PROVIDENCE — Care New England’s year-to-date $40 million loss, mostly attributed to the shuttered Memorial Hospital, qualifies as a significant financial hardship according to its joint application with Partners Healthcare for an expedited review of its acquisition by the Massachusetts hospital system under the R.I. Hospital Conversion Act.
An expedited review is typically completed within 90 days instead of 120, said R.I. Department of Health spokesman Joseph Wendelken. He said the department has not yet received an application for Partners’ acquisition of CNE, only the request for the process to be expedited. He said RIDOH typically responds to such requests within two weeks.
An expedited review does not require an informational public hearing. Public notification is done 20 working days after the review begins instead of 30 with an expedited review. Also, an expedited review leaves deadlines for staff assessment of the completeness of the application, resubmission of the application and re-assessment of completeness as open-ended.
“It is my understanding that “expedited” does not preclude ‘thorough’; That the review will still be a process that fully protects RI health patients and providers,” said Sen. Joshua Miller, D-Cranston, a chairman of the Senate Committee on Health and Human Services.
Qualifying as distressed also requires:
- An operating loss for the two most recent fiscal years
- Less than 50 days cash-on-hand
- Current asset to liability ratio of less than 1.5
- Long-term debt-to-capitalization greater than 75 percent
- In-patient occupancy rate of less than 50 percent
- The entity would be classified below investment grade by a majority rating agency
The hardship must be shown to threaten to impair the acquired company’s ability to continue to operate effectively without the proposed conversion.
In May, Care New England’s fiscal 2018 second-quarter report showed a $7 million operating loss including the shuttered, financially troubled Memorial Hospital of Rhode Island in Pawtucket. Combined with a $33.7 million first-quarter operating loss, the company finished down in the first two quarters by a combined $40.7 million.
However, the company estimated that without the burden of the recently shuttered Memorial Hospital, it would’ve seen a $4.4 million profit. Dr. James E. Fanale, president and CEO, called that a sign of an effective turnaround in action.
Neither company responded to questions about how Fanale’s assessment might affect the request for an expedited review.
In a joint statement on the filing, the companies said they intend to follow up the request for a an expedited review under the HCA with a full regulatory filing for a review of Partners’ acquisition of CNE under the HCA in the coming weeks.
Rob Borkowski is a PBN staff writer. Email him at Borkowski@PBN.com.
