Waterbury Hospital parent sells off more assets

Republican-American – Thursday, November 14, 2024
By Livi Stanford

Prospect Medical Holdings, a private-equity owned company caught in a legal battle with Yale New Haven Health over its effort to sell three of its hospitals in the state including Waterbury Hospital, is now selling more of its assets across four states.

Astrana Health announced Thursday that it has entered into an agreement to acquire Prospect’s California licensed health care service plan; medical groups in California, Texas, Arizona and Rhode Island; Prospect Medical Group’s management service organization; RightRx pharmacy; and Foothill Regional Medical Center in California, an acute care hospital with 177 licensed beds.

Astrana plans to acquire the Prospect businesses for $745 million.

A Prospect Medical Holdings spokesperson declined to comment on the sale when reached Thursday.

Jim Brown, CEO of Prospect, said in a statement that Prospect is “excited about the opportunity to partner with Astrana to build a larger, stronger and more coordinated care delivery network which we expect will benefit our communities by increasing access, quality, value and efficiency.”

Legal wrangling between Yale New Haven Health and Prospect Medical Holdings continues to plague a possible agreement for Yale to purchase Prospect’s three Connecticut hospitals, including Waterbury Hospital.

Potential buyer Yale New Haven Health filed for a declaratory judgment in May that it is not obligated to close the sale because Prospect Medical Holdings allegedly violated the purchase agreement.

The financially troubled Prospect brought a counterclaim against Yale for allegedly breaking the agreement by refusing to pay the negotiated $435 million sales price. Yale asked Prospect to lower the price to $150 million in a Jan. 31 proposal, and Prospect declined in a Feb. 15 response, according to court filings.

The cases have been consolidated in Hartford Superior Court.

In correspondence to Hartford Superior Court Judge Elizabeth J. Stewart on Oct. 9, Yale cited new concerns that Prospect breached the purchase agreement by failing to contribute to its employees’ pension plans at East Connecticut Health Network, and Manchester and Waterbury hospitals.

As a result, Pension Benefit Guaranty Corp. has filed a $4 million lien against Prospect, according to Yale’s court correspondence.

Dana Marnane, director of public relations and communications at Yale New Haven Health, has said that the liens add to the more than $100 million Prospect owes the state and local municipalities. This left Yale with no choice but to issue another notice of breach of the asset purchase agreement, Marnane said.

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