public policy

Bill to amend Hospital Conversions Act moves forward

Posted 4/3/12

PROVIDENCE – A new version of legislation to amend the Hospital Conversions Act will be brought before the Senate House and Human Services for a hearing on Wednesday afternoon. It includes a key provision sought by Steward Health Care – removal of the current three-year ban on a for-profit hospital from acquiring another nonprofit hospital.

Steward’s purchase application for Landmark Medical Center in Woonsocket is currently under review by state regulations. Legislative action to enable Steward to purchase additional nonprofit hospitals within the Rhode Island market without having to wait three years was made a condition of the asset purchase agreement on March 9 by Superior Court Judge Michael A. Silverstein.

Under the proposed bill, another amendment would put in place an expedited review process, not to exceed 90 days from application, for purchase of financially distressed hospitals. The criteria for financially distressed was defined in the bill as meeting some or all of the following:

  • Operating loss for the two most recently completed fiscal years

  • Less than 50 days cash-on-hand

  • Current asset to liability ratio of less than 1.5

  • Long-term debt to capitalization greater than 75 percent

  • Inpatient occupancy rate of less than 50 percent.

In addition, the bill contains a list of conditions that can be added by the director of the R.I. Department of Health or the state Attorney General as contingencies for approval of any nonprofit hospital conversion. They include:

  • Maintaining a local governing board of the converted hospital

  • Making a financial contribution to state health planning

  • Restrictions on financial incentives to patients receiving hospital care outside of Rhode Island

  • Keeping the converted hospital open for at least a set period of time

  • Making a minimum investment in primary care in Rhode Island

  • To only enter into reasonably necessary contracts with affiliated entities

  • To adhere to a maximum amount of profits to owners

  • To adhere to a maximum amount of corporate profits

  • To commit to a minimum investment to protect the assets, financial health, and well-being of the new hospital and for community benefit.

A version of the amended legislation is available here:

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