Prospect Medical, Yale NH Health agree in principle to settle dispute over failed hospital deal

Hartford Business Journal – Friday, September 19, 2025
By David Krechevsky

A tentative agreement has been reached in the ongoing dispute over Yale New Haven Health’s $435 million deal to acquire Prospect Medical Holdings’ three Connecticut hospitals.

A spokesman for YNHH provided a statement from the health system via email on Friday confirming the settlement agreement.

“Yale New Haven Health recently met with Prospect to work toward a mutual agreement to resolve our ongoing litigation,” the statement said. “Following a productive discussion, we reached a settlement agreement in principle.”

No further information about the deal was provided.

Prospect Medical Holdings did not immediately respond to a request for comment.

YNHH agreed in April 2022 to acquire Waterbury, Manchester Memorial and Rockville General hospitals, all owned and operated by Prospect Medical.

Yale later filed a lawsuit seeking to back out of the deal, however, citing the three hospital’s increasing financial woes, in part related to a data breach that occurred in August 2023. Prospect filed a countersuit seeking to force YNHH to complete the deal.

That was followed by Prospect filing a Chapter 11 bankruptcy petition in Texas in January.

In February, YNHH officials said the deal to acquire the three hospitals appeared “impossible.”

In a statement released in February, a YNHH spokesperson said the health system was monitoring Prospect’s bankruptcy proceedings, but the company’s “mismanagement” had all but ruined chances of closing the deal.

Yale New Haven Health System — which includes Bridgeport Hospital, Greenwich Hospital, Lawrence + Memorial Hospital, Yale-New Haven Hospital and related entities — has been dealing with financial issues of its own. It reported an operating loss of $142 million for fiscal year 2023, the latest data available from the state Office of Health Strategy. That was an improvement from the previous fiscal year, when YNHHS reported an operating loss of $234 million.

The health system announced in March that it was restructuring its operations, including eliminating an unspecified number of positions. That same month, it offered voluntary retirement packages to certain senior employees, stating the effort was necessary to navigate “a rapidly changing healthcare landscape.”

As part of Prospect’s bankruptcy proceedings, it is accepting bids for its three Connecticut hospitals.

In a document filed Thursday in U.S. Bankruptcy Court for the Northern District of Dallas in Texas, Prospect named “ECHN Holdings Inc.” as the stalking horse bidder, with a bid of $86 million for Manchester Memorial and Rockville General hospitals. Hartford HealthCare has been identified as the organization behind that bid.

Both Manchester Memorial and Rockville General hospitals are part of Eastern Connecticut Health Network (ECHN).

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