Dive Brief:
- Prospect Medical Holdings, based in Los Angeles, has announced that it plans to merge with Eastern Connecticut Health Network, which owns Manchester Memorial and Rockville General Hospitals. Financial terms were not disclosed.
- Prospect is also in negotiations to acquire the struggling Waterbury Hospital, according to the Hartford Courant.
- The above three hospitals were part of a group of five Connecticut hospitals that were set to merge with Tenet Healthcare, but negotiations crumbled last year when state regulators proposed conditions Tenet found unacceptable, according to the Courant.
Dive Insight:
This is Waterbury's third potential buyer in the last five years.
As of now, 28 of Connecticut's 29 hospitals are nonprofit, as a previous Connecticut law made it almost impossible for for-profits to operate in the state. The law was changed late last year in response to the Tenet deal. However, the new law added additional regulatory oversight for potential for-profit deals, which is what caused the Tenet deal to fall through.
In May, Waterbury released a document explaining, among other things, why it thinks Prospect will be successful in acquiring Waterbury when others have tried and failed. "Prospect has a strong reputation as an ethical and responsible healthcare company, and maintains positive, collaborative relationships with its physicians, employees, labor unions and payers, as well as with the communities served by its hospitals," the document said. "We all believe that Prospect can get a deal done because of their experience in Rhode Island, another highly-regulated state, and their collaborative approach to working with physicians, medical groups, the community and organized labor."
Prospect owns 13 hospitals and 40 clinics in California, Rhode Island and Texas. Terms of the merger with Eastern Connecticut Health Network are under review by the ECHN's board.