Citing declining conditions at three hospitals held by Prospect Medical Holdings, a hospital operator previously supported by private equity investors, U.S. Sen. Chris Murphy, D-Conn., urged Connecticut to adopt a tough stance and outlaw private equity ownership of hospitals.
In a reportMurphy recorded interviews with hospital staff members who detailed Prospect’s poor administration of its three Connecticut hospitals—Rockville General, Manchester Memorial, and Waterbury Hospitals—in a report released by the senator’s office on Wednesday.
In an interview with The Connecticut Mirror, Murphy stated that the state would benefit much from just stating that private equity firms shouldn’t own our hospitals. The purpose of the report, according to the senator, was to clarify what transpired with Prospect and stop similar businesses from running hospitals in Connecticut in the future.
As the state awaits the start of an auction to identify new owners for Prospect’s Connecticut facilities—one step in the extensive company’s months-long bankruptcy proceedings—Murphy’s report is released. The U.S. Bankruptcy Court in Northern Texas, where Prospect filed for Chapter 11 bankruptcy protection in January, will supervise the sale process.
In 2016, Prospect acquired the hospitals in Connecticut. Hospital staff told Murphy that the facilities have since experienced supply shortages, deteriorating infrastructure, and other issues.
According to a Waterbury Hospital operating room assistant, patients were occasionally left on the operating table while staff rushed because supplies were so limited following Prospect’s takeover. According to the study, once Prospect stopped paying vendors, nurses and technicians reported personally purchasing meals for patients to ensure they wouldn’t go hungry.
Do you like to read more in-depth news about Connecticut?Receive the most recent political and public policy news from CT Mirror every day in your inbox. Prospect lowered personnel levels at Manchester Memorial to the point where no doctor was available for evening hours. According to one of the doctors there, the hospital has gotten to the point that he would not advise his own relatives to seek care there.
Prospectcut all care at Rockville General without requesting the necessary state authorization, with the exception of the emergency room and outpatient mental health services.
Murphy’s allegations, according to Deborah Weymouth, CEO of Prospect’s hospitals in Connecticut, was based on anecdotes that had not been independently confirmed.
The standard of care that is provided in our hospitals on a daily basis is not reflected in the concerns regarding private equity in healthcare. Weymouth stated in the statement that Senator Murphy’s Share Your Story project is not intended to assess the clinical performance of specific institutions, but rather to advance policy discussions and reform. The local residents and their life’s work are totally undermined when unsubstantiated incidents are called out for political purposes.
Additional HealthCT state seniors choose alternatives to Medicare AdvantageConnecticut insurers demand higher hikes in health plan rates: Things to be aware aboutWeymouth said that the Prospect hospitals are frequently visited by the Connecticut Department of Public Health and a court-appointed patient care ombuds to make sure patient safety regulations are being followed.
In a report dated July 29A court-appointed patient care ombudsman in the company’s bankruptcy proceedings observed that staffing had greatly improved and found no supply problems at the Prospect Connecticut locations.
[LINK: Prospect Medical Report Identifies CT Hospital Service Cuts]
Murphy is not the only political person advocating for Connecticut’s health care system to no longer be owned by private equity.
For the second consecutive year, lawmakers attempted to enact any legislation to stop it during the most recent state legislative session, but were unsuccessful. Two distinct proposals were taken into consideration.
Supported by Governor Ned Lamont, the first aimed to improve monitoring of significant health care transactions, such as hospital mergers and acquisitions. The alternative would have adopted Murphy’s favored strategy, which would have completely prohibited private equity ownership of hospitals.
The Public Health Committee’s co-chair, Rep. Cristin McCarthy Vahey, D-Fairfield, stated in June that lawmakers’ inability to reconcile the two plans in time to present a bill for a vote was one of the problems. However, she added that industry financial interests also had an impact.
McCarthy Vahey informed Murphy that ten or twelve lobbyists protested the current version of the measure on the second-to-last day or the last day of the session.
The private equity playbook
The prospect arrived in Connecticut with the intention of investing in the hospitals. Murphy was informed by a Waterbury Hospital emergency room staffer that the corporation had promised a completely new emergency department and even displayed plans in the break room. It didn’t happen.
Investors made money while hospital staff dealt with broken promises and worsening circumstances.
According to CBS News, Prospect obtained a $1.1 billion loan in 2018 and utilized the money to provide a $457 million dividend to its executives and stockholders. Prospects sold a real estate investment trust the land and buildings from hospitals it owns in Connecticut, California, and Pennsylvania for $1.4 billion in order to pay back the debt. The trust subsequently leased the hospitals back.
[RELATED: Rockville was a thriving community hospital in 2016. Prospect then took over.]
According to Murphy’s research, Prospect’s CEO from 2007 until 2023, Sam Lee, made out like a bandit. According to Murphy’s investigation, Lee possessed two properties in Los Angeles that were valued at over $15 million in total.
According to the report, Sam Lee robbed three Medicaid hospitals in Connecticut in order to acquire two houses that were eleven minutes apart.
Murphy stated that, in spite of the harm done, he thinks private equity in healthcare can be controlled.
According to Murphy, the role of private equity in acute care hospitals is still somewhat limited.
“As a state and as a nation, we still have time to decide that we do not want these greedy, profit-driven private equity firms to own our most important healthcare facilities,” he stated.
The Connecticut Mirror was the first to publish this story.
