PROVIDENCE – As a federal court considers a request to potentially close Roger Williams Medical Center and Our Lady of Fatima Hospital by the end of the year, a second operator has expressed interest in acquiring the two hospitals.
On Oct. 30, Prospect Medical Holdings, the parent company of the hospitals' operator CharterCARE Health Partners, filed a motion in the U.S. Bankruptcy Court for the Northern District of Texas requesting to close the hospitals by the end of the year if the state of Rhode Island or a designee does not take ownership.
Meanwhile, according to court documents filed by R.I. Attorney General Peter F. Neronha on Monday, "another operator recently commenced diligence on a going concern acquisition of the RI Hospitals." Neronha, who flew to Texas to attend the hearing, urged Prospect to "pursue this alternative [or others] aggressively."
Through his spokesperson Larry Berman, House Speaker K. Joseph Shekarchi told Providence Business News Tuesday in a statement that he "heard from stakeholders that Prime Healthcare is doing its due diligence on both hospitals.”
Prime Healthcare is a for-profit headquartered in Ontario, Calif., that operates 51 hospitals in 14 states.
The fate of the two Rhode Island hospitals, which have a combined total of more than 500 beds, has been precarious for years. But this instability intensified in January when Prospect Medical Holdings declared chapter 11 bankruptcy. The hospitals' prospective buyer, Georgia-based 501(c)(3) nonprofit The Centurion Foundation, has
yet to raise enough money to finalize the sale.
In court documents, Prospect Medical Holdings representatives state that the California-based private health care company "cannot continue to operate the R.I. Hospitals indefinitely," and that continuing operations at the facilities past Dec. 31 would further impede the company's ability to pay administrative debts and cause additional burden to its creditors.
The company said that it has lost approximately $18.7 million in "unanticipated additional losses" during a six month delay on Centurion closing the sale, and that it expects to lose an additional $6 million by the end of November.
Alongside Centurion's lack of fundraising, Prospect Medical Holdings names "financial requirements imposed by the Rhode Island Attorney General and [Rhode Island Department of Health]" as "the major barrier to closing the Centurion Sale."
Neronha and RIDOH have required that Centurion must set aside $95 million to benefit Rhode Island hospitals post-sale closure. The attorney general's office said in court documents that these conditions reflect the vital services provided by the hospitals and the inexperience of Centurion.
"Although a non-profit, Centurion has no demonstrated track record running acute care hospitals in Rhode Island or elsewhere," court documents filed by Neronha state, "nor does it have an independently strong balance sheet to fund [Rhode Island]."
State leadership and health care organizations on Tuesday warned that the hospital closures would significantly weaken Rhode Island's already ailing health care system.
Dr. Dina Himelfarb, president of the Rhode Island Medical Society, said in a statement that the two hospitals "provide essential medical and behavioral health care to thousands of Rhode Islanders and play a vital role in maintaining access to these critical services throughout the state.
"The society urges state leaders to ensure that Rhode Island’s hospitals remain stable, supported, and able to serve their communities over the long term," Himelfarb said. "The potential loss of either facility would have profound consequences for patients, physicians and the entire healthcare system."
In a statement released on Tuesday, Gov. Daniel J. McKee's office said that the administration opposes the hospital closures but is working with the Executive Office of Health and Human Services on contingency plans for patient care, "including engaging with another potential operator that is currently conducting due diligence, reinforcing our commitment to keeping these hospitals open and serving their communities."
“Our priority is to ensure that Roger Williams Medical Center and Our Lady of Fatima Hospital remain open and operating," McKee said. "These facilities are essential to their communities and to Rhode Island’s health care system as a whole."
(UPDATE: Adds Shekarchi statement on name of potential buyer in 4th and 5th paragraphs.)
Jacquelyn Voghel is a PBN staff writer. You may reach her at Voghel@PBN.com.
