RI’s Healthcare System Spirals Into Chaos: Mega-Mergers, Closure Threats, Costs Climbing
GoLocalProv News Team
RI’s Healthcare System Spirals Into Chaos: Mega-Mergers, Closure Threats, Costs Climbing
The healthcare sector dominates both the well-being of Rhode Islanders but is also one of the most critical business sectors, employing approximately 50,000.
But now, nearly every major healthcare company is in a major transition fraught with legal, regulatory and financial issues.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTThe three hospital groups in Rhode Island— Lifespan, Care New England and CharterCare are all in flux.
On Thursday, GoLocal reported that Prospect Medical Holdings informed the Department of Attorney General and the Department of Health that proposed financial conditions from the Attorney General associated with an ongoing Hospital Conversions Act Application will jeopardize the future operations of Roger Williams Medical Center and Our Lady of Fatima.
The showdown, if it comes to a closure, would mean the loss of 2,800 jobs between the hospitals.
Prospect operates under the CharterCARE brand in Rhode Island and is a for-profit -- it pays the City of Providence $2.8 million in taxes and North Providence $875,000.
Attorney General Peter Neronha is reportedly demanding the company place $120 to $150 million in an escrow account in exchange for his approval of the company’s ownership conversion. Prospect claims the amount is unprecedented in the United States.
Rhode Island Speaker of the House Joe Shekarchi said, “This news is very concerning because these are two well-respected hospitals with thousands of dedicated health care employees serving the patients of our state. I have confidence in the review that the Attorney General is undertaking and I look forward to learning the outcome.”
United Nurses and Allied Professionals President Lynn Blais, RN, said, ”Fatima has and will continue to exist to serve our families, friends, and neighbors. Prospect cannot arbitrarily close the doors because they didn't get their way.”
The union has had numerous battles with the CharterCare ownership group over the past seven years. Prospect was tied to the collapse of the St. Joseph pension fund. The company recently made a $27 million settlement payment.
“Sam Lee and David Topper have dragged hundreds of millions of dollars from this community. The Attorney General is right to insist on conditions that secure the continued operation of these hospitals. We stand with him," added Blais. “We fully expect state regulators to hold the wealthy owners of Fatima and Roger Williams accountable going forward."
The ownership conversion has drawn the attention of national and local media due to questions about the deal and the exit of private equity fund Leonard Green.
A December Wall Street Journal report raised questions about the controversial debt-financed dividend payout structure being used by Prospect and Leonard Green.
The Wall Street Journal reported, “Over the last decade, Prospect paid its shareholders, the biggest of which is Leonard Green, more than $500 million in dividends from these hospitals, while loading Prospect’s balance sheet with new debt, according to a debt prospectus and Moody’s.”
The consulting group hired by Neronha gave the green light to the hospital conversion for Prospect Medical Holdings to transfer its ownership on CharterCare to another corporate entity.
The nearly 900-page report by Neronha’s consultant Affiliated Monitors, Inc (AMI) the report concludes, among other things, that Prospect Medical Holdings, Inc. has met its capital commitment requirements that were required under the preceding conversion that took place in 2014. The question was did CharterCare and its owner Prospect make the investments it promised over the past seven years.
Governor Dan McKee, who GoLocal has learned has been trying to lower the temperature in the conflict between Neronha and Prospect, said in a statement, “As Governor, my objective is to protect Rhode Island’s health care system and preserve patient access to critical services. I urge all parties involved in the transaction to come together to reach an agreement that is in the best interest of the people of Rhode Island.”
Senate President Dominick Ruggerio said regarding Thursday’s developments regarding Fatima and Roger Williams, “Fatima and Roger Williams Hospitals are essential to the health and well-being of our communities. I am confident that the Attorney General’s scrutiny will ensure the long-term viability of our community hospitals. This review is a central component of protecting the state’s health care system. I look forward to reading the Attorney General’s report tomorrow.”
As GoLocal reported this week, Lifespan has gobbled up one of the largest physician groups in Rhode Island with little attention. Lifespan, the largest hospital group in the state, has now acquired Coastal Medical in a deal the two healthcare entities have been working on for over a year.
Lifespan is also trying to finalize a merger with Care New England -- the state's second-largest hospital group -- in a merger that is expected to spark a major review by the Federal Trade Commission due to anti-trust concerns.
The deal takes the for-profit physician group off the tax roll according to multiple sources and documents filed with the state over a year ago.
The acquisition of Coastal Medical by Lifespan seems to skirt the state’s regulatory structure as one is a hospital group and the other is a practice. Thus, there is no merger review as in the case of hospitals.
Neronha, whose wife is a long-time physician at Coastal, has refused to respond to questions about the merger and if it should be refused due to the size of the two entities, as Coastal is the largest primary care group in the state.
Rhode Island released data that show for the year prior to the pandemic, healthcare costs were 28% higher than the goal set by Governor Gina Raimondo’s administration.
On Thursday, the Rhode Island Health Care Cost Trends Steering Committee announced that health care spending per capita in Rhode Island grew 4.1% between 2018 and 2019 -- pre-pandemic -- producing health care spending of approximately $8,949 per covered Rhode Islander. This rate of growth exceeds the health care cost growth target of 3.2% established by the Steering Committee in 2018.
“Public transparency of health care cost growth in Rhode Island is a central tenet of the Rhode Island Health Care Cost Trends Project,” said co-chair Patrick M. Tigue, Health Insurance Commissioner at the State of Rhode Island Office of the Health Insurance Commissioner. He added, “These data show that we still have work to do to lower health care cost growth in order to improve affordability for Rhode Islanders.”
Even the state's hospital -- Eleanor Slater -- is immersed in a range of controversies and questions about its future and the quality of care at the facility.