Prospect Medical Holdings, a Los Angeles-based healthcare services provider that has more than a dozen hospitals across four US states, has filed for bankruptcy after struggling with mounting debts and escalating costs.
The company manages a network of over 11,000 doctors and runs more than 16 hospitals. It submitted its bankruptcy petition in Texas on 11 January, listing assets and liabilities ranging from $1bn to $10bn and over 100,000 creditors, reported Reuters via The Edge Malaysia.
Financial issues at Prospect Medical had reportedly been evident since last year when hospital landlord Medical Properties Trust accused the company of defaulting on debt and sought to control some of its healthcare entities.
This week, Medical Properties Trust emphasised its intention to safeguard its investment in Prospect's California hospitals and support the sale of its Connecticut facilities.
Prospect Medical has enlisted Sidley Austin as its general bankruptcy attorney, Alvarez & Marsal as its financial adviser, and Houlihan Lokey as the investment banker to handle the bankruptcy proceedings.
The bankruptcy case is registered under Prospect Medical Holdings, Inc., 25-80002 in the US Bankruptcy Court Northern District of Texas.
A recent Senate committee report highlighted 'overwhelming evidence of financial mismanagement' by Prospect Medical and its private equity backer Leonard Green.
The bipartisan committee suggested that such financial practices could threaten the nation's healthcare infrastructure. Both entities have contested the Senate's findings, reported CBC News.
A spokesperson for Prospect Medical refuted the report, stating that it ignored crucial facts and did not accurately assess the care quality at its hospitals: "The Committee drew general conclusions about the quality of care at our hospitals without ever reviewing information from those hospitals."
They highlighted that Prospect Medical had invested over $750m in its facilities and provided more than $900m in charity care.
In August 2024, Prospect Medical Holdings signed an agreement to transfer ownership of Crozer Health to CHA Partners, a full-service real estate company.
