Neronha Pushes Sale of CharterCARE Forward, Centurion and Prospect Approve of AG’s Changes

Neronha Pushes Sale of CharterCARE Forward, Centurion and Prospect Approve of AG’s Changes

The sale of CharterCARE by Prospect Medical Holding to a Georgia company cleared a major hurdle on Friday.

The two companies gave their approval to the Rhode Island Attorney General’s office's announced amendments to the deal.

“Centurion and Prospect are pleased to confirm their acceptance of the Attorney General’s Amended Decision regarding the Hospital Conversions Act application for the sale of CharterCARE Health Partners. This is a welcome step in the regulatory review process and draws us closer to concluding this important transaction for our hospitals and their 2700 employees. We thank General Neronha and his staff for their diligence and for their advocacy on behalf of patients and staff throughout this process,” said the two companies in a press statement on Friday afternoon.

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This is a deal that was announced almost exactly two years ago.

Earlier in the day, Rhode Island Attorney General Peter Neronha’s office announced: “a limited series of clarifications and amendments to the Hospital Conversions Act Decision, originally issued on June 20, 2024, to conditionally approve a transaction that would allow a change in ownership of a health care system that includes two local safety net hospitals, Roger Williams Medical Center and Our Lady of Fatima Hospital, from Prospect Medical Holdings to The Centurion Foundation.”

 

The AG's office said the changes were as follows:

The clarifications and amendments set forth, which address four of the 40 Conditions of the Decision, are intended to provide clarity and promote efficiency in the execution of these Conditions. 

Importantly, this Amended Decision does not change the core findings or conclusions of this Office’s initial review of the Hospital Conversions Act application, nor does it make any changes to the majority of the conditions initially imposed by this Office including:

Condition 13, which requires the creation of a Hospital Fund in the amount of $66.8 million for the benefit of Roger Williams and Fatima. The Fund will include the entirety of the remaining escrow (approximately $45 million plus interest) required to be set aside by Leonard Green and Prospect Medical Holdings for the Hospitals pursuant to this Office’s 2021 Hospital Conversions Act Decision.

The following Conditions have been clarified and/or amended:

-Condition 5 (Post-Closing Contracts) is amended to clarify that terminations for cause and/or promotions may be executed without prior notice but requires notification to this Office within fourteen days following such actions.  
- Condition 6 (Pre-Closing Obligations) is amended to clarify that the funds required to complete plans of correction may come from the existing pre-closing PACE escrow amount.
- Condition 17 (Turnaround Consultant) is amended because the Office learned that the transacting parties had already began their search for a consultant and the submission of a - - Request for Proposals (RFP), as initially required by Condition 17, would create inefficiencies for the Parties.  Therefore, this Office has removed that requirement and replaced it with a requirement that the New CharterCARE System shall share the scope of the role and potential candidates with the Office no later than fourteen days prior to final selection.  - - Furthermore, the Office will not require that there be an escrow created prior to closing to fund the Turnaround Consultant.
- Condition 35 (Annual Reporting) is amended to allow for an alternative mechanism of annual financial reporting compliance that is sufficient to allow for appropriate oversight of Centurion’s financial condition by this Office. Specifically, in the event that Centurion does not produce audited financial statements in a given year, Centurion shall produce unaudited financial statements prepared by an independent third-party certified public accountant.

Lastly, Neronha's office claims the Rhode Island Department of Health (RIDOH) is in the process of reviewing Change in Effective Control applications from the applicants. "This process is in addition to the Hospital Conversion Act review process. When the owners of a hospital (and certain other healthcare facilities) in Rhode Island want to transfer 50% or more of the ownership, assets, membership interest, authority, or control of the hospital, the transacting parties must file a Change in Effective Control application with RIDOH," said Neronha's office.