WASHINGTON — U.S. Sen. Chris Murphy lambasted Prospect Medical Holdings during a congressional hearing Thursday, arguing the for-profit California-based health care system is bilking Connecticut hospitals and its patients out of resources in an effort to pad its own pockets.
Murphy spoke before the U.S. Senate Health, Education, Labor, and Pensions Committee during a hearing regarding the bankruptcy of Steward Health Care, the largest private hospital operator in the country that was recently granted permission to sell its three Massachusetts hospitals at a loss.
Steward's CEO Ralph de la Torre defied a subpoena and did not attend the hearing, leading to members of the committee saying they plan to hold him in contempt.
During the hearing, Murphy was highly critical of for-profit health care systems in general and Prospect in particular, saying they are "making a disgusting fortune off of withholding health care from people in need."
Prospect owns three Connecticut hospitals — Manchester Memorial, Rockville General, and Waterbury — and is in a legal battle at it tries to sell them to Yale New Haven Health.
While Thursday's hearing focused on one particular health care system, Murphy said "this set of horror stories ... is happening all across the country."
He said after Prospect bought its three Connecticut hospitals, "immediately, they started stripping services," leading to supplies running short, a lack of specialists, and even broken elevators.
In 2018, two years after Prospect added Manchester Memorial and Rockville General to its national portfolio, the private equity firm took out a $1.12 billion mortgage against the facilities, using about $457 million of the loan to pay dividends to investors and executives.
"Prospect was looking for a new buyer to just flip the hospitals to make more money," Murphy said, adding that executives raked in millions in personal profit "as these three hospitals in Connecticut were essentially dying in front of our eyes. Patient quality was being compromised."
Citing various reports, Murphy estimated that the net worth of John Danhakl, the managing partner of Leonard Green & Partners — a Prospect investor — is "likely in the neighborhood of $1 billion."
"How have we let American capitalism get so far off the rails, so unmoored from the common good, that anybody thinks it's OK to make a billion dollars off of degrading health care for poor people in Waterbury, Connecticut?" Murphy said. "Why do we accept that as a country? This is just a choice, to decide to commoditize our health care system — in Connecticut, in Louisiana, in Massachusetts, in every state across this country."
Ultimately, he said, for-profit health care systems put their profits before the needs of patients.
"Because the purpose is now to make as much money to make the owners filthy rich," Murphy said. "When there's a fundamental difference in the purpose, there's a fundamental difference in what happens inside that hospital, and that's just the reality."
Since taking ownership, Prospect's three Connecticut hospitals have been plagued with a series of issues, including a cyberattack that compromised health and other confidential information of more than 100,000 people, dire finances, and deteriorating facilities.
In response, Yale New Haven Health filed a lawsuit in May, in which it argued it does not have to abide by the initial purchase agreement with Prospect because the value of the three Connecticut hospitals has decreased significantly due to Prospect's mismanagement.
The following month, Prospect filed its own lawsuit, suing for the entire $435 million initial asking price for the hospitals, alleging that Yale New Haven Health actively worked to prevent the transaction.
Representatives for Prospect could not be reached for comment Friday.