PROVIDENCE — The R.I. Department of Health has granted Care New England’s joint application with Partners Healthcare of Massachusetts for an expedited review of its acquisition by the Boston-based hospital system under the R.I. Hospital Conversion Act.
CNE had cited its fiscal year-to-date $40 million loss, mostly attributed to the shuttered Memorial Hospital of Rhode Island in Pawtucket, as a significant financial hardship in the application to accelerate the review of its merger with Partners.
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In a brief letter sent to the parties, RIDOH Director Dr. Nicole Alexander-Scott wrote that after a review of the application, “RIDOH has determined that Care New England operates one or more distressed Rhode Island hospitals and hereby grants this request for expedited review.”
Under the HCA, in addition to qualifying as distressed, the hospital system must meet one or more of the following criteria:
- 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 major 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. Combined with a $33.7 million first-quarter operating loss, the company showed an operating loss in the first two fiscal quarters of a combined $40.7 million.
However, the company estimated that without the burden of the recently shuttered Memorial Hospital, it would have seen a $4.4 million profit. Dr. James E. Fanale, president and CEO, called that a sign of an effective turnaround in action.
Still, according to an RIDOH spokeswoman, Butler Hospital met the criteria for a distressed hospital based on operating loss, days cash on hand and current asset to liability ratio.
Lifespan Corp. expressed surprise that Care New England qualified for the expedited review.
“Given Care New England’s reported strong financial performance, we do not believe they meet the criteria, which includes operating one or more distressed hospitals in Rhode Island, to qualify for an expedited review,” said David Levesque, spokesman for Lifespan.
“We respect the decision of the Department of Health and trust they will do the appropriate due diligence to ensure we keep health care and jobs in Rhode Island,” Levesque said.
An expedited review is typically completed within 90 days instead of the standard review of 120 days.
An expedited review also does not require an informational public hearing. Public notification of the review being undertaken is done 30 working days after a standard review begins instead of 20 with an expedited review. Also, an expedited review does not give concrete deadlines for staff assessment of the completeness of the application, resubmission of the application and reassessment of completeness, as opposed to specific deadlines for a standard review.
According to Sophie O’Connell, spokesperson with RIDOH, the department has not yet received an application for Partners’ acquisition of CNE, only the request for the process to be expedited.
Rob Borkowski is a PBN staff writer. You can reach him at Borkowski@PBN.com.
