Prospect Medical Holdings is failing to meet operating expenses for its two Rhode Island institutions, Roger Williams Medical Center in Providence and Our Lady of Fatima Hospital in North Providence, according to Attorney General Peter Neronha.
“We have some concerns about they’re meeting their expenses, paying their bills, frankly, at the moment, so we are monitoring that very carefully,” Neronha tells The Public’s Radio. He said his office is “prepared to take action if it gets to a point where action is necessary. And that action could come very quickly.”
Neronha declined to specify the amount of delinquent money owed by California-based Prospect Medical. “It’s not an amount that potentially would cause the hospitals to fail,” he said, “but it’s enough that it needs to be addressed and it needs to be addressed right now.’
Neronha said the situation has developed over the last six months, “possibly longer.”
Otis Brown, spokesman for CharterCARE Health Partners, a subsidiary of Prospect Medical Holdings, did not respond to a request for comment.
Prospect Medical “has plenty of money,” Neronha said, and the company has gained notice for paying hundreds of millions of dollars in dividends to top executives, a private equity fund that used to be part of its ownership and other investors.
Neronha offered this reassurance about Prospect Medical being behind in paying operating expenses.
“The people who use Roger Williams and Fatima hospitals should be reassured by the fact that we are aware of it when it happens, and we take strong action to make sure that it is remedied as quickly as possible,” Neronha said. “And when I say as quickly as possible, that means without having a negative impact on the hospitals’ delivery of services.”
Prospect Medical Holdings agreed to Neronha’s demand in 2021 that it create an $80 million escrow account for its Rhode Island hospitals as part of a change involving Prospect Medical’s ownership.
As The Public’s Radio reported earlier this week, $45 million of the original $80 million in escrow is left, although it remains unclear what kind of capital expenditures have been made at the two Rhode Island hospitals since 2021.
If necessary, Neronha said, money from the escrow -- meant to leverage spending on operating expenses and capital expenditures -- could be used to directly pay operating expenses.
Fatima and Roger Williams operate as safety-net hospitals and they are among the largest employers in their respective communities.
Prospect Medical has closed hospitals in states including Pennsylvania, and a once bustling local hospital in Connecticut is now a shell of its former self, according to a report this week in the Connecticut Mirror.
The attorney general said there was at least one earlier instance when his office had to tell Prospect Medical’s legal representation to put more money in and that it proceeded to do so.
Neronha said he spoke Wednesday morning with Prospect’s local counsel, Richard R. Beretta Jr of Adler Pollock and Sheehan, and urged him to get the company to pay its delinquent operation expenses.
If the company does not comply, Neronha said, the next step would be to go to court to enforce the terms of the 2021 agreement.
Ian Donnis can be reached at idonnis@thepublicsradio.org
