Nurses Criticize Neronha and RIDOH’s Approval of Sale of Charter CARE

Nurses Criticize Neronha and RIDOH’s Approval of Sale of Charter CARE

On Thursday, Rhode Island Attorney General Peter Neronha and the Rhode Island Department of Health gave the green light for CharterCARE hospitals to be sold by Prospect Medical Holdings to Georgia-based Centurion.

The United Nurses and Allied Professionals (UNAP), the union representing almost 1,200 employees at Our Lady of Fatima Hospital, Roger Williams Medical Center, and Prospect Home Health and Hospice, issued a highly critical statement in response to Neronha’s and RDOH's decision to accept, with conditions, Centurion Foundation’s bid to buy Prospect CharterCare’s Rhode Island healthcare facilities. 

“The conditions set forth in the decision are not nearly enough to ensure the long-term viability of CharterCare’s hospitals and healthcare facilities. Centurion does not have to put up a meaningful amount of their own capital, and the entire transaction relies on saddling these hospitals with more and more debt – to the tune of hundreds of millions of dollars. When you consider the fact that CharterCare’s hospitals and healthcare facilities are losing tens of millions of dollars in operating costs every year, the decision makes even less sense. 

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Since Centurion submitted their application, we have loudly and consistently sounded the alarm about their business model. The math simply does not work without them putting a meaningful amount of their own skin in the game. Our union is disappointed in this decision. Coming on the heels of Prospect’s disastrous ownership of these important community hospitals and healthcare facilities, you would think these conditions would have been much, much stronger. Clearly, that is not what has happened – and the long-term success of Our Lady of Fatima Hospital, Roger Williams Medical Center, and Prospect Home Health and Hospice remains at great risk.”

 

  

Neronha Claims His Decision Gives Protection

According to Neronha’s office, his decision “imposes 40 unique conditions across seven areas, with the following conditions highlighted as particularly critical to ensure the viability of the system and its hospitals.”

Some of those conditions include:

To address the currently precarious status quo and to address the application’s failure to present an adequate level of funding for the hospitals to meet their operating and capital needs:
- Prospect must cure all of the life safety and physical plant violations cited by state and federal regulators, including but not limited to, repair of the roof and inadequate life safety equipment;
- Prospect must come into compliance with the 2021 Decision, including ensuring payment of outstanding accounts payable owed to vendors of the Rhode Island Hospitals;
- Prospect and Centurion must commit to guarantee $80 million in cash financing to add to the books of the New CharterCARE System, regardless of any failure to secure that amount through the bond transaction;
- Prospect and Centurion must contribute an additional $66.8 million to a dedicated fund, toward which Prospect may apply the outstanding escrow funds (~$47 million) from the 2021 Decision, to support the newly non-profit New CharterCARE System—funds which will not be available for Centurion’s management fee or for executive compensation; and
- Centurion’s management fee will be paid only to the extent that the Transacting Parties remain in compliance with all conditions of the Decision;
- To mitigate poor management practices in the past by distant and self-interested owners, the board of the New CharterCARE System must adopt specific best governance practices, include local and community input, and may not alienate, encumber, or pledge New CharterCARE System’s assets without notice to and approval by the Attorney General;
- To address the application’s lack of a credible plan to turn CharterCARE System’s long history of operating losses into New CharterCARE System’s ongoing state of sustainable operations, Prospect and Centurion must fund a turnaround consultant to be approved by the Attorney General;
- To address the application’s reliance on future, contingent events like IRS approval of non-profit status for any chance of success, conditions specifically mandating the timing, level of effort, and manner in which these steps must be completed;
- To ensure that the community’s needs are adequately served, New CharterCARE System must adhere to industry standards for charity care and adequately fund identified community health needs; and 
- To ensure continuity of quality care, the New CharterCARE System must notify the Attorney General of any reductions in workforce that meet a certain threshold, and must maintain the current level of employee benefits during the initial period following the closing of the Proposed Transaction.

“Beyond the numbers, figures, and provisions that make up a transaction are the communities, patients, and providers that these hospitals serve and employ,” said Neronha. “Our conditions aim to ensure that these hospitals continue to deliver quality, accessible, and affordable healthcare, gainfully employ thousands of Rhode Islanders, and successfully operate long into the future.”