Sale of Rhode Island hospitals approved, but with dozens of conditions

Rhode Island officials have approved the sale of two hospitals, but they are requiring a host of stipulations in order to move forward with the deal.

Rhode Island Attorney General Peter F. Neronha, left, and Rhode Island Health Department Director Jerome Larkin have conditionally approved the sale of Roger Williams Medical Center and Our Lady of Fatima Hospital. They've also attached a host of requirements to move forward.

The state's attorney general’s office and health department have both attached conditions for Prospect Medical Holdings’ planned sale of the CharterCARE system to the Centurion Foundation. CharterCARE includes the Roger Williams Medical Center and Our Lady of Fatima Hospital.

Rhode Island Attorney General Peter F. Neronha said the sale would go forward if Prospect and Centurion meet a total of 40 conditions. Neronha says the conditions include ensuring that there is enough money available to finance the facilities and address a host of issues.

“Our team was guided by the baseline principle that Rhode Islanders deserve quality, accessible and affordable healthcare,” Neronha said in a statement. “We also know that the future of these hospitals is critical to the collective landscape of healthcare in Rhode Island.”

To move forward, Prospect and Centurion must guarantee $80 million in cash financing for the new CharterCARE system, along with an additional $68 million to a dedicated fund to support the new system.

Citing CharterCARE’s “long history of operating losses,” Neronha says Prospect and Centurion must select and finance a turnaround consultant, to be approved by the attorney general’s office.

The Rhode Island attorney general said he is also calling for the new governing board to include local input and adopt best governance practices to “mitigate poor management practices in the past.”

In addition, Prospect must address inadequate life safety equipment, roof repairs and physical plant violations cited by state and federal regulators, Neronha said. Prospect also must make payments to vendors of the Rhode Island hospitals. Earlier this month, a Rhode Island judge ordered Prospect to pay an outstanding $17 million to vendors, WPRI-TV reports.

The Rhode Island Department of Health, in conjunction with the attorney general’s office, offered provisional approval of the deal, but the health department also had its own stipulations.

The health department's conditions include that Centurion must ensure the hospitals “remain in good standing with financial obligations.”

In addition, the health department says the governing boards of the hospitals must include a majority of independent board members with experience in hospital operations, healthcare, finance and legal issues. The boards also must reflect the diverse communities that the hospitals are serving, the department says.

Jerome Larkin, director of the Rhode Island Health Department, said the conditions reflect “ongoing financial and operational challenges at the hospitals.”

Larkin said in a statement that the stipulations are designed “to restore local control, help stabilize these two facilities, and help ensure that the new operators would be positioned to provide consistent, safe, high-quality care."

United Nurses & Allied Professionals, which represents nurses at the hospitals and other nurses in New England, has previously objected to the planned sale of Roger Williams and Our Lady of Fatima. The union has urged state officials to reject the sale.

After state officials announced their conditional approval, the union expressed its dissatisfaction. The union said the “conditions set forth in the decision are not nearly enough to ensure the long-term viability of CharterCare’s hospitals and healthcare facilities,” according to GoLocalProv, a news organization in Providence.

Prospect, the for-profit system based in California, is also in the midst of attempting to sell three hospitals in Connecticut to Yale New Haven. Prospect has also been attempting to sell Crozer Health in Pennsylvania.

It’s been an eventful week for health systems in Rhode Island.

This week, Lifespan and Brown University announced an agreement to extend their partnership, with both institutions pleading to make significant investments in each other to improve patient care, medical education and research. Under the new agreement, Lifespan will adopt a new brand name: Brown University Health.

Lifespan will remain a separate organization from Brown University. Officials said that Lifespan and Brown aren’t merging.

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