Los Angeles-based Prospect Medical Holdings and Yale New Haven (Conn.) Health are taking shots at one another amid a monthslong legal battle and public dispute that centers around Yale's proposed acquisition of three Prospect hospitals in Connecticut.
YNHHS had planned to purchase the hospitals from Prospect for $435 million but in May sued to get out of the deal. The health system alleges Prospect engaged in irresponsible financial practices and breached its contract by not paying rent and taxes on time, letting the hospitals deteriorate.
Prospect quickly filed a countersuit demanding that YNHHS honor its contractual obligations to acquire the hospitals, which include:
- Waterbury Hospital
- Manchester Memorial Hospital
- Rockville General Hospital (Vernon)
Prospect has accused YNHHS board members of waging "an aggressive campaign" in the courts and via the media to delay the closing of the transaction and "drive down the value of the hospitals in hopes of extracting a lower purchase price," the health system said in an Oct. 17 statement shared with Becker's.
Both systems signed an asset purchase agreement for the hospitals in February 2022, but YNHHS alleges that various quality and mismanagement issues have come to light in recent months, and should have a significant effect on the valuation of the deal.
Prospect, a private equity-backed system, "has abandoned the communities and patients they are supposed to serve in numerous ways," a spokesperson for YNHHS said in an Oct. 17 statement provided to Becker's.
YNHHS said Prospect failed to make minimum funding contributions to employee pension plans and owes more than $100 million to the State of Connecticut and local municipalities. Earlier this month, some physicians at Manchester Memorial reported significant payment disruptions from Prospect.
"[Prospect's] failure to pay physicians and suppliers along with their lack of investment into the hospitals' infrastructure which allowed for a debilitating cyberattack has been well documented publicly," YNHHS said in a statement. "Yale New Haven Health filed a lawsuit because Prospect refused to acknowledge their numerous violations of our agreement with them. Without revised terms, we don't see a path forward that would allow us to make the necessary investments in these facilities without jeopardizing our system's financial sustainability and uphold our commitment to the communities that we currently serve."
Prospect said it has made several concessions to try to move the deal forward and stands ready to close the transaction.
"Unfortunately, the direction for YNHHS … seems to be focused on beating down the purchase price, and ignoring the collateral damage caused to the communities that rely on the facilities," Prospect said in a statement.