'Save this hospital.' UConn Health wants to buy Waterbury Hospital. But are CT lawmakers on board?
Waterbury Hospital could shut down if a buyer doesn't emerge in bankruptcy court. But some state leaders are balking at borrowing $400 million for UConn Health to step in.
The race is on to save Waterbury Hospital from closing.
UConn Health wants to buy it in a bankruptcy sale, but the system only has a few weeks to convince state leaders to commit hundreds of millions of dollars.
And many lawmakers are still skeptical.
AT RISK OF CLOSING
Waterbury Hospital opened 125 years ago, but it could shut down if the right buyer doesn’t emerge soon in bankruptcy court.
“Someone needs to save this hospital,” said John Driscoll, chair of the UConn Health Board.
Driscoll thinks he’s the man to do it. UConn Health wants to purchase Waterbury Hospital, as well as two others in Bristol and eastern Connecticut that are not under bankruptcy protection.
“We have the talent and the team to turn around that hospital, Driscoll said. “With the state’s help.”
MASSIVE PRICE TAG
The “state’s help” comes with a hefty price tag – roughly $400 million for all three facilities, according to Driscoll. The state would most likely have to borrow the money through long-term bonding.
“We do need to save these hospital systems,” said state Sen. Jeff Gordon (R-Woodstock), a practicing physician.
But lawmakers on both sides of the aisle want more answers before putting taxpayers on the hook for such a massive investment – especially given UConn Health’s history of financial struggles.
“What is their business plan long-term when they get this money over time to really try to make these hospitals more financially sustainable – and UConn Health in general financially sustainable?” Gordon said. “We’re at a point where our back is against the wall. The bankruptcy court is not going to just wait for Connecticut to get its act together, so we have to move. Do we want to get to a ‘yes.’ I absolutely do.”
A bipartisan group of Connecticut’s top lawmakers raised concerns in a letter to UConn Health last week.
“We have concerns about the terms of the proposed deal, particularly the possibility that it could proceed without a firm commitment from the state to assume the debt required to make it viable,” the letter reads. “This proposed transaction represents a critical opportunity to secure continuous regional access to care and to keep private equity out of Connecticut’s health care system.”
BANKRUPTCY
How did the once-profitable Waterbury Hospital end up on the brink of closure?
Three words: Prospect Medical Holdings.
The private-equity firm took over Waterbury in 2016, along with Manchester Memorial and Rockville General hospitals. But earlier this year, the California-based company filed for bankruptcy, claiming it owes more than 100,000 creditors.
Waterbury Hospital alone owes $30 million in back taxes, an estimated $60 million in legal fees and faces a potential fight with the company that owns its land.
Gov. Ned Lamont said that issue complicates a potential sale.
“I think any deal for Waterbury Hospital has got to be free and clear without a big mortgage sitting on it,” he said on Wednesday.
STRRUGLE TO FIND A BUYER
Finding a buyer has been a monumental challenge. Yale New Haven Hospital originally agreed to purchase the Prospect facilities for $435 million, but backed out after accusing the company of misrepresenting its financial situation and the hospitals’ condition. The failed deal is now tied up in lawsuits.
“While YNHHS had hoped to acquire these assets and enhance the clinical care for the impacted communities, Prospect’s failure over several years to pay vendors and state and local taxes and to fund their pension obligations have made this transaction impossible,” Dana Marnane, of YNHHS said in a February statement.
Now, a Texas bankruptcy judge is soliciting bidders for all of Prospect’s assets across the country. Hartford Healthcare is bidding $86 million for Manchester and Rockville General.
A preliminary auction date has been set for Oct. 22.
RISKY INVESTMENT?
Given Prospect’s troubled history, is Waterbury Hospital a risky investment?
Driscoll believes UConn Health can get it profitable in a few years – and even add staff and services. Driscoll pointed to public health systems in states like California that have turned struggling hospitals around.
“We’re going to need a fair amount of money to invest in the capital in the first two years, to upgrade the facilities to where they should be. Once you do get there, we can integrate our clinical network,” he said. “We could immediately start to take advantage of the empty operating rooms in some of these other hospitals. We could also expand primary care access.”
Driscoll himself has turned around health care companies like Hartford-based CareCentrix, which he later sold to Walgreens for nearly $1 billion. Now he’s aiming to make UConn Health profitable, pushing for higher reimbursements and more philanthropic fundraising.
