The 125-year-old Waterbury Hospital will soon be in the hands of a California-based company after the hospital's board voted to sign a a letter of intent with the company last Friday.
"This deal is simple," said Waterbury Hospital CEO Darlene Stromstad during an interview Tuesday. "It’s about Waterbury Hospital, and we think we can get it over the regulatory environment."
Waterbury Hospital, which employes 2,000 and has a budget of $270 million, had been exploring potential financial partners and buyers since 2012. Los Angeles company Prospect Medical Holdings had been a suitor back then.
A deal with Texas-based Tenet Healthcare fell through in December. Tenet had planned to purchase Waterbury Hospital and several other Connecticut facilities, including Manchester Memorial, Bristol Hospital and nearby Saint Mary's Hospital in Waterbury.
The company dropped the deal following disagreements with members of the Connecticut General Assembly and hospital regulators over rules for the purchase.
Prospect executives don't foresee such issues.
"Complexity is the danger to any deal," said Tom Reardon, the president of Prospect East, the company's East Coast operations. "Furthermore, we’ve met with legislators, we’ve met with the governor’s office, we’ve met with the AG and we think Connecticut is open for business."
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Prospect Medical Holdings runs hospitals in California, Texas and Rhode Island. Waterbury Hospital will be its first facility in Connecticut. Reardon wouldn't rule out the possibility that other Connecticut facilities could soon follow.
"We have agreed to make this a one hospital deal. We are talking to other hospitals. There could be others down the line," he said. "We’re going to go forward with Waterbury, assuming we have regulatory approval regardless of some of the other properties."
Gov. Dannel Malloy previously said that he thought Waterbury could no longer support more than one hospital. Today, he said if Waterbury wants to pursue a new deal that its board feels is a good idea, then it's up to the hospital, even after the failed negotiations with Tenet.
"I don’t think it was struck in round one of the Certificate of Need process. I think it could have been struck in round two but Tenet blew it up," Malloy said.
Reardon said Waterbury has a combination of low costs and high quality services, which is what the company looks for in new properties. Prospect also owns hospitals in Texas and California.
Reardon said the company is prepared to sit at the table with Connecticut regulators to make sure the deal is completed.
"We understand that the state has needs and needs appropriate answers and we’re prepared to work through those issues," Reardon said.
Any deal could take between six and 12 months to finalize before Prospect assumes control.
