Urgent: CT Tax Bill Surges to $127M; State Considers Forgiveness

UPDATE: Connecticut’s unpaid hospital provider tax bill has skyrocketed to over $127 million, and state officials are now considering forgiveness options as negotiations intensify. The staggering amount, owed by Prospect Medical Holdings, dates back to 2022 and could have significant implications for local healthcare.

Documents obtained by The Connecticut Mirror reveal that Prospect Medical Holdings has failed to fulfill its hospital provider tax obligations since 2022, leading to this massive debt accumulation. The company filed for bankruptcy protection in January, with the sale of its hospitals being overseen by the U.S. Bankruptcy Court in Northern Texas. The Connecticut Department of Revenue Services has confirmed that the tax liabilities have ballooned from an initial $67 million in December 2023 to an alarming $127 million by July 2023.

The breakdown of the debt shows that Prospect owes $64.4 million for Waterbury Hospital, $47.2 million for Manchester Hospital, and $16.2 million for Rockville General Hospital. As negotiations progress, state officials, including State Comptroller Sean Scanlon, are actively discussing how much of this debt the state may forgive in exchange for UConn Health acquiring Waterbury Hospital.

Governor Ned Lamont has shifted his stance on taxpayer subsidies, previously insisting that maintaining these hospitals should not rely on public funds. However, he acknowledged the deteriorating situation surrounding these facilities, stating, “We really want to keep these hospitals going. I know how important they are to the community.”

As the state moves forward, it plans to borrow $390 million for capital improvement projects across the three hospitals. The funding will also support the acquisition of Waterbury Hospital, while separate arrangements will be made for Bristol Hospital and Day Kimball Hospital in Putnam.

The urgency escalates as the state contemplates the tax forgiveness necessary to secure the acquisition deal. Speaker of the House Matt Ritter emphasized that the legislature must address the tax debt forgiveness separately while considering the hospital bonding deal. “If we want to support UConn Health’s taking over the hospital, then we will have to forgive the tax debt,” he explained.

The implications of this unpaid tax bill are profound, not just for the hospitals involved but for the broader healthcare system in Connecticut. The hospital provider tax is crucial for financing the state’s Medicaid program, and failure to collect these taxes could diminish the federal matching funds that support essential healthcare services.

In a related development, earlier this week, a subsidiary of Hartford HealthCare emerged as the successful bidder for Manchester Memorial and Rockville General Hospitals, offering $86.1 million for both facilities. This deal highlights the ongoing challenges facing Connecticut’s healthcare landscape as the state navigates the fallout from Prospect’s bankruptcy.

As negotiations with Prospect Medical Holdings continue, stakeholders are urged to remain vigilant. The outcome will not only determine the fate of these critical healthcare services but also the financial health of Connecticut’s Medicaid program. The state is poised at a crossroads, and the decisions made in the coming weeks will have lasting impacts on community health and welfare.

Stay tuned for further updates as this developing story unfolds.