Prime Out of the Running for CharterCARE — Fate of Hospitals May Be Determined on Friday

Prime Out of the Running for CharterCARE — Fate of Hospitals May Be Determined on Friday

GoLocal has learned that Prime Healthcare Foundation has withdrawn as a potential bidder to rescue the bankrupt CharterCARE hospitals.

This leaves the financially fragile Centurion as the only potential bidder, but the Georgia non-profit has been unable to close financing in the past 10 months.

On Friday, in a courtroom more than 1,700 miles away, Chief Judge Stacey Jernigan of the U.S. Bankruptcy Court for the Northern District of Texas may indicate the fate of two of Rhode Island’s hospitals — Roger Williams and Fatima.

GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST

The bankrupt Prospect Medical Holding — which has petitioned Judge Jernigan to close the hospitals — could face a petition from the state of Rhode Island to take them over.

Rhode Island Attorney General Peter Neronha confirmed Prime’s withdrawal.

“Prime has been in discussions with Prospect over the last few weeks regarding how to address (and whether they would assume) about 90 million dollars in post-bankruptcy petition expenses, which someone (certainly not the state) will have to pay or otherwise address.  We are aware of those discussions but have not participated in them because that is not our issue. That issue is very important however; Centurion has agreed to cover those expenses if they close their deal,” said Neronha on Wednesday night in a text to GoLocal.

"Prime has also been in discussions with me and my team as well as Rhode Island Department of Health regarding what I view as certain necessary commitments regarding capital improvements, assumption of existing labor contracts, preservation of existing lines of medical services, who would cover anticipated losses while they managed but did not yet own the hospitals, a management fee they would be paid (none versus how much), and more,” said Neronha.

“Prime advised me (and separately Prospect) today that they view the collective hurdles presented by the proposed transaction as too big a challenge for them to take on at this time, and that they wanted to see how the Centurion transaction played out.  I told them that I understood, and I do,” Neronha added.

"Centurion has an opportunity to close this deal, and their ability to do so is rapidly coming to a head, perhaps as early as this Friday, when they will need to convince the Texas bankruptcy court that they can.  We will, of course, be there, though due to some other commitments, I will participate by video link,” added Neronha.

Late Wednesday night, Prime sent the following statement to GoLocal:

Prime Healthcare Foundation, a nonprofit public charity, sincerely appreciates the time, collaboration, and thoughtful discussions we have shared with state leaders as we explored whether a responsible path existed for the Foundation to help preserve access to care at Roger Williams Medical Center and Our Lady of Fatima Hospital. 

After very careful deliberation, the Foundation’s Board of Directors believes it is most appropriate to allow the State, its partners, and all involved stakeholders to continue through the current process. This decision was not made lightly, and we care deeply about ensuring access to care and our mission of ‘saving hospitals, saving jobs, and saving lives.’ We are honored to continue to serve Rhode Island at Landmark Medical Center, which was saved from bankruptcy and is now award winning for its quality and social responsibility.

 

It should be noted that nothing stops Prime from reconsidering the issue with a last-minute offer to the court.

Sources close to the discussions say that Prime estimates that the total cost to stabilize and improve the CharterCARE hospitals is upward of $400 million, far more than the $150 million Centurion has been struggling to secure over the past 10 months.

 

Questions About McKee Administration’s Role

Further adding to the confusion is the lack of a cohesive strategy from Governor Dan McKee’s administration.

Last month, the United Nurses and Allied Professionals (UNAP)  scheduled a press conference “demanding the State stop interfering in the Centurion deal.”

The union specifically will call on Governor McKee and Secretary of Health and Human Services Richard Charest, a former CEO of Prime-owned Landmark Medical Center, to stop unlawfully interfering with the Centurion deal.

UNAP had flipped its own position and, months earlier, had criticized the deal to sell the hospitals to Centurion.

Now, add that there are more questions about Charest’s role.

Neronha told GoLocal when asked if Charest had acted properly, “Not as a legal matter. Certainly, his publicly stated unconditional championing of Prime was not a benefit in our discussions with them, but they may re-engage at some point. In the end, I think that rescuing these hospitals in a way that would satisfy the bankruptcy judge and ensure the kind of medical care Rhode Islanders deserve was just too big a challenge for Prime.”

Regardless, the fate of the hospitals is unlikely to be determined in Rhode Island, but will be decided in a courtroom in Texas.