Rhode Island Attorney General Peter Neronha is trying to ward off the closing of two financially troubled local hospitals by seeking more time to find them new ownership.
Roger Williams Medical Center in Providence and Our Lady of Fatima Hospital in North Providence are owned by California-based Prospect Medical Holdings, which filed for bankruptcy in January.
Prospect Medical recently filed a court motion asking for the hospitals to close by Dec. 31 or be taken over by the state since an intended buyer, the Atlanta-based Centurion Foundation, has struggled this year to close the financing to complete the deal.
Prospect Medical, which bought the Rhode Island hospitals in 2014, has been criticized for how its former majority owner diverted hundreds of millions of dollars for investors from its national network of hospitals.
After a hearing in U.S. Bankruptcy Court in Dallas on Tuesday, Neronha stated that he negotiated with Prospect Medical regarding the use of escrow funds previously set aside by the company to help cover losses from Roger Williams and Fatima for November and December.
Speaking by phone on Wednesday from an airport in Washington, D.C., while en route back to Rhode Island, Neronha said the idea is to allow more time — either for Centurion to complete its financing or for another prospective buyer, California-based Prime Healthcare, to make an offer.
“Prospect is presenting doors 1 and doors 2,” Neronha said, referring to the motion to close the hospitals or shift them to the state. “Neither one was acceptable. So what we were negotiating is really a door 3, which was more time for Centurion or Prime or somebody else to do their due diligence and express interest and come in and close this deal, hopefully by the end of the year.”
A status hearing in the case is expected Nov. 18.
Roger Williams and Fatima, which form the bulk of CharterCARE Health Partners, are among the largest employers and biggest taxpayers in their respective communities.
In a court filing ahead of Tuesday’s hearing, Neronha’s office warned that closing the hospitals would have a catastrophic effect on Rhode Island.
While Centurion won approval in 2024 to buy the hospitals, critics expressed doubt about how the company’s financing plan relied on debt, and the nonprofit foundation has been unable so far to raise enough money to complete the transaction.
“They’re down to the last two minutes of the fourth quarter,” Neronha said.
Centurion CEO and Chairman Ben Mingle said in a statement on Wednesday, “Centurion remains fully committed to completing the sale of CharterCARE, regardless of any interest by other parties. We continue to work aggressively with Bank of America and (the Rhode Island Health and Educational Building Corp., a quasi-public agency) to complete the financing and close the sale.”
Prime Healthcare owns Landmark Medical Center in Woonsocket.
Prime began exploring a possible purchase of the CharterCARE hospitals after being contacted by Richard Charest, secretary of Rhode Island’s Executive Office of Health and Human Services, said Laura Hart, a spokeswoman for Gov. Dan McKee. Charest is a former CEO at Landmark.
Hart said McKee continues to support Centurion’s plan to buy Roger Williams Medical Center and Our Lady of Fatima Hospital.
Prime spokesman Noel True said, “While we are in the early stages of reviewing the situation, we are honored by the trust placed in our ability to save, invest in, and improve hospitals so they can continue delivering compassionate, high-quality care to the communities they serve.”
United Nurses and Allied Professionals, the union that represents almost 1,200 workers at the two hospitals, has urged state leaders to remain focused on closing the Centurion deal.
“The importance of keeping these hospitals open and operational can not be understated,” Chris Callaci, UNAP’s general counsel, said in a statement. “There is no more time to waste. We implore state leaders to keep their eye on the ball and focus on getting the Centurion deal across the finish line rather than chasing Prime Health down a rabbit hole.”
