A bill to create a multimillion dollar taxpayer backstop for a stalled effort to buy two cash-strapped Rhode Island hospitals sailed through the General Assembly on Tuesday, but not before a few lawmakers lambasted what they call the corrosive effect of private equity on healthcare.
The legislation passed 67-0 in the House of Representatives and 34-0 in the state Senate.
The bill will create an $18 million taxpayer-backed reserve fund. That is meant to boost investor confidence in bonds the Atlanta-based Centurion Foundation is using to finance its planned acquisition of Roger Williams Medical Center in Providence and Our Lady of Fatima Hospital in North Providence.
The hope is that Centurion can turn around the safety-net hospitals, which are losing a combined $45 million a year.
A few lawmakers called out the hospitals’ current owner, Prospect Medical Holdings of California, which bought Roger Williams and Fatima in 2014 and went on to steer hundreds of millions of dollars in dividends from its national chain of hospitals to top executives and investors.
State Sen. Jonathon Acosta (D-Central Falls) described what happened as a cautionary tale that should linger in the memory of Rhode Islanders.
“Some out-of-state private equity folks were getting rich,” he said. “Rich people borrowed money from other rich people using our public hospitals as collateral, and now need us to bail them out with public money so that we can convert the private hospital back to a nonprofit. That is wild.”
Gov. Dan McKee said he plans to sign the bill on Wednesday.
Prospect was initially greeted as a savior in Rhode Island. By January 2025, the company had filed for bankruptcy.
In the House, Rep. Charlene Lima (D-Cranston) expressed outrage.
“Prospect is paying out-of-state attorneys $30 million to protect them in bankruptcy,” she said. “That’s what they care about, protecting themselves. And you should see the salaries [at Prospect] while our constituents are having trouble getting doctors, our doctors are leaving the state, our doctors are filing for bankruptcy.”
Prospect did not immediately respond to a request for comment.
Centurion won state approval to acquire Roger Williams and Fatima in 2014, but it has struggled to finalize its financing.
An escrow fund required by Rhode Island Attorney General Peter Neronha after a change in Prospect’s ownership has helped them to keep operating.
In a statement, Centurion President/CEO Ben Mingle thanked lawmakers for passing the reserve fund bill, saying McKee, House Speaker Joe Shekarchi and Senate President Val Lawson contributed “tireless efforts to help expedite this important legislation.”
“We now look forward to the governor’s signature of these bills, which will keep us on track for closing this transaction by the end of February,” Mingle said.
The state is accepting offers from other entities through Feb. 17 to buy the hospitals.
In a joint statement, Shekarchi and Lawson said Rhode Island could not afford to close hospitals that serve 300,000 patients a year.
“While the entire health sector, nationally, faces many uncertainties in the current environment, this sale,” the top lawmakers said,” which would return the hospitals to nonprofit status, is the best available path forward for a better future for Fatima and Roger Williams, and for public health in Rhode Island.”
