Waterbury Hospital has new plans to be purchased, turn for-profit
Waterbury Hospital has announced plans to be acquired by a private Los Angeles-based health care company, the latest move in the hospital’s quest for long-term stability.
Prospect Medical Holdings, which operates 13 hospitals and 40 clinics and outpatient centers in California, Texas and Rhode Island, is Waterbury’s third potential buyer in five years.
A previous plan to form a joint venture with a Texas company and Waterbury’s St. Mary’s Hospital fell apart over concerns raised about providing reproductive services, while another potential purchaser, Tenet Healthcare Corp., walked away in response to what it considered overly onerous conditions proposed by the state regulator in charge of hospital transactions.
Waterbury Hospital's announcement about the latest plans alluded to the past difficulties in completing a transaction. In a statement about the agreement, President and CEO Darlene Stromstad described a “parallel strategy” of strengthening the hospital’s services and reducing costs while also working toward the partnership.
She said in an interview that Prospect was appealing because of its reputation, its history of working with unions, and its experience in Rhode Island, another state with a highly regulated health care market.
In addition, Stromstad said, it was important that this deal not be contingent on any other hospitals.
Tom Reardon, president of Prospect East Holdings, said the company is in talks with other Connecticut hospitals, but that the Waterbury Hospital deal does not depend on the outcome of those talks.
Reardon said that if the sale goes forward, Prospect would assume the hospital's union contracts and pension obligations.
The Tenet deal came under fire from the unions representing hospital workers, as well as some community groups. Some legislators also raised concerns about the hospital’s purchase by a for-profit company.
If Waterbury and Prospect continue their plans – so far, the two sides have signed a letter of intent that will allow them to develop an agreement for a sale and apply for regulatory approval – it would be the first attempt by a for-profit health care chain to buy a Connecticut hospital since the Tenet deal fell apart late last year.
All but one of Connecticut’s 29 acute care hospitals are nonprofit, and until last year, state law made it virtually impossible for for-profit hospitals to operate in the state. That changed as part of a deal reached on the last night of last year’s legislative session in response to Tenet’s plans. The new law made it easier for hospitals to operates as for-profits, but also expanded state regulatory oversight on proposed transactions that would turn nonprofit hospitals into for-profits.
That change allowed Tenet to proceed with its plans to purchase five Connecticut hospitals in partnership with the Yale New Haven Health System.
But late last year, the state Office of Health Care Access, which regulates hospital transactions, proposed setting strict controls over the Tenet-Waterbury acquisition, involving staffing levels, services and pricing.
Ten days later, Tenet announced that it was giving up its plans to buy all five Connecticut hospitals, citing the proposed decisions and its view that “the approach to regulatory oversight in Connecticut would not enable Tenet to operate the hospitals successfully for the benefit of all stakeholders.”
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