Yale New Haven Health strikes deal to acquire Connecticut health systems from Prospect Medical Holdings

Yale New Haven Hospital, the flagship of Yale New Haven Health System. Yale New Haven Health has reached a deal to acquire two Connecticut health systems from Prospect Medical Holdings. (Photo by Yale New Haven Health)

Yale New Haven Health System has reached a deal to acquire two Connecticut health systems from Prospect Medical Holdings, a for-profit organization.

In the deal announced Thursday, Yale New Haven Health would acquire three hospitals. The two health systems, Waterbury HEALTH and Eastern Connecticut Health Network (ECHN), would transition to non-profit status.

Yale New Haven and Prospect said they are seeking approval from regulators in Connecticut. Yale New Haven is Connecticut’s largest health system.

“Now more than ever, it’s critical for us to find ways to creatively sustain local access to high-quality care,” Christopher O’Connor, president and CEO of Yale New Haven Health System, said in a statement.

“This transaction offers unique advantages to the residents of the communities served and allow for continued patient access to critical healthcare services while being strengthened by the quality-of-care YNHHS is known for nationally,” he said.

If the deal is approved, Yale New Haven Health would take over these hospitals and organizations:

• Waterbury Hospital (also known as Waterbury HEALTH) in Waterbury, Conn., with 357 certified beds
• Manchester Memorial Hospital (also known as ECHN) in Manchester, Conn., with 249 certified beds
• Rockville General Hospital in Vernon, Conn., with 102 certified beds
• Prospect Provider Group of Connecticut (Alliance Medical Group and ECHN Medical Group)
• Visiting Nurse and Health Services of CT

Yale New Haven Health and Prospect said they are working with Connecticut’s Office of Health Strategy and the Connecticut Department of Public Health to obtain regulatory approval. They plan to file a “Certificate of Need” with the state this fall.

If regulators sign off on the deal, the three hospitals will become part of the Yale New Haven Health System. Yale New Haven Health said Waterbury HEALTH and ECHN will be able to expand primary care and specialty care services.

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The leaders of the two health systems expressed enthusiasm for the move to Yale New Haven Health.

“Waterbury Hospital is deeply committed to caring for our communities and adapting to the rapidly evolving healthcare landscape," Justin Lundbye, president and CEO of Waterbury HEALTH, said in a statement. "Along with ECHN, we are proud of what we’ve accomplished, including investing millions of dollars in our communities, preserving jobs, increasing quality ratings, and being leaders in Connecticut’s response to the pandemic. We are confident YNHHS will continue this legacy.”

Deborah Weymouth, president and CEO of ECHN, said in a news release that she is excited about joining Yale New Haven.

“We are proud of our accomplishments and appreciative of the significant investments made by Prospect to preserve jobs and respond to the needs of the community throughout the pandemic while increasing both quality ratings and improvements to the patient experience,” Weymouth said in the statement.

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Yale New Haven Health said it aims to improve the delivery of healthcare. The system also said it is focused on preserving jobs in local communities, supporting workers’ pension funds and evaluating the capital needs of the facilities that would join the system.

“Working with our partners at the Yale School of Medicine, this will create a seamless and integrated delivery system that will serve the best interests of our patients in the most cost-effective manner possible throughout the state of Connecticut and the entire region,” O’Connor said in the news release.

Prospect Medical Holdings has been looking to shed some of its other hospitals.

Earlier this year, ChristianaCare, the Delaware health system, reached an agreement to acquire Crozer Health in the Philadelphia area from Prospect. However, ChristianaCare and Prospect announced in August that the acquisition wasn’t going to happen. The organizations said "the economic landscape has significantly changed, impacting the ability of the sale to move forward."

• Read more: These proposed hospital mergers and acquisitions collapsed. Here’s why.

At least partly due to the COVID-19 pandemic, it’s been a fairly quiet time for hospital mergers. In the first half of 2022, only 25 hospital mergers and acquisitions were announced, according to Kaufman Hall, a consulting firm. That essentially matches the pace in 2021, when 49 hospital deals were announced, down from 79 in 2020.

Analysts expect the pace of hospital mergers to pick up in the future, as some financially troubled hospitals and systems may need to find partners to stay afloat.

While fewer hospital mergers have been taking place, the transactions moving forward have been bigger deals. Trinity Health just completed the acquisition of MercyOne last month.

However, federal regulators have been taking a closer look at hospital mergers, particularly transactions involving hospitals or systems in the same markets. The Federal Trade Commission has objected to some recent proposed mergers, prompting the health systems to abandon the deals because of the regulatory opposition.

President Biden has directed regulators to take a close look at mergers, including hospital consolidations, to preserve competition and ensure consumers don't see higher prices and reduced services.