we revised emergency department operations focusing on triage training and improved monitoring.

“Waterbury Hospital and our nurses and leadership fully implemented a collaboratively developed staffing plan, approved unanimously by all key stakeholders (including both the Union members and Hospital Leadership,” she added. “Last month, we welcomed over 60 new hires — our largest new employee orientation to date — demonstrating our continued investment in workforce growth and care quality,” she said. “In addition, we have added traveler nurses to our rosters to provide additional help, with approximately 30 nurses already here and more to be added as needed.”

Legislation

Connecticut legislators aimed to restrict private equity from acquiring hospitals but that legislation failed to pass this session.

SB 1507, which did not make it to the House or Senate floor for passage, would have prohibited private equity companies and real estate investment trusts from acquiring for increasing direct or indirect ownership in or operational or financial control over a hospital or health system, according to the bill’s analysis.

“There was a great sense of insecurity when none of the bills for protection of this measure passed,” Gadomski said. “We have no legal protection to stop this.”

Anwar said “now we are dependent on the wisdom of the judge in Texas to not make a decision in favor of private equity .. because we were not able to pass the law.”

Blumenthal is expected to introduce legislation at the end of the month at the federal level that would provide safeguards and protections against private equity owned health care facilities.

“It would prohibit private equity firms from stripping assets from health care entities or undermining the quality and safety and access to health care,” the senator said, explaining one of several measures of the pending legislation.

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