PROVIDENCE – Senate President Dominick J. Ruggerio on Tuesday said he’s filed legislation that would impose a one-year moratorium on hospital conversions involving for-profit corporations.
“The questions swirling around the financial instability of [Our Lady of Fatima Hospital] and [Roger Williams Medical Center] stem in no small part from their for-profit status,” said Ruggerio in a statement, referring to Prospect CharterCARE LLC’s two Rhode Island hospitals. “Public allegations have been made that the hospital network they are a part of has incurred over a billion dollars in debt, and that the owners have personally taken over $500 million in dividends. They are insolvent and headed for bankruptcy, according to allegations made in court filings.”
Ruggerio said he has called upon Sen. Louis P. DiPalma, D-Cumberland, to convene the R.I. Senate Rules, Government Ethics & Oversight Committee to review matters related to Fatima, for-profit hospitals and hospital conversions. The hearings are expected to begin Jan. 20 and will include a review of the applications pending for a transfer of control at Fatima and Roger Williams hospitals.
Prospect CharterCARE RWMC LLC, doing business as Roger Williams Medical Center, filed an application in November 2019, which was resubmitted in February 2020, for a change in ownership of its ultimate parent company, Ivy Holdings Inc., to effectuate a buyout of the private-equity investors. Roger Williams Medical Center is owned by Prospect CharterCARE LLC, which is 85% owned by Prospect East Holdings Inc., which is wholly owned by Prospect Medical Holdings Inc., which is wholly owned by Ivy Intermediate Holdings Inc., which is wholly owned by Ivy Holdings Inc. The buyout would grant Prospect Medical Holdings CEO Sam Lee and President David Topper sole ownership of a newly formed parent company, which would be named Chamber Inc. The proposed acquisition price of $11.9 million would come from available Prospect Medical Holdings corporate cash, according to the application.
Ruggerio also cited the shutdown of Memorial Hospital in Pawtucket and the impact it has had on the health care sector in Rhode Island amid the COVID-19 pandemic as a reason for the bill. Care New England Health System received approval to close Memorial in 2017. The hospital was losing tens of millions of dollars per year when Care New England proposed its closure.
“We have seen the ripple effect that the closure of Memorial Hospital had on hospitals across the state. Hospital facilities and staff are stretched to their limit, and the pandemic has only exacerbated the strain. The strength of our overall statewide hospital network is critical to the well-being of Rhode Islanders. We need to conduct a comprehensive review of for-profit hospital entities and their impact on the financial condition of the hospitals they operate and the broader health care network in the state.”
The legislation, if approved, would not affect the proposed merger between Lifespan Corp. and Care New England, as both are nonprofit entities, but would impact the proposed acquisition of CNE by Pennsylvania-based StoneBridge Healthcare LLC, which offered a $550 million acquisition package in December.
Chris Bergenheim is the PBN web editor. You may reach him at Bergenheim@PBN.com.