Roger Williams Medical Center in Providence and Our Lady of Fatima Hospital in North Providence have been losing money for years. According to Rhode Island Attorney General Peter Neronha, that’s because the California hedge fund that owns them has prioritized investor returns over patient care.
California-based Prospect Medical is now trying to sell these two Rhode Island hospitals to an Atlanta-based nonprofit called the Centurion Foundation.
But Prospect, a national hospital chain based in Los Angeles, ended up filing for Chapter 11 bankruptcy protection last month before it could complete the sale. The company recorded debts up to $10 billion.
The bankruptcy filing meant a judge needed to approve the sale, and time was of the essence because the company could not afford to keep running the hospitals.
Even so, various stakeholders opposed the sale for different reasons.
Rhode Island’s attorney general attached a list of 85 conditions that must be met before a new owner can take charge.
Federal regulators from the Centers for Medicaid and Medicare Services attached a laundry list of conditions too, as did the United Nurses and Allied Professionals (UNAP), the union representing 1,200 employees at the two hospitals.
At a hearing in Dallas Wednesday, Chief Judge Stacey G.C. Jernigan of the U.S. Bankruptcy Court of the Northern District of Texas heard from state and federal officials, lawyers, bankers, and others before giving the green light.
“The court believes that all objections have been resolved, withdrawn, or overruled,” she determined. “So with that, the court will approve the transaction.”
That means the sale can go ahead, with a closing date set for 30-to-60 days.
Centurion has not yet come up with financing for the deal, but Anne Wallace, an attorney for Sidley Austin LLC representing the hospital’s current owners, indicated that Centurion’s financing was contingent on a closing date.
Neronha said in a statement, “The bankruptcy court’s approval of this sale provides reason for cautious optimism.”
While Nehrona applauded the idea that the hospitals will no longer be owned by a private equity firm, he emphasized there is still work to be done to meet the conditions set out by the state.
“These safety-net hospitals are absolutely critical for maintaining delivery of safe, affordable and accessible health care services in Rhode Island. Roger Williams and Fatima provide services to largely underserved and underinsured communities, and we must maintain their viability. And in order for us to give these hospitals a fighting chance, our conditions must be met. If all parties meet our conditions as they say they intend to, today brings us one step closer to the finish line.”
Dr. Jerry Larkin, Director of Health for the Rhode Island Department of Health, issued a statement saying he was pleased by the court’s decision to allow the sale to go forward.
“While some steps in this transaction are still outstanding, we are committed to the two facilities having new ownership,” he said. “Rhode Island needs a stable network of hospitals that supports the health and wellness of every community in the state.”
This story was reported by The Public’s Radio.
