New Deal Impacts CharterCARE’s Future

New Deal Impacts CharterCARE’s Future

If CharterCARE’s fate was in question before, now the future of the embattled company and its hospitals, Roger Williams and Fatima, is even more complex.

This past week, bankrupt Prospect Medical Holdings, the parent company of CharterCARE, sold off arguably its most valuable remaining asset to Astrana.

Prospect sold off its 11,000 provider network to Astrana — the healthcare company formerly known as Apollo Medical Holdings, which describes itself as “a physician-centric, AI-powered healthcare company committed to delivering high-quality, patient-centered care.”

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The provider groups involved in the deal are located in Southern California, Texas, Arizona, and Rhode Island.

The sale by Prospect to Astrana may make it more difficult to sell the bonds necessary to save Rhode Island’s third-largest hospital group.

 

Bond Sales Stagnated

For the past two months, the Rhode Island Health and Education Building Corporation (RIHEBC) has been attempting to sell bonds totaling $140,665,000. The money from the bonds is to fund the deal in which Georgia-based Centurion Foundation would take over the CharterCARE hospitals from bankrupt Prospect Medical Holdings. The hospitals include Roger Williams and Fatima.

Centurion has never run a hospital.

Josh Nemzoff, a top national hospital executive, said this latest development is a potential blow to the sale of the CharterCARE bonds.

“[The provider network is one of] the only profitable assets that Prospect owns, and they just sold them, which means that all those profits go to the new owner,” said Nemzoff.

The bonds were pre-marketed for weeks, which included roadshows, online presentations, and one-on-one investor meetings. The marketing started on May 7.

S&P rated the bonds as BB- with a negative outlook.

The sale of the bonds was scheduled to close on May 29; the bonds did not close, and the deal has been floundering. It is now six weeks later.

The Wall Street firm Barclays, the deal's underwriter and the group leading the marketing of the bonds, has been unable to sell a significant amount of the bonds. 

“That means everything that’s left is losing even more money than before, because it’s not offset by these profitable entities. My guess is this will put even more pressure on Prospect and force them to close CharterCARE's sale as quickly as they can. If the Barclays [sale of the bonds] doesn’t go through quickly, there is significant trouble. Now that Barclays has had more than two months to market these bonds, at some point, someone’s gonna say, “This is not working,’” Nemzoff added. 

According to Chris Hunter, a spokesperson for RIHEBC, the bonds are still being marketed.

 

The Deal

According to the press announcement on the deal, “The Company completed the acquisition of Prospect Health for a total purchase price of $708 million, a reduction from the originally announced $745 million in accordance with the terms of the executed Purchase Agreement. The updated purchase price underscores the Company's commitment to disciplined capital deployment, while maintaining full conviction in the value creation potential of the asset. The acquisition of Prospect Health will deepen Astrana's capabilities in providing access to high-quality and high-value care to communities across the country.”

"We are excited to welcome Prospect Health's physicians, providers, and team members to Astrana Health," said Brandon Sim, President and CEO of Astrana. "Together, we will further accelerate our mission to drive consistent, coordinated, high-quality patient outcomes at scale, ultimately driving greater value across the healthcare ecosystem."

 

Potential Big Impact

Rhode Island's healthcare system is now even more stressed.

Layoffs and closures have hit Thundermist, Providence Community Healthcare Centers, Blue Cross Blue Shield of Rhode Island, and Anchor Medical, to name but a few. Anchor, the primary care group that served 25,000 Rhode Islanders, closed last month.

Health insurers in Rhode Island are requesting premium increases of 20% or more.

CharterCARE employs 2,400 full and part-time employees.  Just over 1,100 of those jobs are union.

If the bonds do sell and Centurion takes control, CharterCARE would change from for-profit to not-for-profit, and the respective host cities, Providence (Roger Williams Hospital) and North Providence (Fatima), would lose approximately $6.5 million combined in tax revenues.

The two hospitals, combined, have 552 beds, conducted over 17,000 surgeries in 2024, and saw over 377,000 visits last year.