Amended hospital act heads to Senate floor

Posted 4/12/12

PROVIDENCE – The R.I. Senate Health and Human Services Committee, by a 5-0 vote on Wednesday afternoon, approved the latest amended version of legislation changing the Hospital Conversions Act, sending it to a scheduled floor vote by the Senate on Thursday.

Steward Health Care got much of what it lobbied for – including the elimination of a three-year waiting period for for-profit hospitals in purchasing additional nonprofit hospitals in the Rhode Island market after completing an initial hospital purchase.

Steward, which currently owns 10 hospitals in Massachusetts and announced plans last week to purchase an 11th hospital there, is interested in further expanding its hospital network into Rhode Island, according to Steward spokesman Christopher Murphy.

The amended legislation also included a new section, strengthening the powers of the state in the development of a unified plan of the state’s health care delivery and financing system, with an initial report to be provided to the governor and the General Assembly by March 1, 2013.

Steward’s application to purchase Landmark Medical Center in Woonsocket and its sister facility, the Rehabilitation Hospital of Rhode Island in North Smithfield, is now under review by state regulators.

Under the newly amended legislation, Steward could complete its purchase of Landmark and also purchase additional nonprofit hospitals in the Rhode Island market in advance of completion of any unified state plan. The two parts of the legislation – regulation of conversion of nonprofit hospitals by both for-profit and nonprofit hospital systems, and the development of a statewide plan for the health care delivery service – are “contemporaneous, not parallel,” explained Sen. Rhoda Perry, chairman of the Health and Human Services Committee.

Steven M. Costantino, secretary of the R.I. Executive Office of Health and Human Services, told the Providence Business News he was in the process of reviewing the newly amended part of the legislation pertaining to statewide planning, which he said he had not seen before. “It would have been nice if we had a plan already in place,” Costantino said.

The amended legislation also enables nonprofit hospitals to acquire other nonprofit hospitals in Rhode Island under an 90-day expedited review, if the director of the R.I. Department of Health determines that the hospital being acquired is operating under significant financial hardship, under one or more of six criteria regarding its financial status, including operating losses for two consecutive years, less than 50 days cash on hand, an inpatient occupancy rate of less than 50 percent, an asset-to-liability ratio of less than 1.5, and a rating of below investment grade by a major rating agency.

To view the amended legislation, click here.

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