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Prospect, Yale New Haven Deal Dispute Remains at Impasse

Analysis  |  By Jay Asser  
   October 29, 2024

Connecticut officials have called on the parties to resolve their grievances and finalize the agreement.

Two years after agreeing to a sale of three Connecticut hospitals, Yale New Haven Health and Prospect Medical Holdings continue to be locked in a tug-of-war that is playing out in court and in the media.

Since agreeing to send Manchester Memorial, Rockville General, and Waterbury hospitals to Yale New Haven for $435 million in 2022, the two sides have lobbed lawsuits and criticisms at one another over the conditions of the deal.

Connecticut governor Ned Lamont and comptroller Sean Scanlon have reiterated the importance of the two organizations finding a middle ground to complete the transaction.

"We're in the red zone, getting into the end zone is pretty tough,” Lamont said in a press conference. “We've met with Prospect, Yale separately, met with them together twice, doing everything we could to get this deal done on behalf of the patients. Right now, this dispute lingers on.

“I’m not quite sure we’ll be able to keep them out of the courthouse. So in the meantime, I care deeply about patient safety there, making sure that we monitor that situation closely.”

Lamont also shared that he told Prospect that he wants an independent monitor to oversee the hospitals and ensure patient safety is not compromised.

Meanwhile, Scanlon believes that if Yale New Haven and Prospect can’t work out their differences, it could be time to move on from the deal.

“Litigating this in both the courts and the press is not in the best interest of the patients, and certainly not the members that are in the [health] plan that I run,” he said, according to CT Insider. “Either Yale needs to finish this purchase, or if it's not a workable deal for them anymore… I think we need to figure out another path forward."

The dispute started to take shape in May when Yale New Haven sued Prospect to get out of the acquisition, alleging that the seller engaged in “irresponsible financial practices,” including failing to pay physicians and vendors. Prospect filed a countersuit soon after.

Then, Yale New Haven said Prospect was underfunding its employee pension plans, which prompted the Pension Benefit Guaranty Corporation to get involved last month and claim that Prospect owed more than $4 million for the three hospitals it offloading.

In response, the California-based company accused Yale New Haven of waging “an aggressive campaign in both the courts and via the media to denigrate Prospect Medical’s Connecticut hospitals and employees.”

Yale New Haven has dug in its heels and remains steadfast in its desire to change the conditions of the deal for it to be completed.

"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," a Yale New Haven spokesperson said in a statement.

The disintegration between the two transacting parties is a reminder of the complications that can set in after a hospital deal has been agreed upon but before it is finalized.

Health systems not only have to deal with the uncertainty of the FTC potentially blocking transactions, but also with keeping partners satisfied with the agreed upon conditions.

This means that both the buyer and seller should do their due diligence when entering into an agreement, checking under the hood of the involved organizations to have the clearest picture possible of the assets in question.

Otherwise, a stalled-out or dragging deal can have major consequences in both directions, disrupting care for patients, harming reputations, and hampering finances.

Jay Asser is the CEO editor for HealthLeaders. 


KEY TAKEAWAYS

Yale New Haven Health and Prospect Medical Holdings have yet to overcome their lawsuits and public battle to complete their deal of three hospitals.

Connecticut governor Ned Lamont said he has spoken to both organizations to get a deal done and wants to appoint an independent monitor at the Prospect hospitals to keep an eye on patient safety.

The dispute serves as an example of the ramifications that can hit transacting companies in a hospital deal when the sides clash after an agreement.


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