UNAP Oppose Prospect's Sale of CharterCARE, Centurion Fires Back
GoLocalProv Business Team
UNAP Oppose Prospect's Sale of CharterCARE, Centurion Fires Back
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UNAP is publicly urging the Department of Health and Attorney General Peter Neronha to reject Centurion’s application. UNAP had approved the initial sale of CharterCARE to Prospect more than a decade ago.
Centurion fired back at UNAP's charges -- see below.
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The union said the proposed business model "is not credible or viable, starting with the fact that Centurion has never owned or operated a hospital or healthcare facility."
The union also noted that Centurion "will not be bringing any new capital to these facilities, at a time when that’s what is needed most."
UNAP on Record
“We took a good hard look at the application when it was made public, and it didn’t take long to find a business model that is simply not credible or viable,” stated UNAP General Counsel Chris Callaci. “There are a number of significant issues in Centurion’s application, with the most glaring being the fact that they are an unknown entity that has never owned or operated a hospital or healthcare facility. They are not bringing any capital to the table and plan to saddle our community hospitals with more than $133 million in debt – money they aren’t on the hook to pay back. The closer we look, the worse this application gets.”
UNAP cited a number of major concerns within Centurion’s application, including:
"Centurion doesn’t own or operate any hospitals and doesn’t know how to.
Centurion knows that CharterCARE (Roger Williams Medical Center, Fatima Hospital and Prospect Home Health and Hospice) continues to lose money, which is unsustainable. But Centurion is not going to make any financial commitments to CharterCARE facilities.
Centurion is not putting up any of their own money in this sale. Instead, they expect these community hospitals and healthcare facilities to borrow more than $133 million to stay afloat. Centurion is not on the hook to pay this money back. CharterCARE facilities will have to pay it back with money they don’t have. Since these hospitals operate at a loss, there are no revenues to pay this debt down.
According to Centurion, these community hospitals and healthcare facilities are supposed to survive by finding cost-savings and new revenue, which they haven’t been able to do for decades now.
At the same time that Centurion refuses to invest any money in these healthcare facilities, they insist on making CharterCARE’s hospitals and facilities pay them numerous fees and charges. Worse, Centurion refuses to tell us what the fees and charges are for, or how much they will be."
Callaci continued, “We are going to do all we can to secure the future of CharterCARE. But having an out-of-state corporation from Georgia come to Rhode Island to take advantage of us is not the answer. This company wants to make us borrow a ton of money we can’t pay back. This doesn’t get us anywhere. In fact, it makes our financial situation much worse than it already is.”
“Having an out-of-state corporation come to RI and take already scarce healthcare dollars away from us in the form of hidden fees and charges is the opposite of what we need to provide quality care," Lynn Blais, R.N., President of UNAP and a registered nurse at Fatima Hospital. "Coming on the heels of Prospect’s disastrous ownership of these important community hospitals and healthcare facilities, it is imperative that the next owner is willing to put healthcare first and be a true community partner – someone who is willing to invest in the patients, the workforce, the hospitals and our community. Based on this application, Centurion clearly does not fit that bill.”
Centurion Fires Back
The Centurion Foundation's statement in response to UNAP's release is as follows:
We are disappointed that UNAP has chosen to oppose the proposed acquisition of CharterCARE by The Centurion Foundation.
We reiterate that Centurion is committed to partner with union and non-union employees alike to continue the outstanding work of these two respected hospitals. To that end, Centurion has made a commitment to assume UNAP’s existing collective bargaining agreements should they become owners, and we have offered a health and benefits plan that doesn’t increase members’ costs. Demanding economic advances well beyond what UNAP members are receiving now is unrealistic and could threaten job security for employees.
We have been at the negotiating table with UNAP for several months, having good discussions, but only now have these concerns surfaced. UNAP has made several negotiating demands that are not achievable within CharterCARE’s present financial condition, nor are they reflective of current market and labor realities around the Rhode Island hospital industry. UNAP should not make unmet union demands a condition of approval of Centurion’s proposal to acquire CharterCARE.
We want to be very clear. Centurion’s proposal provides the best path to economic and workforce stability for CharterCARE. In fact, the Centurion acquisition will recapitalize CharterCARE and, ironically, provide the financial wherewithal for CharterCARE to offer our union employees, all employees, fair and market competitive compensation, which our present financial conditions prevent. This model will also return jobs to Rhode Island that have been handled by a regional and corporate office.
In response to UNAP’s statement, we wish to make the following clarifications:
One, Centurion is a financing company, not a hospital operator, and its role here is to provide innovative options to stabilize and recapitalize CharterCARE.
Two, Centurion’s business model includes reliance on local management who can effectively and efficiently operate CharterCARE’s hospitals, the same local leadership who helped negotiate the latest 3-year labor agreements with UNAP.
Also, we look forward to educating everyone during the regulatory review process on these and other facts of the Centurion plan:
- The Centurion Foundation is a non-profit corporation dealing almost exclusively with charitable organizations to increase access to health care while also lowering costs. Its business model is completely opposite of the for-profit, private equity approach. It’s also an innovative, industry-proven model given that they successfully partnered with 11 non-profit health systems realizing close to $300 million in savings.
- Centurion’s proposal will return CharerCARE to non-profit status and decouple it from Prospect Medical Systems, providing an approximate $17 million improvement to the bottom line that will immediately strengthen CharterCARE’s financial position.
- At the close of the acquisition transaction, CharterCARE will receive an $80 million cash infusion to recapitalize the organization. This capitalization meets the industry standard on how to properly finance a not-for-profit health system.
- Centurion’s proposal will preserve local control and independence under the direction of a new board and will rely on local management, assuring an undivided focus on meeting the needs of Rhode Island citizens.
- CharterCARE’s new board and management team will reinvest any profits back into the health system, ensuring that our hospitals continue to meet the needs of the communities served.
- Centurion’s plan assures local for CharterCARE’s $350 million in annual cash collections. No monies will flow out of state.
- Centurion will receive one set annual fee, there are no extraneous fees or charges, as is outlined in the application.
- CharterCARE will establish fundraising programs and activities and will identify worthwhile local entities for charitable investments.
- CharterCARE will partner with key organizations to improve healthcare and the quality of life in Rhode Island.