Two weeks ago, Prospect Medical Holdings said an announcement regarding initial bids for its three Connecticut hospitals — Waterbury Hospital, Manchester Memorial and Rockville General — was imminent.
The company has yet to disclose any details on interested buyers.
Experts say that could be a sign the facilities aren’t attracting strong interest in the court-supervised sale — part of a months-long bankruptcy proceeding the company filed in January.
During a hearing on Aug. 20, a lawyer for Prospect said several times that the company would announce initial bidders for the Connecticut hospitals within days. But, as of Thursday, Prospect still had not named a “stalking horse bidder,” the first bidder in a bankruptcy auction whose offer serves as the minimum bid.
Prospect must complete the sale auction for the Connecticut hospitals by Sept. 19 and a final order approving the transaction must be entered by Oct. 3, according to a recently updated agreement with one of its lenders.
The company has already missed several such deadlines.
Roughly a month after Prospect filed for bankruptcy protection, the company set a timeline for the Connecticut sale, including a bid deadline of late May 2025 and a sale hearing, where the court would approve a new owner, for June 5, according to court documents submitted to the U.S. Bankruptcy Court of Northern District of Texas.
“Most likely, if in the last six to eight months they have not teed up a sale for the Connecticut hospitals, it means they’re probably having difficulty finding a buyer,” Ken Rosen, a bankruptcy attorney with experience in the health care industry, said. He added that it’s possible Prospect has a buyer lined up but that the parties have not yet been able to agree on price or contract terms.
Spokespeople for Prospect Medical Holdings did not respond to multiple requests for comment.
Matthew Beatman, a Bridgeport-based bankruptcy attorney, also said the delays could be concerning and added that the timeline extensions likely reflect a major effort underway to avoid hospital closures.
“The preference would be to see a private party come in, or private parties come in, and have some continuation for one or all of [the hospitals],” Beatman said. “Whether or not that’s feasible and going to happen, no one knows. But it sounds like no one wants to give up yet.”
But in the case of some Prospect-owned hospitals, closures were unavoidable.
Prospect shuttered its two remaining Pennsylvania hospitals earlier this year after failing to find a viable buyer, even after the state provided more than $15 million over seven months to help keep the facilities open.
In Massachusetts, Steward Health Care, another formerly private equity-backed hospital operator that declared bankruptcy in May of last year, closed two hospitals after failing to receive any qualified bids for the facilities.
Rob Blanchard, a spokesperson for Gov. Ned Lamont, said the administration is preparing for all possible outcomes.
“The state has been actively working for many months now to prepare for any eventuality that may occur with these facilities to ensure continuity of care and preserving these community assets.”
When Prospect filed for bankruptcy in January, Lamont vowed to keep the hospitals open.
But, months later, as part of a broader agreement, the state Office of Health Strategy granted Prospect permission to convert one of its three Connecticut hospitals — Rockville General in Vernon — from a full-service acute care hospital into a satellite campus of Manchester Memorial Hospital, located 20 minutes away. While not technically a closure, the agreement cleared a path for Prospect to permanently shutter all services aside from the emergency and behavioral health departments.
During the same August hearing where a Prospect lawyer said bids for the Connecticut hospitals were imminent, the company also admitted that none of the offers it had received to date were as high as a $435 million offer Yale New Haven Health agreed to pay for the facilities in April 2022.
The attorney also discussed a motion Prospect filed seeking to hold Yale New Haven to the terms of the deal. If the motion is successful, Yale would either have to purchase the hospitals for $435 million, pay a penalty to Prospect or challenge the company in court. The bankruptcy court judge is slated to decide whether to grant that request in a hearing scheduled for Sept. 23.
During the hearing, the judge encouraged Yale and Prospect to enter into mediation talks.
Dana Marnane, a spokesperson for Yale New Haven Health, confirmed that the health system had agreed to mediation talks. But she declined to provide any additional information on what potential outcomes could be, including whether Yale New Haven would consider purchasing the hospitals at a lower price.
“At the request of the court overseeing Prospect’s bankruptcy proceedings, Yale New Haven Health has agreed to meet with Prospect and other parties, including representatives from the State of Connecticut,” Marnane stated in emailed comments.