Prospect’s handling of Waterbury Hospital an ‘abomination,’ CT senator says

CT Insider – Tuesday, March 18, 2025
By Paul Hughes

WATERBURY — The way Prospect Medical Holdings has run its three Connecticut hospitals was described during a roundtable discussion Tuesday led by U.S. Sen. Chris Murphy as a textbook example of how private equity owners operate — buy up hospitals and provide an initial infusion of needed capital, and then saddle hospitals with debt, cut services, staffing, supplies and investments, maximize profits and investor returns, and finally sell, declare bankruptcy, or close.

A challenge identified Tuesday for state and federal policymakers, health care regulators and advocates, and hospital employee unions looking to better protect the public interest in health care access, quality, and costs against the worst of corporate and private equity ownership is they have no manual for counteracting these ill effects and curing them.

“Private equity has figured out the model by which to come into a hospital, to come into a physician practice strip down the services that are consumer facing, degrade the quality of care, and then get out quickly enough to make a profit before you get caught,” said Murphy, a Democrat elected to his third six-year term in November.

But he said there is still time to enact policies on the state and national level to more strictly regulate private equity’s growing role and influence in the health care field.

State legislators in Connecticut are trying to craft laws to govern private equity’s involvement in the health care industry here, but a crafty, sophisticated and nimble private equity industry is likely to remain steps ahead no matter what laws the legislature or Gov. Ned Lamont write, said state Rep. Cristin McCarthy Vahey, D-Fairfield, the House co-chairwoman of the Public Health Committee.

McCarthy Vahey and state Sen. Saud Anwar, D-South Windsor, the Senate co-chairman of the Public Health Committee, participated in Tuesday’s roundtable discussion at the Waterbury Health Department a day after presiding over a public hearing on a committee bill proposing to prohibit private equity ownership and control of hospitals and certain health care institutions.

Murphy chose Waterbury because Waterbury Hospital is one of the three Prospect-owned hospitals in Connecticut. The California-based hospital chain purchased Waterbury Hospital, Manchester Memorial Hospital and Rockville General Hospital in Vernon for a combined $205 million in 2016.

“What happened here in Waterbury and what has happened in Connecticut is an abomination,” Murphy said. “The number of the patients who have suffered because of what Prospect did, the crisis that these hospitals are still in today is avoidable. We have to just to decide to make a different choice as a state and a country.”

Waterbury Hospital Director of Communications Lauresha Xhihani said in a prepared statement that “despite recent challenges, our focus remains on providing excellent patient care and supporting our colleagues. We have satisfied every DPH submission requirement and implemented policies and procedures to protect our employees. We continue to work collaboratively with our unions and regulators to meet all regulatory requirements as we work toward our common goal of delivering high-quality care and service to our patients and community.”

Mayor says Prospect has been bad for the city

The 2016 purchase was seen as the salvation of Waterbury Hospital after previous proposed mergers and sales dating back a decade had all failed, including several proposed partnerships with Saint Mary’s Hospital across the city. The initial relief turned to disillusionment as the hospital declined financially and operationally under Prospect’s long-distance ownership and management.

Prospect Medical Holdings and its subsidiaries filed for Chapter 11 bankruptcy protection in January. The company is seeking to sell its hospital operations in Connecticut, Pennsylvania and Rhode Island to concentrate on its California operation.

Waterbury Mayor Paul K. Pernerewski Jr. said private equity ownership of Waterbury Hospital under Prospect has been bad for the hospital and detrimental to the city.

“The city has seen firsthand what this is really like. The false promises made by Prospect Holdings that they never kept, sucking out a lot of the profits out of the hospital that they then siphoned off to shareholders instead of putting back into the hospitals,” he said.

He said the blatant mismanagement and fiscal irresponsibility of Prospect is not only jeopardizing health care in Waterbury, but also the financial and economic stability of the state’s fifth largest city. He noted how Prospect owes Waterbury roughly $22 million in unpaid city taxes.

“I am going to tell you for a city like Waterbury $22 million in lost tax revenue hurts,” Pernerewski said. “That is a huge chunk of money for a city like us. It is time we hold Prospect Holdings and other private equity firms accountable for the mismanagement and the harm they have caused.”

The current city budget is $446.7 million.

Nurse paints a bleak picture at Waterbury Hospital

Sarah Campbell, a registered nurse and co-president of Waterbury Hospital CHCA District 1199, painted a bleak picture of the conditions of Waterbury Hospital, staffing and patient care.

“I started working in Waterbury Hospital in 2003, so I have been through many of the leadership changes that have happened through the years, but nothing has been like what Prospect has put us through,” she said.

Campbell said there are water leaks and water-damaged ceiling tiles, plumbing problems that include inoperable toilets in the ICU and a lack of warm water in some sections of the hospital, broken beds and stretchers, deteriorating building interiors and exteriors, spotty heating, inoperable computers, a lack of phone service in some wards.

“We can’t handle the patients we have because we don’t have working supplies,” she said. “Everything you do day-to-day working in that hospital slows you down. You struggle to give the best care that you can because you don’t have the supplies that you need. Prospect has just put no money into the pot at all.”

Campbell said inadequate staffing continues to plague the hospital due to turnover, and the union has filed complaints alleging the hospital is not following staffing plans, which the hospital administration has denied. She said staff safety is also problem.

Dr. Manisha Juthani, the state public health commissioner, discussed a consent order issued last November after five surprise inspections violations of state law, including two related to patient deaths. The state Department of Public Health also fined Waterbury Hospital $60,000 at that time.

The consent order required the hospital hire an independent monitor to over see patient care for one year. Juthani disclosed that DPH officials were prepared to take regulatory action against the hospital unless the independent monitor was put in place.

“We got to the point where we really wanted to get to a consent order because otherwise we were going to press charges, and we were able to negotiate that through a process with out attorney general’s office and with Prospect,” she said. “It took a lot to get them to the table and agree to it, but they did, and that all happened right before they filed for bankruptcy.”

State: Waterbury is a needed hospital

Juthani said state health officials have limited tools to hold hospitals accountable in some of the ways that participants in Wednesday’s roundtable discussion advocated.

“The one tool that we did have was a consent order,” she said, “and we were able to get that in place, and having at least people on the ground to be able to go in on a weekly basis and say, ‘What is it you are doing and are you upholding what you said you would in our consent order.’

Juthani said state health officials are also now working on weekly basis with an ombudsman that the bankruptcy judge in the Northern District of Texas where Prospect filed for Chapter 11 protection recently appointed.
In the last several weeks since then, she said the dire conditions at Waterbury Hospital have yet to reach the point where closure seems a possibility.

“This is a needed hospital in this situation. So, we are between a rock and a hard place. We have to keep this place open and functional, and make staff feel like they can go to work here and at the same time to be able to provide a service that is necessary in the community, and at the same try hold the company accountable for what they said they’re going to do and what they said they would do to ensure safety and quality care.”

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