The Connecticut Office of Health Strategy (OHS) approved the University of Connecticut’s application to purchase Waterbury Hospital on Friday, following the bankruptcy of previous owner Prospect Medical Holdings.
UConn Health will pay $13 million for the hospital, located on Robbins Street, as part of an anticipated $225 million investment from state bonds over the next five years. The acquisition complements UConn’s John Dempsey Hospital in Farmington, Conn.
“I’m confident we’re moving toward a much stronger and brighter future for the facilities owned by Prospect,” said Gov. Ned Lamont in a statement. “While the path ahead is not without challenges, UConn Health has shown real leadership by stepping up and prioritizing the health care needs of the Greater Waterbury community.”
The state’s decision requires UConn Health to evaluate the condition of the hospital’s 136-year-old building with a “strategic integration plan,” and engage with the community in a community health needs assessment process within nine months, whilst maintaining or enhancing the services formerly offered at the hospital and existing outpatient and non-hospital doctor’s offices for at least three years.
UConn is additionally required to adopt existing insurance reimbursement rates and negotiate future rates separately from other hospitals.
OHS noted that the Connecticut Office of the Attorney General and Department of Public Health have regulatory oversight over the transaction and may impose additional conditions.
According to OHS, UConn Health was the only bidder for Waterbury Hospital in last year’s bankruptcy auction. They concluded that approving UConn’s bid would prevent the facility from closing permanently, “potentially creating a gap in access to certain inpatient and outpatient services or straining existing providers within the service area.”
The rest of Prospect’s Connecticut portfolio, the Eastern Connecticut Health Network, comprising Rockville General and Manchester Memorial hospitals, were acquired by Hartford Healthcare for $86 million last month.
UConn Health, in their “certificate of need” application to OHS, said their plan for Waterbury Hospital includes “updating and moderniz[ing]” the facility’s emergency medical service, addressing doctor retention, strengthening access to women’s healthcare and enhancing specialized services like ambulatory surgical facilities and oncology programs.
The application also requests that regulators allow “a number of beds” currently under Waterbury Hospital’s license to be, as needed, reallocated under UConn’s current John Dempsey Hospital license to “support returning patient volume from the Waterbury area currently seen at JDH…or allowing JDH to operate a service…where patient access, cost or quality outcomes might be improved.”
“Returning Waterbury Health assets to nonprofit ownership will help ensure that financial resources, capital investments, and strategic planning remain focused on community health needs rather than private interests,” Bill Pizzuto, State Representative for the 71st District, said in support of the deal. “A transition to UConn Health represents the best possible outcome for Waterbury Health and the communities it serves.”
$8.8 million of the purchase price will go to the City of Waterbury for back taxes and utility costs as part of a settlement in Prospect’s bankruptcy proceedings.
Prospect acquired Waterbury Hospital for $43.3 million in 2016. The group’s three Connecticut hospitals were to be acquired by a joint venture between Yale-New Haven Health and Dallas-based Tenet Healthcare circa 2014 in a deal that fell through; Yale tried again, unsuccessfully, to acquire Prospect’s holdings in 2022.
“The decision serves the needs of patients, families and communities in the Greater Waterbury area,” said Amy Porter, acting OHS commissioner. “Ensuring continued access to quality care for Connecticut residents impacted by the Prospect Medical bankruptcy has been a priority for Governor Lamont and OHS.”
While UConn Health is primarily based at John Dempsey Hospital in Farmington, the system operates a number of specialized and general care facilities statewide — including an urgent care location near the main UConn campus in Storrs-Mansfield.
Waterbury Hospital is one of two medical centers in Waterbury, the other being Saint Mary’s Hospital, an affiliate of Trinity New England. Both service over a dozen towns in the Naugatuck River Valley area.