Tim Tai, Senior Photographer

Content warning: This article contains one non-graphic mention of suicide.

Two years ago, Yale New Haven Health agreed to acquire three financially-troubled hospitals in Connecticut. 

Now, the deal is on unsteady footing in the wake of a six-week long cyberattack against the hospitals, with YNHH requesting to pay a lower price and receive financial support from the state.

The attack targeted Manchester Memorial, Rockville General and Waterbury Health Hospitals — the medical centers that YNHH is poised to acquire, which are currently owned by the Los Angeles-based company Prospect Medical Holdings.

YNHH proposed a flurry of changes to the acquisition deal in an attempt to address the hospitals’ financial issues, many of which were exacerbated by the cyberattack. Under its “Recovery Plan,” YNHH would provide management services to all three hospitals to aid their recovery from the cyberattacks. 

In the meantime, according to YNHH’s plan, Prospect Medical Holdings would decrease the purchase price of the three hospitals — originally $435 million — and Connecticut’s state government would lend financial support for the deal. With the acquisition, YNHH would gain over 700 new beds and add about 4,400 additional employees, for a total of 33,400. The for-profit Prospect hospitals would also be reverted to non-profit status.

Dana Marnane, director of public relations and communications for Yale New Haven Health, emphasized the need for communication between the players involved in the acquisition process regarding the hospitals’ current financial situations.

“We need everyone to sit down to get a full understanding of the current financial condition of Waterbury and [Eastern Connecticut Health Network] hospitals, including the impact of the recent cyberattack, and determine a path forward,” said Marnane.

Cyberattack worsens financial status of Manchester Memorial, Rockville General and Waterbury Hospitals

Early in August, the Eastern Connecticut Health Network — which includes the Manchester and Rockville hospitals — and Waterbury Health experienced a simultaneous systemwide network outage. That outage was later identified to be the result of a halting cyberattack on the Prospect Medical Holdings company.

In August, the CT Mirror previously reported that Manchester Memorial issued multiple “divert notifications” to emergency responders. These messages indicated that they could not accept patients to their emergency room. The hospitals closed their ER to new patients 29 times and canceled more than half of elective surgeries. At all three hospitals, staff individually monitored patients as they lacked functional technology, causing staffing shortages to surge. 

The attacks may also have compromised the personal information — including social security numbers — of over 24,000 Prospect Medical Holdings employees.

Information released to employees explained that the attack occurred between July 31 and Aug. 3. AFT Connecticut — the workers’ union representing almost 1,000 registered nurses and allied health professions in five local unions at Manchester Memorial and Rockville General Hospitals — statewide vice president John Brady said the attack was then discovered through an investigation on Sept. 13.

However, Brady said, employees only learned of the breach on Sept. 29 — almost two months after it originally occurred. While employees lacked official communication about the cyberattack and data breach, Brady said, the effects of the attack were clear in the workplace.

The attacks also caused severe financial challenges for the Prospect hospitals.

State Senator Saud Anwar, co-chair of the Connecticut General Assembly Public Health Committee, told the News that the hospitals were not able to properly bill their patients nor pay their medical supply vendors, creating a financial roadblock for the facilities that worsened their already-deteriorating financial statuses.

As a result, the CT Mirror also reported that the state was also forced to provide a $7 million bailout to the hospitals, which were struggling to stay afloat after they were unable to receive Medicaid reimbursements due to the attacks. 

“This was a perfect storm from the hospitals’ perspective,” Anwar wrote in an email to the News. “They were already struggling financially, and the fact that their medical records and ability to see as many patients as they usually see, as well as their ability to bill patients as normal, resulted in a financial issue that harmed cash flow, making their ability to manage their finances significantly more difficult.”

Strained finances and Prospect’s past

Negotiations for the acquisition are occurring during a period of financial strife for YNHH. In 2022, the system lost $240 million on the heels of the COVID-19 pandemic: a deficit that forced YNHH to fire 72 hospital managers during the worst fiscal year in its history. This year, YNHH budgeted for an even larger $250 million deficit.

