On Wednesday morning, state officials celebrated the University of Connecticut Health Center\u2019s acquisition of Waterbury Hospital and bid good riddance to the now-bankrupt, formerly private-equity backed hospital operator, Prospect Medical Holdings.<\/p>\n
After Hartford HealthCare acquired Manchester Memorial and Rockville General hospitals in January, the UConn Health deal marked the final step in a lengthy search to find buyers for Prospect\u2019s Connecticut hospitals \u2014 a process that often seemed on the brink of failure<\/a>.\u00a0<\/p>\n But Prospect still owes the state $127 million<\/a> in unpaid hospital provider taxes going back more than three years.\u00a0<\/p>\n During the Wednesday press conference, Gov. Ned Lamont said the state would try to recoup what it could, but acknowledged that it\u2019s unclear to what degree that would be possible.<\/p>\n \u201cThey bled this system dry. I think we\u2019re going to try and get whatever we can. Am I overly optimistic? Not right now,\u201d Lamont said.<\/p>\n Prospect Medical Holdings did not respond to a request for comment.<\/p>\n When a company files for bankruptcy, the parties it owes money to \u2014 or \u201ccreditors\u201d \u2014 won\u2019t all necessarily get paid back in full. It depends on how high up on the priority list they sit.<\/p>\n The taxes Prospect owed to Connecticut were previously classified as a combination of $73.8 million in \u201csecured claims\u201d and $54 million in \u201cpriority tax claims.\u201d \u201cSecured claims\u201d are the highest priority and get paid back first; \u201cpriority claims\u201d sit a couple levels below.<\/p>\n In February, as part of the deal to sell Waterbury Hospital to UConn Health, the state agreed to reclassify<\/a> those claims as \u201cgeneral unsecured claims,\u201d which get paid out after \u201csecured claims\u201d and \u201cpriority tax claims.\u201d\u00a0<\/p>\n \u201cUnsecured creditors in most Chapter 11s today don\u2019t get very much,\u201d Ken Rosen, a bankruptcy attorney with experience in the health care industry, said.<\/p>\n The move pushes Connecticut further back in the line of parties jockeying to get paid what they\u2019re owed by Prospect, making it less likely that the state will ever see the full $127 million it\u2019s owed.<\/p>\n \u201cThat\u2019s a big number,\u201d Rosen said. \u201cThe state may have said to themselves, \u2018The last thing we want is for this hospital to shut its doors. And we\u2019re not going to take the risk that pressing to collect the taxes results in a closed hospital.\u2019\u201d<\/p>\n Prospect owed Connecticut for what is known as the \u201chospital provider tax,\u201d which is intended to help finance the state\u2019s Medicaid program. The revenue generated by the tax is used to receive matching federal funds and to offset other Medicaid costs. If hospitals are not paying the tax, the state\u2019s federal match is less.<\/p>\n When Prospect filed for bankruptcy<\/a> in January, Gov. Ned Lamont insisted that he didn\u2019t think keeping the hospitals open necessitated \u201ctaxpayer subsidies.\u201d\u00a0<\/p>\n In October 2023, the governor rejected a plea<\/a> from Yale for $80 million in state funding to help close its $435 million deal with Prospect Medical. That deal eventually fell through, and Yale recently paid<\/a> Prospect $45 million to end the litigation over the failed deal.<\/p>\n But by October of last year, state officials indicated that they were negotiating a tax settlement with Prospect and its landlord, Medical Properties Trust, as part of the discussions to acquire Waterbury Hospital.<\/p>\n \u201cThe situation has deteriorated over the last year, two years,\u201d Lamont said at the time. \u201cWe really want to keep these hospitals going. I know how important they are to the community.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"On Wednesday morning, state officials celebrated the University of Connecticut Health Center\u2019s acquisition of Waterbury Hospital and bid…\n","protected":false},"author":2,"featured_media":323330,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[34],"tags":[160387,163,521,85,46,59687,17725],"class_list":{"0":"post-323329","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-healthcare","8":"tag-feature-story","9":"tag-health","10":"tag-healthcare","11":"tag-il","12":"tag-israel","13":"tag-prospect-medical-holdings","14":"tag-top-story"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/323329","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/comments?post=323329"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/posts\/323329\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media\/323330"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/media?parent=323329"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/categories?post=323329"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/il\/wp-json\/wp\/v2\/tags?post=323329"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}