HCA bill in limbo in Assembly

The fate of several hospitals in the state and whether they remain solvent or dive headlong into bankruptcy may very well sit in the hands of state lawmakers.
Changes to the Hospital Conversions Act have already passed the Senate, leaving the House Corporations Committee to wrestle with the issue. The Senate-passed changes are advantageous to Massachusetts-based, for-profit hospital-operator Steward Health Care Services LLC. The company has made a bid to take over the nonprofit Landmark Medical Center in Woonsocket and its affiliate, the Rehabilitation Hospital of Rhode Island in North Smithfield, both of which have had financial difficulties.
Prior to the May 24 hearing the committee proposed an amended bill with significant changes, making it similar to the Senate bill. That version removes a ban on for-profit hospitals from converting more than one Rhode Island nonprofit hospital to a for-profit in a three-year span. It also allows the R.I. Department of Health and Office of the Attorney General to impose conditions on any conversion, including those keeping the hospital’s ties to the local community. Lastly, it streamlines the application process.
The conversions act could pave the way for Steward to quickly purchase other hospitals in the state which are financially strapped, including The Westerly Hospital, which declared bankruptcy last December.
A concern that was voiced regarding the legislation was an arbitration procedure that said if any transacting party aggrieved by a final order of the department of health or the attorney general can submit to binding arbitration administered by the American Arbitration Association.
“We are not sure if it is workable or not. The attorney general voiced concern that it would even pass constitutional muster,” said Brian Patrick Kennedy, D-Hopkinton, chairman of the committee, who so far has held the bill for study. Attorney General Peter F. Kilmartin has already announced he has approved, with conditions, the proposed sale of Landmark Medical Center and Rehabilitation Hospital of Rhode Island to Steward. Health Director Michael D. Fine has also ruled that Steward’s plans were acceptable from the standpoint of public health.
But the sale is still contingent on the changes sought by Steward to the HCA being approved, said Christopher Murphy, Steward media director.
“There has been discussion with the legislature and the hospital community over the years on how to modernize or refine the conversion act,” said Edward J. Quinlan, president of the Hospital Association of Rhode Island. “This year there has been more visible efforts to amend the legislation, particularly regarding the potential entry of Steward into the Rhode Island marketplace. The interest in amendments being offered this year are directly associated with the circumstances of several hospitals.”
Quinlan referred to the area’s hospitals as a very dynamic marketplace. “But it’s the same everywhere, here and in other states. There are similarities in the marketplace with our neighboring states on Connecticut and Massachusetts. That’s consistent with the times we are in and with hospitals examining – on a constant basis – how best to meet the needs of the communities they serve,” Quinlan said. He also explained that Steward, with its structure of 10 hospitals, has more capability to absorb big losses than one hospital. Since its purchase of six hospitals in November 2010, Steward, owned by private-equity firm Cerberus Capital Management in New York City, has been expanding its hospital system, buying four more hospitals in Massachusetts during the last two years. “Even in Massachusetts they are looked on as being young owners of these hospitals,” he said. “The fact that they are looking at Landmark, close on that particular deal and perhaps have their eye on another hospital really doesn’t concern me. We already have hospital chains in the state like Lifespan and Care New England, although they are nonprofits,” Quinlan said.
Kenneth H. Belcher, president and CEO of CharterCARE Health Partners – a team of Roger Williams Medical Center, St. Joseph Center for Health and Human Services and Our Lady of Fatima Hospital – agrees the time has come to make changes in the law to make it easier for for-profit hospital expansion in the state.
“The current HCA as it is structured for us isn’t working,” he said. “Seven of the hospitals in the state last year have lost money. There are a lot of challenges they face.”
He explained that the formation of the nonprofit CharterCARE combined the resources of both facilities under one roof. In only two years he’s cut $27 million in expenses from the budget. Roger Williams is in the black. Our Lady of Fatima has removed $16 million in debt and should also be in the black within the next year.
Kennedy said that at the time the act was originally drafted, it was done to protect the state’s nonprofit hospitals because Columbia HCA was proposing to buy several in the area. Fifteen years later, the situation has completely changed. “Along with the changes that have taken place in the economy and in the world, there have been many things that have changed. … That boogeyman known as a for-profit hospital is not as scary as it once was,” he said. &#8226

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