Hospitals

Connecticut lawmakers promise help as hospitals struggle

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The decision by Prospect Medical Holdings to file for bankruptcy has put the spotlight back on Connecticut’s hospitals and the financial woes they face. Lawmakers say some difficult decisions might need to be made.

Lawmakers say they want to help Connecticut’s struggling hospitals this upcoming session - something that was a priority even before Prospect Medical Holdings filed for bankruptcy.

In the wake of that filing, though, lawmakers now also want additional regulations around private equity firms that own hospitals.

“First and foremost, we need to make sure that private equity keeps their greedy hands away from healthcare,” Sen. Saud Anwar (D-South Windsor) said.

Aside from Prospect’s woes, the Connecticut Hospital Association said the industry needs help in Connecticut.

A report from the CHA, released last month, found the state’s 27 acute care hospitals operated at a loss of $76 million in 2023, or 0.5% of their revenues.

“Our hospitals overall in Connecticut are still operating at a negative margin,” CHA Vice President of Policy Paul Kidwell said, adding that deficit was an improvement from 2022.

The report found expenses for the hospitals rose by a combined $1 billion.

Kidwell said it’s because the reimbursement rates are too low, forcing the hospitals to make up for those losses on charges for patients with private insurance.

“For employers in this state and employers in this state, that sum of those costs are getting pushed on to them in the costs of their premiums,” he said.

Lawmakers want to raise those rates but also said the state’s budget situation may limit their ability to do so.  

“That's not a small price tag so, again, we’re going to have to look at the balance of how we do that,” Rep. Cristin McCarthy Vahey, (D-Fairfield) said. McCarthy Vahey and Anwar co-chair the legislature’s Public Health Committee.

Lawmakers are looking at other ways to reduce costs, including recruiting more people to become doctors and nurses, adjusting a tax on hospitals and creating finding more affordable ways to get care.

Sen. Heather Somers (R-Groton) said the state should also educate the public on when they should go to urgent care centers and other facilities, not emergency rooms.

Emergency rooms are often the most expensive form of care, and Connecticut’s facilities are also overcrowded.

She also said the state will need to consider whether 27 hospitals are too many and whether some can be replaced with urgent and surgical care centers.

“It’s going to need a longer look and some difficult and, you know, some difficult decisions on what we can support through a population,” Somers, a ranking Republican on the Public Health Committee, said.

Then there’s the debate about private equity. Many of the leaders said they want to set up additional protections for patients, especially in light of Prospect Medical’s problems.

The California-based company owns Waterbury, Manchester Memorial and Rockville General hospitals, as well as facilities in several other states, but filed for bankruptcy over the weekend. The hospitals remain open for now.

A report released this month by the U.S. Senate Banking Committee blasted private equity firms, including Leonard Green & Partners. LGP was a majority owner of Prospect for several years.

“LGP and PMH’s primary focus was on financial goals rather than quality of care at their hospitals, leading to multiple health and safety violations as well as understaffing and the closure of several hospitals,” the report said.

It found that Prospect paid out $635 million in dividends since 2010, with 66% going to LGP. The company racked up massive debt and has closed eight hospitals during that time.

“We really need to make certain we are holding their feet to the fire when it comes to patient care,” Sen. Jeff Gordon, (R-Woodstock) said. Gordon is on the Public Health Committee. He and Anwar are also doctors.

Gov. Ned Lamont agreed on setting rules, but was reluctant to ban private equity from purchasing hospitals in Connecticut.

“You can say, ‘I hate all private equity I don’t want any of them there,’ or you can say ‘what did Prospect do – putting that leverage, putting that mortgage on top of the Waterbury hospital,’” he said.

Many lawmakers, including the leaders of the Public Health Committee, agreed.

McCarthy Vahey and Somers both expressed concern about pushing away investors who could bring much needed money into Connecticut hospitals.

Lamont and lawmakers have been hopeful Yale-New Haven Health will follow through on a deal to purchase Prospect’s three hospitals.

The $435 million deal was reached nearly three years ago, but Yale-New Haven has been looking to lower the price or get out of the deal altogether.

The network filed a lawsuit last year accusing Prospect of allowing the hospitals to deteriorate.

To read the Connecticut Hospital Association report, click here.

Prospect Medical Holdings email to employees says workers will be paid

Employees with Prospect Medical Holdings in Connecticut have multiple concerns, with getting paid near the top of the list. An employee shared an email with NBC CT Investigates, which ensures workers will be paid.

Prospect employees here in Connecticut have multiple concerns - certainly getting paid is near the top of the list.

In the wake of the Chapter 11 bankruptcy filing by Prospect, it apparently sent an email to employees, and an employee shared it with NBC Connecticut Investigates.

The letter said in part that Prospect got permission from the bankruptcy court to secure up to $100 million in loans, along with $90 million in other credit it can tap.

Prospect also said the court will allow it to continue paying wages and benefits to employees.

Prospect Medical Holdings has hundreds of employees at its three hospitals in Waterbury, Vernon and Manchester.

The company did not respond to our requests to authenticate the document we received.

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