Prospect Medical Holdings files for bankruptcy after owners took hundreds of millions in payouts [Video]

A Los Angeles-based company that owns more than a dozen hospitals in four states filed for bankruptcy late Saturday night, the second major system acquired by private equity to collapse in less than a year.

In an initial filing seeking Chapter 11 protections, Prospect Medical Holdings, which owns facilities in California, Pennsylvania, Rhode Island, and Connecticut, listed debts of more than $400 million. In a press release announcing its restructuring, the company said it would continue to operate as normal.

“Throughout the Chapter 11 process, Prospect Holdings’ hospitals, medical centers, and physicians’ offices will remain open, and patient care and services will continue uninterrupted,” the company wrote. 

Prospect Medical’s bankruptcy comes less than a year after the bankruptcy of Steward Health Care, another major hospital system once-backed by private equity. CBS News documented how Steward, along with private equity investors, extracted hundreds of millions of dollars from that company, potentially …