Westerly Hospital sale OK expected this month

LIFE CHANGES: One controversial change under the merged entity is that Westerly Hospital will no longer maintain its maternity services, a result of declining births at the hospital as well as financial difficulties. / COURTESY WESTERLY HOSPITAL
LIFE CHANGES: One controversial change under the merged entity is that Westerly Hospital will no longer maintain its maternity services, a result of declining births at the hospital as well as financial difficulties. / COURTESY WESTERLY HOSPITAL

If all goes as expected, Westerly Hospital’s sale for $69 million to Lawrence + Memorial Hospital of New London, Conn., will be approved by Rhode Island state regulators this month, W. Mark Russo, the court-appointed special master, told Providence Business News.
“I hope to have regulatory approvals by the middle of April,” said Russo, speaking after a brief public hearing March 27 at the Westerly Middle School during which only two people testified. “I would suspect that we would close within 30 days after that. … I don’t see any last-minute snags on the horizon.”
The public hearing, one of two back-to-back sessions held that day, sought public comment from Westerly residents about the pending sale. The hearings were conducted the R.I. Department of Health and the attorney general’s office, the two state agencies charged with overseeing the sale of hospitals under the state’s Hospital Conversions Act.
Jodi Bourque, Rhode Island assistant attorney general, opened the hearing by saying to a mostly empty auditorium: “We’re here to listen.” After brief statements from Russo, R.I. Attorney General Peter F. Kilmartin and Dr. Michael Fine, director of the R.I. Department of Health, only two residents stepped forward to offer comments.
In contrast, similar public hearings held in April 2012 at Woonsocket City Hall on the proposed sale of Landmark Medical Center to Steward Health Care drew an overflow crowd of several hundred Woonsocket residents. However, after receiving approval by state regulators, Steward backed out of the deal in September 2012. A new suitor, Prime Healthcare Services of Ontario, Calif., is now pursuing the purchase of Landmark.
The first Westerly resident to speak, Steven Hartford, Westerly’s town manager, put a positive spin on the low turnout. Hartford said the low attendance at the hearing was a sign that most people were “comfortable” with the sale, even if they were “frustrated by the reality” that their acute-care community hospital could no longer financially sustain its operations by itself. “We understand that a partnership had to be made, and this is the best possible partnership” available, Hartford said. The sale, he continued, “is preserving the hospital in the best possible way in a rapidly changing health care environment.”
Hartford also praised the work ethic of Russo in helping get the deal done.
Under the pending purchase agreement, Lawrence + Memorial will assume $22 million of Westerly Hospital’s debts, invest about $6.5 million in the first two years to support the hospital’s operations and spend another $30 million in upgrade the hospital’s infrastructure. Lawrence + Memorial and Westerly hospitals will have the same corporate parent, but they will have separate licenses, medical staffs and tax status.
One controversial change under the merged entity is that Westerly Hospital will no longer maintain its maternity services, a result as much due to changing demographics and the declining number of births at the hospital as its financial difficulties.
Richard Sorensen, the only other person to testify at the hearing, praised Westerly as a “wonderful haven to retire in.” Sorenson claimed that he was “the first baby boy, along with his twin sister,” to be born at Westerly Hospital in 1940.
Sorensen urged the regulators, the special master and the state’s health regulators to find a way to reconsider the decision the close the maternity services.
The sale of Westerly Hospital promises to be the first of four pending hospital transfers in Rhode Island to be completed, according to Kilmartin.
“We are now considering our fourth conversion,” Kilmartin told PBN. In addition to Westerly Hospital, he continued, “we have Landmark, Care New England and Memorial, and CharterCARE. The only completed application is for Westerly,” which he expects to be approved. After the hearing, Fine praised the collaborative work done on the sale of Westerly Hospital.
“We’re all working hard,” he said. “It’s a great collaboration. We’ve all been thinking together and learning from each other.”
Everyone, he continued, “wants to do what’s right for the health and safety of Rhode Islanders. We understand the General Assembly’s perspective about financially distress hospitals.”
On March 19, the state’s Health Care Planning and Accountability Advisory Council sent out a draft report to stakeholders, with the final version to be presented to the General Assembly, assessing Rhode Island’s current and future health care system’s inpatient-hospital capacity. The report, prepared by The Lewin Group, created a “Bed Need Model” to provide planning guidance to the state on the ideal number, location and type of hospital beds that will be need through 2017. The model also creates a methodology to estimate the cost of excess capacity – including an estimated projected excess capacity of more than 200 hospital beds in Rhode Island in 2017.
When asked about the draft report and how it plays out with the pending sale of Westerly Hospital, Landmark Medical Center and the mergers of Memorial Hospital with Care New England and the recently announced proposed merger of CharterCARE with Prospect Medical Holdings Inc., a for-profit California company, Fine said he was not sure about the report’s immediate impact.
“We don’t really have tools to shrink or change hospitals,” Fine continued. “As to whether we should have those kinds of tools or not, that’s a call for the General Assembly.” •

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