PROVIDENCE - R.I. Director of Health Dr. Jerry Larkin on Monday accepted the recommendation of the R.I. Health Services Council to approve applications for the sale of two Rhode Island hospitals to the Georgia-based nonprofit Centurion Foundation.
The R.I. Department of Health said the prospective sale of Roger Williams Medical Center and Our Lady of Fatima Hospital in North Providence by Prospect Medical Holdings Inc. has now received all the state-level regulatory approvals required, following a separate set of approvals in June.
“Rhode Island needs a stable network of hospitals that supports the health and wellness of every community in the state,” Larkin said. “In light of the historical and ongoing financial and operational challenges at the hospitals, RIDOH’s Change in Effective Control decision and our Hospital Conversions Act decision came with conditions carefully developed to restore local control, help stabilize these two facilities and help ensure that the new operators would be positioned to provide consistent, safe, high-quality care.”
The conditions of approval require the applicant to:
- Provide data, including but not limited to, finances, utilization and demographic resident information, to RIDOH upon request
- Maintain national accreditation [for ambulatory surgical centers, home health, and hospice facilities]
- Create a plan for the referral of charity care cases with a minimum of one licensed community health center [for ambulatory surgical centers, home health, and hospice facilities]
- Submit written reports to RIDOH regularly, including detailing any proposed reconfiguration of the composition of the boards of directors
- Abide by the conditions in RIDOH’s Hospital Conversions Act decision
- Those include Centurion is responsible for ensuring the hospitals remain in good standing with financial obligations
- Governing bodies for the hospitals must be maintained and include independent board members and individuals with experience in hospital operations, healthcare, finance, law, business, labor, investments, community purpose, and diversity, and they must represent the diverse populations served by the hospitals
- The transacting parties must hire a chief restructuring officer to manage business affairs, oversee financial management and explore strategic alternatives
- Prospect Medical Holdings must settle outstanding balances with vendors and fund necessary repairs to the hospitals
- The hospitals may not eliminate or significantly reduce healthcare services without approval from RIDOH.
The terms follow approvals with conditions in June by RIDOH and R.I. Attorney General Peter F. Neronha on a Hospital Conversions Act application.
Otis Brown, a spokesperson for Prospect, said the health department approval "is welcome news for our 2700 employees and for the thousands of patients we treat annually. The transacting parties will now focus attention on executing the legal sale closing, scheduled for later in January 2025."
On Nov. 15, Neronha announced Roger Williams Medical Center and Our Lady of Fatima Hospital will retain approximately $45 million in escrow noted in some minor amendments to the Hospital Conversions Act decision from June.
Neronha’s office said the amendments, which conclude the attorney general’s review, addressed some of the 40 conditions within the decision made by the state over the summer to give preliminary approval to the sale.
At the time, Neronha set those conditions to address the “currently precarious status quo,” including having Centurion and seller Prospect Medical Holdings Inc. guarantee they will add $80 million in cash financing to the hospitals’ books.
The conditions also included contributed an additional $66.8 million to a dedicated fund to support the hospitals themselves, not for executive compensation or management fees. That fund will include all of the remaining escrow – approximately $45 million plus interest – from Roger Williams and Fatima.
A week prior to the state giving its early blessing on the sale, Providence Superior Court Justice Brian Stern ordered Prospect to pay more than $17 million to vendors within 10 days after being found it violated multiple terms of a 2021 sale agreement. Prospect said in early July it paid off its overdue hospital bills, but Neronha filed a motion asking Stern to hold Prospect in contempt of court arguing his office had at the time not yet “received sufficient evidence” that Prospect has paid its vendors. Neronha dropped that motion in August after Prospect showed it complied with the judge’s payment order.
(ADDS 16 paragraph with Prospect comment.)
