After a yearslong review process, state health regulators have granted final approval to the proposed sale of Roger Williams Medical Center and Our Lady of Fatima Hospital, opening the door for a nonprofit to take over ownership of the struggling Rhode Island hospitals from a for-profit private equity firm.
Otis Brown, a spokesman for the hospitals’ current operator CharterCARE, a subsidiary of Prospect Medical Holdings, said the group expects to finalize the sale in January 2025.
The buyer, a Georgia-based nonprofit called the Centurion Foundation, plans to pay for the hospitals with borrowed money raised through tax-exempt bonds. A quasi-public state agency that is facilitating the issuance of those bonds, the Rhode Island Health and Educational Building Corporation, is still vetting the financial viability of the transaction.
Executive Director Dylan Zelazo said his agency’s final review is unlikely to be done in time for its monthly board meeting on Dec. 11.
“As we progress through due diligence and move towards a marketing of the bonds in a potential sale, that could be a special meeting later in the month of December, or it could be a meeting in the month of January,” Zelazo said.
If the sale goes through, two hospitals that offer crucial psychiatric and medical treatments will get another chance to figure out viable business models. Roger Williams Medical Center in Providence and Our Lady of Fatima Hospital in North Providence have both been losing money for years.
Sandra Powell, deputy director for the Rhode Island Department of Health, said the hospitals were in danger of closing if Prospect Medical Holdings did not find an interested buyer. The Department of Health granted final approval to the sale on Monday afternoon, following the recommendation of the state’s Health Service Council.
A union representing many of the hospitals’ staff members, the United Nurses and Allied Professionals, has criticized the proposed sale at public hearings. Union leaders fear that if the hospitals were already unprofitable, taking on new debt will only make it more costly to operate them.
Powell said state regulators imposed conditions on the sale to make the hospitals’ finances more transparent to state regulators. A Rhode Island Department of Health press release states that its decision requires Centurion to provide the department with data “upon request” concerning the hospitals’ “finances, utilization, and demographic resident information.”
Powell said the conditions also require the Centurion Foundation to hire a chief restructuring officer who will report to the hospitals’ respective boards of directors and the department of health.
“Their job is to try to look at the hospitals and how they work in their totality, and to offer recommendations to the board to try to move the hospitals into the black,” Powell said.
According to the press release, other conditions on the sale include:
- Governing bodies for the hospitals must be maintained and include independent board members “with experience in hospital operations, healthcare, finance, law, business, labor, investments, community purpose, and diversity, and they must represent the diverse populations served by the hospitals.”
- Prospect Medical Holdings must settle “certain outstanding balances” with vendors and fund “necessary repairs” to the hospitals.
- The hospitals may not eliminate or significantly reduce healthcare services without approval from the Rhode Island Department of Health.
“By transitioning to new ownership, we’re working to restore local control of these hospitals,” Powell said in an interview. “Although Centurion is based in Georgia, the local operators, the current CEO, the doctors in the leadership team at the two hospitals, are going to be running and managing the day to day operations.”
