Manchester Hospital Remains Operational Despite Chapter 11 Filing

MANCHESTER, CT — Manchester Memorial Hospital was operational Monday as state and municipal officials were paying close attention to bankruptcy proceedings involving the parent company of it, Rockville General and another Connecticut hospital.

On Saturday, Prospect Medical Holdings, Inc. commenced with Chapter 11 proceedings to "advance a strategic pathway to realign organizational focus. Though its Connecticut hospitals — Manchester and Rockville, along with Manchester Memorial and Waterbury — were not mentioned, "proceedings to effectuate expedited sales" of two Rhode Island Hospitals and another in Pennsylvania certainly were.

Rockville and Manchester are operated by Eastern Connecticut Health Network, a subsidiary of Prospect. .

"By engaging with stakeholders and implementing the hospital transactions, prospect holdings is prioritizing its core strength — focusing on operating community hospitals in California, providing vital care to underserved communities, and promoting patient and physician continuity while ensuring these hospitals outside of California continue operations with proper financial support," the filing said, again not specifically mentioning Connecticut.

The filing continued, "To effectuate the paths forward and the hospital transactions in an expedited timeframe, and to ensure continued provision of critical and tailored healthcare, Prospect Holdings, together with certain of its subsidiaries, initiated voluntary Chapter 11 proceedings in the United States Bankruptcy Court for the Northern District of Texas. The transactions will be conducted in accordance with the provisions of the United States Bankruptcy Code."

Despite the seeming distance, the announcement has put Connecticut officials on alert.

"This is not unexpected," said Vernon Mayor Dan Champagne, who can see Rockville General from his office. "We have been following developments at ECHN and Prospect closely and have known for some time that they were behind in paying suppliers, doctors and others, both locally and across the nation. I have been in touch with the governor’s office and we will continue to work with him and others. The key thing for our communities to know is that Eastern Connecticut Health Network will continue to care for patients and provide the medical care our communities have come to rely on. Patient care is still No. 1 for ECHN."

Manchester officials reacted.

First and foremost, we need to let everyone know that the hospital is still running so if you have an emergency, need to get to the hospital for anything. our hospitals are up and running strong," Mayor Jay Moran said. "The Most important thing is safety for our community by having a local hospital, and actually the second thing is employment for those who that work there. The hospital employs a lot of people so those are the two most important things.

"Hopefully this bankruptcy works it out and the hospital continues to run strong. Hopefully, in the future, we have a transition that works. I'll be happy with that."

Prospect Health and Yale New Haven Health have been involved in a contentious acquisition process.

Added state Rep. Jason Doucette, "I am in communication with the Governor’s office, the attorney general and the commissioners about this situation. Unfortunately, it was inevitable. However, I am hopeful the bankruptcy process will allow for an orderly proceeding to ensure continuity of financial operations and I know the state will be monitoring to ensure the continuity of patient care."

State Sen. Jeff Gordon, a physician, commented to Patch, "I have been warning about this happening, especially given that it has played out in a bad way in Massachusetts with Steward Health," he said.

Gordon then said to check the stethoscope for a heartbeat from state regulators.

"The Yale planned purchase of Prospect's hospitals in Connecticut and of ECHN took way too long by the Office of Health Strategy and if it had been done in a timely manner, perhaps we would not be where we are today.," he said. "I have been engaged actively with the Governor's office, state agencies, and my fellow legislators to make certain that in the short-term, despite Chapter 11 bankruptcy proceedings, medical care is still available when needed for everyone, and the health care employees keep their jobs and get their paychecks. If Yale is still looking to buy the hospitals, then the state needs to step in now to facilitate things further. We cannot let the hospitals close. In the long-term, I continue to advocate for banning or significantly restricting the presence of for-profit, private equity involved with hospitals in our state. I have a bipartisan bill this legislative session that I call The Putting Patient's Over Profits Act that would do just that."

Like Champagne said the announcement caught no one off guard.

"The administration has been preparing for the possibility that Prospect Medical Holdings would file for Chapter 11 bankruptcy. The three hospitals remain open, and we will continue to hold Prospect accountable to provide quality care to the communities that rely on these institutions," he said. "We have a cross-agency team in place to ensure hospital operations continue uninterrupted and that employees and vendors continue to be compensated, as required by court orders. As part of this response, we are in touch with management at these local hospitals, representatives for hospital staff, and local elected officials.

"Our number one priority remains maintaining safety and quality of care at Prospect’s three Connecticut hospitals. We currently have an independent monitor overseeing operations at Waterbury Hospital and will increase oversight at Manchester Hospital. We will continue to work to evaluate opportunities to transfer these institutions to a new operator.

"The state will be monitoring the situation closely and intends to participate in court proceedings to the extent necessary to protect the interests of patients, employees and creditors."

Connecticut Attorney General William Tong said he has an eye on the proceedings.

"I am disappointed that Prospect Medical Holdings has decided to file for bankruptcy. However, this changes nothing with regards to their obligations to patient care and safety," Tong said. "My office is watching this matter closely and I intend to actively participate in the proceeding to protect the interests of the state, Prospect's patients, employees, and the communities that rely on its services."

Von Crockett, Prospect Holdings' Chief Executive Officer, said, "Today’s actions represent an important step forward in our longstanding commitment to best serve the interests of our patients, physicians, employees, and communities. Divesting our operations outside of California will ensure that they receive necessary financial support so that the communities that rely on those facilities will maintain continued access to highly coordinated, personalized, and critical healthcare services long into the future."

Crockett continued, "Through this process, Prospect Holdings will regain its financial footing as we rededicate ourselves to our original mission of serving the community. We look forward to working alongside our stakeholders to implement these strategic transactions, and are confident that through these actions, Prospect Holdings will be better positioned to prioritize and execute its core strengths."

Yale New Haven Heath sent the following statement to Patch:

"Prospect’s decision to file for bankruptcy is much larger than just the state of Connecticut – this is a national matter and of grave concern to many hospitals around the country. Yale New Haven Health raised the alarm about this inevitability in the lawsuit we filed last year, recognizing Prospect’s lack of investment and mismanagement of the Connecticut Prospect hospitals. The situation was further exacerbated by their lack of payment to the pension plans and growing debt to the state, local governments and vendors. Many of these same issues were referenced in lawsuits filed by the States of Pennsylvania and Rhode Island regarding Prospect’s mismanagement of their hospitals in those states. We will closely monitor the proceedings and determine what steps, if any, YNHHS will take as part of this process."