The Centurion Foundation, the Atlanta-based nonprofit trying to buy a pair of safety net Rhode Island hospitals, still can’t lure investors, prompting a fourth revision to the deal conditionally approved by state regulators.
In a letter to Centurion Foundation CEO Ben Mingle on Tuesday, R.I. Attorney General Peter F. Neronha agreed to ease up on the terms his office imposed on the pending sale of Roger Williams Medical Center in Providence and Our Lady of Fatima Hospital in North Providence. A copy of the letter was shared with Rhode Island Current.
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The revisions come as Centurion continues to struggle to sell the $165 million in taxable and tax-exempt bonds needed to finalize its purchase of the hospitals. Credit ratings agencies highlighted “significant uncertainty” in the financial and operational performance of Centurion’s pending bonds in ratings assessments earlier this year.
The bond amount reflects the $80 million purchase price plus an $80 million cash injection into the struggling hospitals’ balance sheets — one of 85 conditions state regulators imposed in granting conditional approval of the sale in June 2024. The proposed change in ownership, and corresponding switch from for profit to nonprofit status, requires the sign off of state regulators under the state’s Hospital Conversion Act.
Neronha has already pulled back on certain regulatory and financial conditions three times in an effort to help Centurion sell the bonds and close the deal and keep the safety net hospitals open.
Their existing owner, Prospect Medical Holdings, filed for Chapter 11 bankruptcy in federal court in Dallas in January. If the sale to Centurion falls through, the Rhode Island hospitals risk shuttering or being sold as assets in an out-of-state federal bankruptcy proceeding.
“If you want to ask why I keep betting against myself in the Centurion transaction, that’s why,” Neronha said at an unrelated press conference Tuesday. “The alternative is worse than that.”
He continued, “Prospect, you know, wants to close these hospitals. They want to close them right now. That’s what I am trying to avoid.”
The two hospitals, with 500 beds between them, account for more than 50,000 emergency room visits per year. Together they have 104 beds for behavioral health patients, representing more than 20% of behavioral health beds available statewide.
The long-delayed deal is now expected to close Oct. 31, assuming Centurion can sell the bonds under the revised terms.
“I suspect if they didn’t close by the end of October, that will be the death knell for the transaction,” Neronha said.
Otis Brown, a spokesperson for CharterCARE Health of Rhode Island, Centurion’s local subsidiary, did not return inquiries for comment on Tuesday.
In July, Neronha agreed to cut the upfront cash requirement from $80 million to $45 million, giving Centurion 90 days after the deal closed to come up with the remaining $35 million. But that was still not enough.
Centurion told Neronha that even the more lenient financial conditions “have frustrated its ability to obtain sufficient bond financing,” the letter states.
Now, Neronha will shave off another $9 million from the upfront cash requirement, reducing the initial injection to $36 million. He also granted Centurion’s request to waive the condition that it invest another $35 million in the first 90 days.
However, like prior revisions, there are strings attached.
“Stop interrupting my vacation,” Neronha said Tuesday when asked what new protections he imposed.
His letter proved more illustrative, outlining two new conditions tied to the waiver.
One cuts $10 million from the sale profits that will be transferred to federal bankruptcy court in Dallas to fulfill Prospect’s obligations to creditors. The other specifies that Centurion has to spend its own money – versus bond sale proceeds – to cover $1.5 million of the closing costs. They must wait at least six months before tapping $2 million of bond sale proceeds for additional administrative costs. If Centurion meets the previous requirement of a $45 million cash injection for hospital operations, the cost deferral is not required.
Neronha said Tuesday he denied a request from Centurion seeking the state’s help to cover the sale. Details, including the amount requested, were not immediately available.
In Massachusetts, Gov. Maura Healey put up $700 million in state incentives and taxpayer money to lure buyers for a string of hospitals at risk of closing under the bankrupt Steward Health Care. That included St. Anne’s Hospital in Fall River and Morton Hospital in Taunton, which Brown University Health bought for $175 million last year.
John Fernandez, CEO of Brown University Health, reiterated Tuesday that the health system had no interest in buying Roger Williams and Fatima because of their financial struggles.
