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By PBN Staff
By PBN Staff
(Updated, 3:24 p.m.)
PROVIDENCE – The R.I. Department of Health has given the final OK to the creation of Prospect CharterCare LLC, a for-profit combination of CharterCare Health Partners and Prospect Medical Holdings, a Los Angeles-based for-profit health care provider.
The new entity will own Roger Williams Medical Center, St. Joseph Health Services of Rhode Island/Our Lady of Fatima Hospital and other health care services providers.
“I hope the implementation of these approvals, as conditioned, will strengthen the fiscal condition of these valued hospitals,” said Dr. Michael D. Fine, director of the DOH. “I also hope the implementation of these approvals, as conditioned, will improve the overall health care provided by our Rhode Island hospitals as we work together to make health care affordable and work together to improve the health of all Rhode Islanders.”
The final decision analyzing and accepting the recommendation of the Health Services Council to approve the deal named five conditions, including the requirement that the new entity retain 110 psychiatric care beds between the two campuses that will “retain or build upon: a)the existing range of unique inpatient psychiatric services … and b) the existing continuum of outpatient psychiatric services.”
In addition, the approval calls for Prospect CharterCare to make a $355,000 payment to the state to settle Medicaid reimbursements for 2006 to 2010, and requires the new entity to participate in Rhode Island’s Medicaid program.
The R.I. Attorney General’s office approved the deal last week, although the approval added 30 conditions relating to documentation and notification of the transaction and the governing of the new entity that Prospect CharterCare needed to meet.
Under the terms of the agreement, Prospect Medical Holdings will provide $95 million to CharterCare over the next four years. Of the $95 million total, $45 million will be subject to regulatory approval to be used for debt reduction and short-term working capital.
Prospect Medical Holdings will provide an additional $50 million over the following four-year period to provide capital for physician network development, facility improvement and technology acquisition.
A Rhode Island for-profit company, Prospect CharterCare LLC, will own the operating entities for the hospitals post-conversion. Prospect Medical will own 85 percent of Prospect CharterCare LLC, and Charter Care will own 15 percent. The Prospect CharterCare governing board will be made up of 50 percent Prospect Medical representatives and 50 percent CharterCare representatives.
CharterCare issued a statement upon release of the final approval needed to consummate the deal, first announced in September, which said in part, “We are gratified by the decisions of Attorney General Peter F. Kilmartin and Department of Health Director Michael Fine, M.D., to grant final approval to our joint venture. … Through our unique and innovative partnership, we look forward to building on the tradition of high-quality, compassionate care at Roger Williams Medical Center and Our Lady of Fatima Hospital and preserving both institutions, as well as Elmhurst Extended Care and the St. Joseph Health Center clinics, as vital components of the Rhode Island health care network.”
Of 14 letters received by the Health Department commenting on the proposed combination, only one, from Prime Healthcare Services, which bought Landmark Medical Center on Dec. 31, 2013, for a reported $62 million, retrieving it from five years in court-supervised receivership. Prime had been looking to purchase CharterCare to create a larger health care network in Rhode Island.