Attorney General George Jepsen and the Office of Health Care Access have issued draft decisions greenlighting a California company’s acquisition of Eastern Connecticut Health Network, but have also placed conditions on the deal.
The buyer, Prospect Medical Holdings, is a for-profit company that operates 13 acute care and behavioral hospitals in three states, including two in Rhode Island.
The ECHN system includes Manchester Memorial Hospital, Rockville General Hospital and related entities.
Jepsen’s purview in reviewing the deal include ensuring procedural and financial fairness and protecting and preserving ECHN’s charitable gifts, which as of March totaled more than $23 million.
The Office of Health Care Access (OHCA) oversees all Connecticut acute care hospitals.
Jepsen concluded in his proposed decision Wednesday that ECHN’s board of directors exercised due diligence during the process that led to the sale, that the health system is receiving fair market value, and that its charitable assets would be adequately protected.
Jepsen placed several conditions on the deal related mainly to charitable assets.
OHCA also included some stipulations in its preliminary approval including requiring Prospect and ECHN to: conduct a health-needs study of the community; submit a plan detailing how services will be provided by the new hospital operator; disclose numerous financial measures; maintain current community benefit standards; and hire an independent monitor, among other requirements.
Prospect has committed to operating the two hospitals for at least three years after the deal closes and to spend $75 million or more on capital projects over the next five years.
“Substantially all of the employees of ECHN and its affiliates will be offered employment by PMH or its affiliates,” Jepsen’s decision reads.
ECHN has said it sought a buyer to ensure its future existence. access sufficient capital to upgrade its facilities and integrate it operations with a larger system capable of navigating a changing healthcare landscape.
The Office of Healthcare Access and Department of Public Health are also reviewing the deal.
ECHN previously requested permission to be required by another for-profit operator, Tenet, but the would-be acquirer scuttled its proposal to purchase five Connecticut hospitals in late 2014, after state regulators imposed conditions on one deal that Tenet viewed as onerous.
ECHN confirmed a year ago it was pursuing a deal with Prospect, which has also proposed buying Waterbury Hospital for $100 million
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