It wasn’t hard to distinguish supporters from opponents in the standing room-only crowd in Rhode Island College’s Alger Hall Tuesday afternoon.
Royal purple T-shirts bearing the logo for the United Nurses & Allied Professionals signifying the union of nurses, therapists and other health care workers urging state regulators to reject the proposed sale of Roger Williams Medical Center and Our Lady of Fatima Hospital.
Amid the purple sea were blazer-clad administrators and hospital leaders, who described the prospective, not-for-profit owners as a cure for the financially weakened hospitals and the patients they served.
The public hearing came amid review of the proposed sale of Our Lady of Fatima Hospital in North Providence, and Roger Williams Medical Center in Providence.
Atlanta nonprofit The Centurion Foundation submitted an application to the state in November proposing to acquire the two community hospitals from LA-based Prospect Medical Holdings.
Under the state’s Hospital Conversions Act (HCA), hospital conversions to nonprofit status must be approved by the Rhode Island Office of the Attorney General and Rhode Island Department of Health. The two state agencies have until June 11 to accept, reject or impose conditions on the sale.
The revised 186-page application along with hundreds of pages of appendices and exhibits was accepted in December, and made public in January. It marks the third attempt by Prospect to offload the Rhode Island hospitals from its portfolio.
Centurion was the only viable entity to respond to Prospect’s solicitation, according to Jeffrey Liebman, CEO and president of CharterCARE, the Prospect subsidiary for Rhode Island. An initial application for sale submitted in May 2023 was rejected; then a second application sent in July 2023 was deemed incomplete.
“Not only was this the only viable candidate, but it was one that had a great solution,” Liebman said, speaking to the crowd of more than 60 hospital administrators and health care workers.
If the sale is approved, Liebman would remain in charge of the hospitals under a new parent entity known as CharterCARE Health of Rhode Island, Inc. He would work alongside a local board of directors composed of community members and Centurion representatives, according to the application.
Other supporters touted the sale as a way to stop the financial hemorrhaging from the troubled hospital system while creating opportunities for research and restoring local control.
Centurion has offered $80 million to buy the two hospitals plus affiliated physician groups, home care and hospice agencies and offices — half of the estimated $160 million value. The nonprofit also plans to invest another $80 million into the hospitals for infrastructure, equipment, services and staff, according to its application. A combination of taxable and tax-exempt bonds worth $133 million would cover the costs for the sale and initial balance sheet investment.
Not only is this the only viable candidate, but it is one that has a great solution.
– Jeffrey Liebman, CEO and president of CharterCARE, the Prospect subsidiary for Rhode Island.
Centurion has also agreed to assume responsibility for $60 million in outstanding loan financing taken on by Prospect, which has created liens against the two community hospitals, according to court filings. The unpaid debt is one example of the private equity firm’s worsening financial condition.
Prospect’s failure to honor the terms of the agreement with the state prompted the attorney general’s office to sue in November, while the state health department issued a separate compliance order. The petition filed in Providence County Supreme Court on Nov. 8, 2023, — before the latest sale application was deemed complete — aims to safeguard the state’s community hospitals against fallout from Prospect’s rapidly accruing debt.
Leaking building, broken IV pumps at Roger Williams
From fiscal years 2015 to 2020, CharterCare lost $88 million, according to the sales application. The subsidiary racked up another $50 million in debt over the next three years, and had $24 million in unpaid bills to vendors at its Rhode Island hospitals as of October 2023, according to court documents.
While hospital leaders lavished praise upon workers for their dedication and compassion, they painted a bleak picture of how financial shortfalls have affected their work, and patient services.
Jennifer Hudson-Parker, clinical nurse manager at Roger Williams, shared a patient review that described rain pouring in through leaks in the building, and broken IV pumps.
“We know private equity hasn’t worked,” said Dr. John A. Stoukides, chairman of medicine at Roger Williams. “We need to get back to local control.”
Centurion pledges to do that.
The application described the Atlanta-based private nonprofit as “nimble,” touting experience in $1 billion worth of real estate transactions, including health care construction and financing, along with sales and leasebacks. Equally important, according to the application, is the non-profit status, which will save an estimated $20 million in taxes and other expenses. It also plans to hire 200 more workers in clinical and support, returning key departments such as human resources and information technology back to Rhode Island.
But the 1,000 union workers within CharterCARE weren’t sold. Their concerns centered on Centurion’s lack of experience in hospital operations or ownership, along with exclusion of financial details from its proposal, which were redacted from public view for confidentiality.
“We’re not saying we don’t want a nonprofit,” said Lynn Redding, a nurse and president of the Local 5092 nurses union at Roger Williams. “What we’re saying is we don’t want this nonprofit because there are way too many unanswered questions.”Questions like the final borrowing costs for the $133 million Centurion has proposed to take on to pay for the sale and inject liquidity into the hospitals. Chris Callaci, UNAP general counsel, warned of “crushing debt” upwards of $279 million including interest based on current rates and a 30-year repayment plan.
Because Centurion would keep its CharterCARE holdings separate from the rest of the company, that also puts the hospitals on the line if those debt payments can’t be made, Callaci said.
“If this application is improved in its current form, the future of these facilities will be in serious jeopardy,” Callaci warned.
The state health department as part of its separate, but simultaneous review of the change in hospital ownership also pointed out Centurion’s lack of experience in hospital operations along with an absence of “substantive information” on how it will make the hospitals financially self-sustainable, according to a Feb. 28 letters obtained by Rhode Island Current.
We know private equity hasn’t worked. We need to get back to local control.
– Dr. John A. Stoukides, chairman of medicine at Roger Williams.
Ben Mingle, Centurion director and president, offered opening remarks Tuesday in which he pledged to work with unions to ensure the hospitals remain viable, and to assume the existing contracts with workers. Mingle declined to comment further on the criticism.
Otis Brown, spokesperson for CharterCARE Health Partners, offered an emailed statement Tuesday night.
“We are confident that our proposed acquisition will bring financial and workforce stability to CharterCARE and allow it to continue its hospitals’ vital mission as Rhode Island’s health care safety net for the metropolitan area and beyond,” Brown said. “In terms of UNAP, we have promised to recognize all current bargaining agreements post sale and have proposed a health and benefits package of equal or even better quality with no increase to members. We remain hopeful that UNAP leadership will rethink their position and partner with us to secure the future of all employees and these important hospitals.”
Attorney General Peter Neronha said in an interview after the hearing that he does not plan to release any more of the redacted application for public viewing.
“The law requires them,” he said of the omissions.
Lawmakers, meanwhile, have stressed the importance of strengthening the state’s health care landscape, including its hospitals and primary care services. Senate President Dominick Ruggerio, a North Providence Democrat whose district includes Our Lady of Fatima Hospital, has emphasized the hospital’s significance to its community repeatedly throughout the legislative session. However, he and other lawmakers have steered clear of policies relating to the sale, instead leaving the review up to other state agencies.
Johnston Mayor Joe Polisena Jr., also stressed the importance of hospital services for his constituents in a written comment, while North Providence Mayor Charles Lombardi said in an interview with The Public’s Radio that he would oppose the sale if it did not provide for the full payment–in-lieu-of-taxes owed to North Providence from the company. Lombardi worried the payment might be reduced under a conversion to non-profit ownership.
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