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RI sues Prospect Medical Holdings, the company trying to sell 3 CT hospitals

Waterbury Hospital.
Molly Ingram
Waterbury Hospital.

Rhode Island’s attorney general is suing Prospect Medical Holdings, the company struggling to sell three hospitals in Connecticut.

RI Attorney General Peter Neronha said he has significant concerns about the financial state of the hospitals.

Prospect Medical Holdings, a California-based company, owns two hospitals in Rhode Island.

“We need to ensure the continued viability of these hospitals for as long as we can,” Neronha said in a statement. “They are integral to our community network of care and employ thousands of Rhode Islanders. Prospect needs to fulfill their legal, and frankly ethical, obligations to Rhode Islanders — and our lawsuit is the next step in making sure they do so.”

According to documents unsealed by a Rhode Island judge last week, the company owes tens of millions of dollars to its vendors.

In Connecticut, Prospect is trying to sell Waterbury, Manchester Memorial and Rockville General hospitals. The deal has been in the works for more than a year and has been delayed by buyer Yale New Haven and the state Office of Health Strategy.

That’s due in part to a cyberattack that took place in August.

Yale New Haven wants to renegotiate the deal in the wake of the cyberattacks. They say the hospitals are deteriorating and are no longer worth the $435 million originally agreed upon.

OHS said they are actively negotiating with the hospital systems to reach a deal that benefits Connecticut residents. Those negotiations are private.

“Several weeks ago, OHS provided the parties with a draft settlement agreement,” OHS told WSHU. “OHS’s proposals, as in previous transfers of ownership, are designed to ensure that issues of cost, quality and access raised by the transaction are appropriately addressed.”

The Department of Public Health said they have deployed surveyors to monitor hospital conditions to ensure care is up to standards.

“As part of these visits, surveyors toured the units, observed care, reviewed clinical records, interviewed patients and staff, reviewed policies and procedures and reviewed hospital documentation (staffing/schedules) to ensure care and services were provided in accordance with physician orders and the plan of care.”

Connecticut Attorney General William Tong’s office has confirmed that he is also investigating the financial practices at Prospect. He has not said if he plans to join Rhode Island’s lawsuit.

Tong’s office said they could not comment on the active investigation.

Molly is a reporter covering Connecticut. She also produces Long Story Short, a podcast exploring public policy issues across Connecticut.