Confidential Memo Outlines Plan to Save CharterCARE Hospitals by Merging Them Into Brown Health

Confidential Memo Outlines Plan to Save CharterCARE Hospitals by Merging Them Into Brown Health

GoLocal has received a copy of a memorandum outlining steps to create a long-term solution to preserve CharterCARE hospitals' functions and "stabilize" the Rhode Island healthcare system by merging Roger Williams and Fatima into existing Rhode Island hospital groups.

The document was shared between Brown University Health officials and Rhode Island state leaders; GoLocal has confirmed its veracity.  

The future of the hospitals will be determined by a bankruptcy judge in Texas.

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READ: History of Financial Failure of CharterCARE Hospitals - Underfunded and Financial Schemes

 

The next hearing before Chief Judge Stacey Jernigan of the U.S. Bankruptcy Court for the Northern District of Texas may determine the fate of two of Rhode Island’s hospitals. Presently, no hearing on the matter is scheduled.

The confidential memo outlines the cost and what are deemed to be critical steps needed to move forward.

“Healthcare is an important service and economic driver for the state and region,” says the memo. “We have a crisis in health care in Rhode Island and a CharterCARE bankruptcy and closure will make the situation even worse.”

The memo states that state leaders needed to move quickly to ensure that Rhode Island is able determine its own fate.

The buyer of CharterCARE, Centurion Foundation, has been struggling for a year to close $160 million in bonds.

Centurion, an Atlanta-based non-profit that has never run a hospital, missed a critical deadline before the bankruptcy court when it failed to raise the capital needed to purchase the hospital.

Centurion recently claimed it was close to securing $85 - $90 million, but says it needs the State of Rhode Island to backstop between $18 million and $36 million.

There are strong concerns that even if Rhode Island provided Centurion the tens of millions it is requesting, and it was able to close some financing, that the amount of capital needed to sustain the hospitals is hundreds of millions, and, thus, the hospitals would again be in crisis in just months.

 

Framework Outlined in the Memo

In the proposed deal between Brown Health and the State of Rhode Island, Brown Health would acquire Roger Williams, and, potentially, Care New England would acquire Fatima.

The memo states:

- Convert of the other hospitals (most likely Fatima) to a behavioral health facility — potentially in partnership with Care New England [which operates Butler Hospital].

- Change Roger Williams into a facility with an emergency department and short-stay beds.

Then, over time, move Roger Williams' surgical functions to Rhode Island Hospital and The Miriam Hospital, states the memo.

 

Proposed Financial Structure

The financial terms outlined in the memo are:

- The $50 million presently under the control of the Attorney General — monies negotiated from private equity firm Leonard Green — to Brown Health for capital improvement and recruiting.

- The State of Rhode Island would commit to $100 million for transition costs (transition services, IT, recruitment, and staffing).

- Rhode Island would provide a $150 million interest-free loan to finance the cash flow for the hospitals.

- The State would commit to inflation plus 1% on Medicaid rates for five years for all providers in Rhode Island.

There are other staffing issues that would need to be resolved — the unions would need to accept Brown Health’s pay practices and benefits.

And, during the transition period  — up to five years — the unions would agree not to strike.

Brown Health did not respond to GoLocal's request for comment.