Medical Properties Trust — a real-estate investment company that owns the land and buildings occupied by bankrupt hospital operator Prospect Medical Holdings — is at odds with Connecticut officials over what its tenant owes the state in unpaid taxes, State Comptroller Sean Scanlon said during an interview with The Connecticut Mirror on Wednesday.
The issue plays a central role in ongoing negotiations for the state’s struggling flagship medical institution, UConn Health, to acquire Waterbury Hospital currently owned by Prospect. The acquisition is part of a UConn Health expansion plan, which also includes the proposed acquisition of two independent hospitals, Bristol Hospital and Day Kimball Hospital in Putnam.
Earlier this month, the University of Connecticut’s Board of Trustees and the UConn Health Board of Directors authorized a bid of up to $13 million to acquire Waterbury Hospital — along with its land and buildings. Some level of tax forgiveness will also be part of the deal, Scanlon confirmed.
But right now, the parties can’t even agree on what Prospect owes.
“Tax liability was always going to be factored into the ultimate purchase price of this hospital as part of the negotiation,” Scanlon said. “The reason why it’s hard to give a definitive number is because that is being negotiated right now as part of this bankruptcy.”
Spokespeople with Medical Properties Trust and Prospect Medical Holdings did not respond to requests for comment.
Prospect Medical Holdings filed for bankruptcy protection in January, and the sale of its hospitals around the country is being overseen by the U.S. Bankruptcy Court in Northern Texas. The hospital’s landlord, Alabama-based Medical Properties Trust, has played a key role in the negotiations of the hospital sales.
In 2019, Medical Properties Trust, one of the country’s biggest hospital landlords, purchased the land and buildings of Prospect’s hospitals in Connecticut, California and Pennsylvania for $1.4 billion. The deal, referred to as a “sale-leaseback,” helped to fund a $457 million dividend to Prospect’s private equity owners and investors, but left the three Connecticut hospitals with a new expense: rent payments to MPT.
MPT also owned the hospital buildings of the Steward Health Care system — a for-profit chain that operated hospitals in multiple states, including Massachusetts, and also filed for bankruptcy protection.
When Prospect filed for bankruptcy, Gov. Ned Lamont insisted that he didn’t think keeping the hospitals open would require “taxpayer subsidies.” Now, the state seems poised to forgive millions of dollars in unpaid taxes to facilitate the UConn deal.
Spokespeople for Lamont did not respond to a request for comment.
The tax forgiveness would require legislative approval.
In conversations earlier this week, House Speaker Matt Ritter, D-Hartford, said the legislature would likely approve waiving Prospect’s tax bill.
“If we want to support UConn Health’s taking over the hospital then we will have to if it’s part of the deal,” Ritter said. “Otherwise you have to consider the alternatives — that the hospital could potentially close or some other private equity firm could come in and buy it.”
House Minority Leader Vincent Candelora, R-North Branford, said that while he agrees it’s vital to consider the needs of the state’s health care system, he’s not going to give a deal the OK before seeing the details.
“I’m not going to make it easy for Prospect to get the best deal they can. So if they think that the legislature is just going to rubber-stamp because we’re desperate, they’re wrong,” Candelora said. “I think it’s important for us as legislators to make it very clear that what Prospect did to the state of Connecticut hospital systems is egregious.”
What does Prospect owe?
In December 2023, the state’s Department of Revenue Services filed liens showing Prospect Medical Holdings had neglected to pay $67 million in taxes.
During a press conference in January of this year hosted by Gov. Ned Lamont, Attorney General William Tong said Prospect owed Connecticut “more than $100 million.”
CT Mirror reached out to DRS to clarify Prospect’s current tax liability.
DRS spokesperson Tiffany Thiele said the agency cannot disclose what Prospect owes in taxes because the department is prohibited by statute from releasing “taxpayer information, including liabilities.”
Earlier this week, CT Mirror reported that the state plans to borrow $390 million to fund the expansion of UConn Health. The funding would primarily go towards capital improvement projects at all three hospitals, though it would also support the acquisition of Waterbury Hospital, Scanlon said. Funding to acquire Bristol and Day Kimball hospitals would be handled separately, he added.
Waterbury Hospital, in particular, would need a major influx of capital funding to bring it up to the state’s standards for its medical facilities, Scanlon said.
“There are significant capital expenditure needs to maintain what I would say is the level of public health care that our citizens deserve and expect. And, frankly, that’s not possible in the condition that this hospital is in right now,” he said.
Also at issue are taxes owed to municipalities. As of January 2025, Prospect and MPT owed upwards of $23 million to Waterbury, Manchester, Vernon and South Windsor, according to a report from the Journal Inquirer.
Waterbury accounted for over $20 million of the funds owed. At the time, MPT had filed a tax appeal regarding the appraised value of the hospital building at 64 Robbins Street, according to city officials.
The city of Waterbury’s Director of Finance Michael LeBlanc said negotiations are “ongoing” and “confidential.”
“There have been ongoing negotiations between the City’s Representing Counsel and Debtor’s Counsel in furtherance of reaching a settlement on the real and personal property taxes,” LeBlanc said in emailed comments. “We cannot comment further at this time.”