Prospect Medical Holdings, which owns 20 for-profit hospitals around the country, is also plagued by a checkered history. In 2018, CBS News reported that its owners took out a $1.12 billion loan, using proceeds to pay themselves and their shareholders a $457 million dividend. To pay it back, the company sold land and buildings in three states — including Connecticut — to a real estate investment trust and leased the hospitals back.

In 2019, according to a ProPublica investigation, Connecticut’s Joint Commission on Hospital Accreditation initially denied Waterbury’s accreditation — which is required for facilities to receive Medicare and Medicaid funding — after finding 42 quality standards out of compliance. In one case, according to the investigation, the hospital had failed to monitor two actively suicidal patients. After one patient died, the hospital failed to inform police.

Yale New Haven Health’s ‘Recovery Plan’

In light of the cyberattacks and the hospitals’ deteriorating financial conditions, YNHH proposed an amended deal that would allow them to purchase the hospitals for a lower price. 

Dana Marnane, director of public relations and communications at Yale New Haven Health, said that the proposed YNHH “Recovery Plan” is essential to ensure that the three hospitals stay afloat.

“Yale New Haven Health proposed a Recovery Plan in which Yale New Haven would provide immediate management support to [Waterbury Health] and ECHN to help them recover from the cyberattack,” Marnane wrote in an email to the News. “Prospect would adjust the purchase price and the State would provide financial support to the [Waterbury Health] and ECHN hospitals to account for their deteriorating condition. We need all parties, including the State, to join in the Recovery Plan to make this transaction happen.”

Prospect Medical Holdings did not respond to multiple requests for comment.

State legislators, including Anwar and Governor Ned Lamont, along with YNHH, Waterbury Health, ECHN, and Prospect Medical Holdings officials will convene in a special meeting within the next week to discuss the proposed plan and the progression of the overall acquisition deal.

Along with the challenges of providing continued care to patients, Anwar mentioned concerns over the Prospect hospitals’ outstanding bills. 

“Many vendors have not been paid and that’s why I sense a need of urgency of moving forward with the acquisition so that a stronger health care system can provide support and change the trajectory of health care systems still struggling at this time,” Anwar said. “I hope vendors understand that as soon as a transaction happens, things will improve.”

Anwar also mentioned the importance of the upcoming meeting to move the deal along. 

An influx of cash from the YNHH acquisition could do more than pay Prospect’s bills to vendors; it could keep the hospitals from closing down, he said. 

“YNHH does have an excellent record and provides very high-quality care, and has been collaboratively working in many communities”,  Anwar added. “Hospitals have the ability to generate their own funding, but they do need some investment and technical know-how to improve quality of care and increase capacity.”

The acquisition has been met by hesitation from some officials, including Ted Doolittle, the state’s former appointed healthcare advocate, who say that patients might face higher prices.

The deal would mean that, alongside the Hartford HealthCare system, YNHH would own over half of all hospitals in Connecticut. 

“It could be good, but it’s probably more likely to be a net negative for the families in the state,” Doolittle told the News last year.  “When hospitals do merge and expand, the end result is that the prices paid by consumers and families and insurance companies tend to go up.”

According to the American Hospital Directory, there are 51 hospitals in Connecticut. 

The National Suicide Prevention Lifeline is a hotline for individuals in crisis or for those looking to help someone else. To speak with a certified listener, call 988. 

Crisis Text Line is a texting service for emotional crisis support. To speak with a trained listener, text HELLO to 741741. It is free, available 24/7 and confidential.

To talk with a counselor from Yale Mental Health and Counseling, schedule a session here. On-call counselors are available at any time: call (203) 432-0290.  Appointments  with Yale College Community Care can be scheduled here.

Students who are interested in taking a medical leave of absence should reach out to their residential college dean.

Additional resources are available in a guide compiled by the Yale College Council here.

Alexandra Martinez-Garcia covers Community Health and Policy and the Yale-New Haven Health System for the SciTech desk. Originally from Gales Ferry, CT, she is a sophomore in Silliman College majoring in Neuroscience.
Giri Viswanathan was a Science and Technology Editor for the News. Previously, he served as a Photography Editor while covering the School of Public Health for the SciTech Desk. Originally from Pittsburgh, PA, Giri is a junior in Timothy Dwight College majoring in Global Affairs with a certificate in Global Health Studies.