Prospect Medical Holdings Files for Chapter 11 Bankruptcy

Prospect Medical Holdings, which operates a network of hospitals across California, Connecticut, Pennsylvania, and Rhode Island, filed for Chapter 11 bankruptcy on January 11 due to rising costs, declining revenues, and a severe liquidity crisis. The company, which has over 100,000 creditors and liabilities estimated between $1 billion and $10 billion, plans to sell two of its Rhode Island facilities to Centurion Foundation and is negotiating the sale of Crozer-Chester Medical Center in Pennsylvania. Governor Ned Lamont assured that Waterbury Hospital, which is owned by Prospect, will remain open and emphasized that bankruptcy does not mean the end of operations. Meanwhile, the Pennsylvania Attorney General has filed a lawsuit against Prospect for alleged mismanagement of the Crozer Health System. As the company seeks to stabilize its finances, it maintains that all patient care and services will continue uninterrupted throughout the bankruptcy process. The challenges leading to the filing were exacerbated by the COVID-19 pandemic, resulting in increased operational costs and decreased outpatient visits.