A tentative plan to keep two struggling Rhode Island hospitals open through January won praise Friday from a U.S. Bankruptcy Court judge in Texas, although state Attorney General Peter Neronha said the hospitals still face ongoing uncertainty.
The plan would use escrow money set aside after a previous ownership change to fund ongoing losses at Roger Williams Medical Center in Providence and Our Lady of Fatima Hospital in North Providence.
The Atlanta-based Centurion Foundation has set a mid-January target for completing its financing to acquire the hospitals.
“I feel much better today than I have in the past few hearings,” U.S. Bankruptcy Court Judge Stacey Jernigan said during a hearing in Texas Friday.
She noted that Centurion – which won state approval last year to acquire Roger Williams and Fatima – has added Bank of America as part of its effort to sell bonds for the takeover.
The tentative plan is expected to be approved next week.
During a subsequent call with reporters, Neronha cautioned that Centurion still needs to show it can complete its financing after struggling to do so for most of the year.
“If Centurion doesn’t close, well, then the ball is really in the state’s court and at that point it’s closure or some kind of receivership potentially back here,” Neronha said. “That’s not where my focus is right now. My focus is on Centurion closing this deal.”
At the same time, Neronha said Centurion remains the sole suitor of Roger Williams and Fatima after Prime Healthcare of California took itself out of the running. He said Centurion made a greater financial commitment than Prime to put the hospitals on a better footing.
On Thursday, Neronha said that following discussions with Prime about financial commitments necessary to complete a deal, the company advised him “they view the collective hurdles presented by the proposed transaction as too big a challenge for them to take on at this time, and that they wanted to see how the Centurion transaction played out. I told them that I understood, and I do.”
In an email to Ocean State Media this week, Centurion CEO Ben Mingle said Centurion remains committed to preserving the hospitals.
Roger Williams and Fatima are currently owned by California-based Prospect Medical Holdings. Prospect filed for bankruptcy earlier this year after years in which critics lambasted the company and its former majority owner for running down its hospitals and withdrawing hundreds of millions of dollars for senior executives and investors.
Prime began exploring a potential purchase of Roger Williams and Fatima after Centurion struggled to close its financing.
Prime operates Landmark Medical Center in Woonsocket, and a former CEO of the hospital, Richard Charest, now Rhode Island’s Secretary of Health and Human Services, was able to elicit the company’s interest.
Neronha expressed disapproval for Charest’s role in the situation, which he likened to being “a cheerleader” for Prime.
“I don’t think I’ve even seen in my 30 years of public service a situation where a public servant is quoted in a press release by a private party when it is a yet to be concluded transaction,” he said. “It is remarkable and I think it tells us everything we need to know.”
Ashley G. O’Shea, spokeswoman for the Executive Office of Health and Human Services, did not respond to a request for comment.
