U.S. Sen. Chris Murphy, D-Conn., called on Connecticut to take a “hard line” and ban private equity ownership of hospitals, citing deteriorating conditions at three facilities owned by Prospect Medical Holdings, a hospital operator formerly backed by private equity investors.
In a report the senator’s office published Wednesday, Murphy documented conversations with hospital employees in which they described Prospect’s mismanagement of its three Connecticut hospitals: Rockville General, Manchester Memorial and Waterbury Hospitals.
“The state will be much better off if we just say private equity companies shouldn’t own our hospitals,” Murphy said in an interview with The Connecticut Mirror. The senator said the report was intended to shed light on what happened with Prospect and prevent similar companies from operating Connecticut’s hospitals in the future.
Murphy’s report comes as the state awaits the launch of an auction to find new ownership for Prospect’s Connecticut facilities — one step in the sprawling company’s months-long bankruptcy proceedings. The sale process will be overseen by U.S. Bankruptcy Court in Northern Texas, where Prospect filed for Chapter 11 bankruptcy protection in January.
Prospect purchased the Connecticut hospitals in 2016. Since then, the facilities have faced crumbling infrastructure, supply shortages and other challenges, hospital workers told Murphy.
An operating room assistant at Waterbury Hospital said supplies were so scarce after Prospect’s takeover that patients were “sometimes left on the operating table while staff scrambled.” Nurses and technicians reported personally buying food for patients so they wouldn’t go hungry after Prospect stopped paying vendors, according to the report.
At Manchester Memorial, Prospect reduced staffing to the point that there was no longer a doctor available on overnight shifts. One physician there said the hospital reached a point where he would not recommend his own family members receive treatment there.
At Rockville General, Prospect cut all care except for the emergency department and outpatient mental health services without applying for required state permission to do so.
Deborah Weymouth, CEO of Prospect’s Connecticut hospitals, said Murphy’s report relied on anecdotes that hadn’t been independently verified.
“The concern surrounding private equity in healthcare does not reflect the quality of care being delivered in our hospitals each day. Senator Murphy’s ‘Share Your Story’ initiative is aimed at advancing policy discussions and reform, not evaluating the clinical performance of individual hospitals,” Weymouth wrote in the statement. “Calling out unconfirmed events to make a political point completely undermines the local constituents and their life’s work.”
The Connecticut Department of Public Health and a court-appointed patient care ombuds regularly conduct visits to the Prospect hospitals to ensure patient safety standards are being met, Weymouth added.
In a July 29 report in the company’s bankruptcy proceedings, a court-appointed patient care ombuds found no supply issues at the Prospect Connecticut hospitals and noted that staffing had “significantly improved.”
[RELATED: Report on Prospect Medical highlights service cuts at CT hospital]
Murphy isn’t the only elected official calling for an end to private equity ownership of health care in Connecticut.
During the most recent state legislative session, lawmakers tried and failed — for the second year in a row — to pass any measures to curb it. Two different proposals were considered.
The first, backed by Gov. Ned Lamont, sought to increase oversight of major health care transactions, like hospital mergers and acquisitions. The other would have taken Murphy’s preferred approach, banning private equity ownership of hospitals outright.
In June, Rep. Cristin McCarthy Vahey, D-Fairfield, co-chair of the Public Health Committee, said part of the issue was that lawmakers failed to thread the two proposals together in time to bring a bill up for a vote. But industry financial interests also played a role, she said.
McCarthy Vahey told Murphy that lobbyists “showed up the second to last day or the last day of session … ten of them, or twelve of them, objecting to the current version of the bill.”
The private equity playbook
Prospect came to Connecticut promising to invest in the hospitals. An employee who worked in the emergency room at Waterbury Hospital told Murphy that the company had promised a whole new ER, and even went so far as to post blueprints in the break room. It never came to be.
As hospital employees faced empty promises and deteriorating conditions, investors profited.
In 2018, Prospect took out a $1.1 billion loan and used the funds to pay its executives and shareholders a $457 million dividend, CBS News reported. To repay the loan, Prospect sold the land and buildings from hospitals it owns in Connecticut, California and Pennsylvania to a real estate investment trust for $1.4 billion, then leased back those hospitals from the trust.
[RELATED: In 2016, Rockville was a bustling local hospital. Then Prospect took over.]
Sam Lee, the CEO of Prospect from 2007 to 2023, “made out like a bandit,” Murphy stated in the report. Lee owned two homes in Los Angeles worth more than $15 million combined, according to Murphy’s report.
“Sam Lee pillaged three Medicaid hospitals in Connecticut so he could have two mansions 11 minutes apart,” the report stated.
Despite the damage that’s been done, Murphy said he believes it’s possible to rein in private equity in health care.
“Private equity still only has a small foothold in the acute care hospital setting,” Murphy said.
“It’s not too late to make a decision collectively, as a state and as a country, that we don’t want these profit-obsessed, rapacious private equity companies owning our most critical health care facilities,” he said.
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