CharterCare partners with Prospect Medical Holdings
UNDER THE TERMS of an asset purchase agreement between CharterCare Health Partners and California-based Prospect Medical Partners, CharterCare will hand over management of its 579 licensed beds and 3,000 employees to Prospect.
PROVIDENCE – CharterCare Health Partners signed an asset purchase agreement Tuesday with Prospect Medical Holdings, creating a new for-profit joint venture.
CharterCare, the corporate parent of Roger Williams Medical Center and St. Joseph Health Services of Rhode Island/Our Lady of Fatima Hospital, announced its intention to partner with Los Angeles-based Prospect Medical Holdings on March 21.
According to a release announcing the partnership, the CharterCare board and management team selected Prospect Medical Holdings, a national health care services company, on the basis of its proven track record of coordinated health care.
CharterCare currently operates a total of 579 licensed beds, has about 3,000 employees, and has annual operating revenue of approximately $300 million.
“We are confident that we have found the right partner in Prospect Medical, who not only understands the importance of local governance but also has the expertise and capital to help us succeed in the Rhode Island marketplace,” said Edwin Santos, chairman of the CharterCare board, in a release.
Under the terms of the agreement, Prospect Medical Holdings will provide $95 million to CharterCare over the next four years. Of the $95 million total, $45 million will be subject to regulatory approval to be used for debt reduction and short-term working capital.
Prospect Medical Holdings will provide an additional $50 million over the following four-year period to provide capital for physician network development, facility improvement and technology acquisition, the release stated.
The asset purchase agreement will now be submitted for review by the R.I. Department of Health and the R.I. Attorney General under the provisions of the state’s Hospital Conversion Act.
“We look forward to working through the state approval process to create a joint venture relationship that will focus on providing the highest possible quality for the lowest cost while embracing population management and risk contracting,” said Samuel S. Lee, CEO of Prospect Medical Holdings.
The transaction is expected to be completed by the early part of next year, subject to regulatory and church approval (St. Joseph Health Services of Rhode Island/Our Lady of Fatima Hospital have remained Roman Catholic institutions even after merging with Roger Williams). After the closing, Prospect Medical Holdings will serve as the manager of the hospital joint venture under a management contract.
Both CharterCare and Prospect Medical Holdings will be equally represented on the organization’s governing board.