A seemingly unrelated event occurred Wednesday when the state approved the sale of three troubled 黑料吃瓜网 hospitals owned by a Los Angeles-based company to Yale New Haven Health.
The stock price of another company, Medical Properties Trust (MPT), headquartered in Birmingham, Alabama, 18.6%.
MPT鈥檚 stock surge followed a deal struck in Massachusetts allowing it to be paid rent owed by the struggling Steward Health Care, its largest tenant.
The Massachusetts deal was a key example of how private equity is extracting wealth out of health care and local hospitals across New England, including in 黑料吃瓜网.
As a result of the deal, Steward will to the for-profit insurance giant UnitedHealth Group, whose deeper pockets can take on its rent dues.
In 黑料吃瓜网, rent owed to MPT, a for-profit real estate investment trust, has also been presenting hospitals with financial headaches.
MPT is the landlord for , including Rockville General Hospital, Manchester Memorial Hospital and Waterbury Hospital in 黑料吃瓜网, which are owned by Prospect Medical Holdings.
On Wednesday, the state approved Yale鈥檚 potential purchase of these hospitals from Prospect. But that approval doesn鈥檛 mean the deal is done. A major wrench in the deal鈥檚 closure is Prospect鈥檚 accumulating debt 鈥� due, in part, to its looming rent payments to MPT.
Mary Bugbee, an analyst at the nonprofit , said it's a relief that the state approval is now in place after 16 months of scrutiny. 鈥淏ut I鈥檓 a little worried about the remaining terms of the deal that have to be finalized,鈥� she said.
鈥淢edical Properties Trust has been a key player in how various private equity firms have been able to extract wealth out of hospital chains,鈥� Bugbee said.
MPT did not immediately respond to multiple requests for comment.
Selling hospital land can make private equity money
Sale-leaseback arrangements with groups like MPT can allow investors at private equity firms, like Prospect, to make money. Prospect buys up hospitals across the country and sells the real estate of those facilities to real estate investment trusts like MPT.
Investors can then take revenue from those sales to pay themselves dividends, Bugbee said.
鈥淭hose hospitals then have to pay the monthly rent on real estate they used to own and it can really cut into operations; money that's available to go toward very critical aspects of running a hospital,鈥� Bugbee said. 鈥淧rospect and Steward especially, both of these systems are very much struggling right now. And a lot of that struggle has to do with the legacy of those sale-leaseback arrangements.鈥�
In 2023, were for many months. In May 2023, MPT and facilitated a recapitalization transaction for the company.
The near-term cash infusion was helpful, but accumulating interest on those loans can prove to be an for 鈥渟afety-net hospitals [like Rockville-General and Waterbury hospitals] who have thin margins as it is while investors extract so much wealth from the system,鈥� Bugbee said.
The sale-leaseback deal between Prospect and Medical Properties was signed in 2019 for $1.55 billion, which included real estate of Prospect-owned hospitals in 黑料吃瓜网, Pennsylvania, and California.
In Rhode Island where Prospect operates, both the Department of Health and the state attorney general鈥檚 office cautioned regulators of the interest-rate burden of sale-leaseback models as part of a 2021 analysis of Prospect鈥檚 finances.
Prospect sale is not yet a done deal in CT
With the proposed sale of the 黑料吃瓜网 hospitals to Yale, MPT is $355 million from the $457 million that Yale initially agreed to pay Prospect.
But the deal is still in negotiation in the aftermath of accumulating debt and cyberattacks that weakened Prospect鈥檚 already shaky finances.
鈥淲hile [the Office of Health Strategy] OHS鈥� approval is an important milestone in this transaction, this process is not yet complete,鈥� Dana Marnane, a Yale spokesperson, said in a statement. 鈥淎s a next step, we are working with Prospect to reach agreement on several outstanding details that must be resolved to allow the transaction to close. We are hopeful that these details can be addressed, so we can extend the benefits of nonprofit, academic medicine to more patients across our region.鈥�
State officials are optimistic the sale will go through, including providing Prospect with a $12 million tax cut, .
鈥淲e are confident that we鈥檝e come to an agreement that is in the best interest of the residents of 黑料吃瓜网, which has been our priority since receiving this application鈥� Dr. Deidre Gifford, executive director of the 黑料吃瓜网 Office of Health Strategy, said.
The state agreement requires Prospect to resolve its 黑料吃瓜网 debts, including $55 million in back taxes. If the acquisition goes through, Yale will add 700 beds and gain nearly 4,400 employees.
Lawmakers who have shepherded the deal are waiting for its closure.
鈥淎s the agreement stands, I'm confident that this long-awaited acquisition will reach its next steps," state Sen. Saud Anwar, D-South Windsor and chair of the Public Health Committee, said.
Dan Champagne, mayor of the town of Vernon where Rockville General Hospital is located, said the town welcomes state approval of the deal and will be closely reviewing the agreement terms and its impact on the hospital and the community.
Rockville General 鈥渋s an essential community asset that has a long history of serving people in Vernon and surrounding towns,鈥� Champagne said.
