Rockville General Hospital is one of three hospitals in Connecticut owned by Prospect Medical Holdings. Shahrzad Rasekh / CT Mirror

Yale New Haven Health officials acknowledged Thursday for the first time they have growing concerns about the completion of a deal to buy Waterbury, Manchester Memorial and Rockville General hospitals and said the acquisition is “more at risk” as time passes without approval from the state.

The three hospitals are owned by Prospect Medical Holdings.

“We have mounting concerns about the viability of our transaction with Prospect Medical Holdings to acquire substantially all the assets of Waterbury and [Eastern Connecticut Health Network] hospitals,” Rob Hutchison, senior vice president of marketing and communications for Yale New Haven Health, said in an email to The Connecticut Mirror. “Our concerns include the deteriorating condition of the Waterbury and ECHN hospitals, particularly in light of the cyber-attack last month, and the state Office of Health Strategy process to review the [certificate of need] application that we filed last November.”

Hutchison said Yale officials are working on a recovery plan to “salvage the acquisition of these community hospitals.”

The plan would involve Yale, Prospect Medical and state officials sitting down to “discuss a path forward,” he said, including examining how Yale might design and direct an information technology recovery effort at the hospitals, which were recently hit with a debilitating cyberattack.

“We are engaged in conversations with Prospect about the plan, and we stand ready to engage with the state,” he said. “We believe that every day that passes without a path forward puts the transaction more at risk.”

Nina Kruse, a spokeswoman for ECHN, and Lauresha Xhihani, a spokeswoman for Waterbury Hospital, could not be reached for comment Thursday night.

Earlier this week, the heads of Waterbury and Manchester hospitals met with Gov. Ned Lamont and with a group of about 30 legislators to discuss the cyberattack and fiscal difficulties at the facilities.

Hospital executives painted a gloomy picture of their finances and urged the state to move quickly on approving a sale of the facilities to Yale New Haven Health, according to people who were present at the legislators’ meeting.

Yale announced in 2022 that it had signed an agreement with Prospect to acquire the hospitals. Completion of the sale and a certificate of need process is pending. Hospital officials have said they are worried about the length of time the state has taken to review and approve the sale.

Deidre Gifford, executive director of Connecticut’s Office of Health Strategy, has defended the state’s timetable for reviewing the certificate of need.

“There is a statutory process,” she told The Mirror last week. “We have met our timelines on the cost and market impact review. We prepared an initial draft; we shared it with the transacting parties. They had 30 days to send us comments. We have just received the comments back from the parties. The next steps are, we have, by statute, 60 days to incorporate any changes. … We have not missed any of the statutory timelines.”

A spokeswoman for Gifford could not be reached Thursday evening.

Sen. Saud Anwar, who with Majority Leader Jason Rojas organized the legislators’ meeting Tuesday, said that hospital executives expressed concern about their “dire” financial situation and are having trouble paying vendors and physicians under contract to provide care at the facilities.

Representatives from Yale New Haven Health and Prospect Medical also attended the gathering, held at the state Capitol.

“They were talking about almost getting to the point where they’re having difficulty paying for bed linens, things like that,” said Anwar, D-South Windsor, who is co-chair of the legislature’s Public Health Committee and a physician under contract at Manchester Memorial. “Between the cyberattack and the current financial situation … they are going through a very significant financial challenge.”

Yale raised concerns at the meeting about investing in facilities with outdated computer systems. An official with Prospect said the company was dealing with dual issues of financial challenges and recovering from the cyberattack, Anwar said.

“I know [some of] the hospital doctors have not been getting paid. Many of them are planning to leave. And then there are other situations where there have been the limitations on lab equipment and chemicals used for labs.”

Anwar said the CEOs also warned that if the sale falls through, the hospitals would not remain financially viable or functional.

“With their lack of funding and capacity with the cyberattack, their survival may be impacted if the state delays this sale or [approves it] with contingencies that are going to make Yale walk away,” he said. “The fear we have at this point is if, God forbid, something like that happens … then the deal will fall through and the hospitals will have to close, which would mean thousands of jobs would be lost and hundreds of thousands of people in our state would be without health care.”

In an interview Thursday, Anwar reiterated that concern.

“If the Yale transaction does not go through, the chances are very high that [the Prospect-owned hospitals] will not make it or they will become a shell with most things being transferred to other hospitals, and they’ll be doing only very basic things,” he said. “It will not be sustainable anymore.”

The cyberattack began in early August and lasted for more than six weeks, forcing the hospitals to divert patients, cancel surgeries and care for fewer people because of staffing issues.

Waterbury Hospital President Justin Lundbye said in an interview Tuesday that although computer systems are working again, the hospitals face “a long-term recovery” from the attack.

The Mirror reported last week that another Connecticut hospital CEO, citing discussions with Lundbye, told Lamont that Waterbury owes vendors more than $40 million and that Yale executives are concerned about “deteriorating conditions” at Prospect’s three Connecticut facilities.

Yale officials “have begun to question whether acquiring Manchester and Waterbury hospitals remains a prudent business decision,” Pat Charmel, CEO of Griffin Health in Derby, wrote to Lamont in August.

In his email to the governor, Charmel said Prospect Medical’s “long awaited” debt refinancing was supposed to “improve liquidity and provide working capital” to hospitals like Waterbury, Manchester and Rockville, but “none of the proceeds found their way to Connecticut.”

“In previous discussions and correspondence about conditions at Waterbury, I told you that Justin [Lundbye] was stretching out his vendors (many of them local), and the hospital’s accounts payable were growing,” Charmel wrote. “They have continued to grow and are now in excess of $40,000,000. Many vendors have Waterbury and Manchester hospitals on credit hold and are refusing to do additional business with the hospitals until AP balances (vendor receivables) are paid down.” 

In an emailed statement last week, Lundbye said $25 million to $30 million had been provided by Prospect to its Connecticut-owned hospitals since June, when the debt refinancing was completed, but he did not say how the money was used or whether it went toward vendor payments. He declined to say how much money was still owed to vendors.

Charmel warned that the financial troubles could affect the sale of Prospect’s Connecticut hospitals to Yale New Haven Health.

“We know that Waterbury, Manchester and Rockville hospitals will only get relief when their proposed acquisition by the Yale New Haven Health System is finalized,” he wrote to Lamont. “I have not spoken to [Yale] CEO Chris O’Connor recently, but I am aware that Chris and his board are concerned about deteriorating conditions at Waterbury and Manchester hospitals and have begun to question whether acquiring Manchester and Waterbury hospitals remains a prudent business decision.”

Jenna is CT Mirror’s Health Reporter, focusing on health access, affordability, quality, equity and disparities, social determinants of health, health system planning, infrastructure, processes, information systems, and other health policy. Before joining CT Mirror Jenna was a reporter at The Hartford Courant for 10 years, where she consistently won statewide and regional awards. Jenna has a Master of Science degree in Interactive Media from Quinnipiac University and a Bachelor or Arts degree in Journalism from Grand Valley State University.

Dave does in-depth investigative reporting for CT Mirror. His work focuses on government accountability including financial oversight, abuse of power, corruption, safety monitoring, and compliance with law. Before joining CT Mirror Altimari spent 23 years at the Hartford Courant breaking some of the state’s biggest, most impactful investigative stories.