Kilmartin approves CharterCare, Prospect Medical venture
THE ATTORNEY GENERAL on Friday approved an application by CharterCare Health Partners and Prospect Medical Holdings to form a new for-profit hospital venture. The R.I. Department of Health still needs to weigh in on the application before the venture can go forward.
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, the release stated.
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.
“The transacting parties have worked diligently to provide regulators with the necessary documentation and information throughout this review process to make this decision, a decision I believe is in the best interest of Rhode Island’s health care marketplace, the community, the employees and most importantly, the patients,” said Kilmartin in a statement.
The attorney general’s approval contained a list of 30 conditions under the Hospital Conversion Act related to documentation and notification of the transaction and the governing of the new entity. The R.I. Department of Health, also expected to issue its final decision on the venture Friday, had not responded to requests regarding the announcement of a formal decision before the publishing of this article.
“In addition to the significant capital investment provided to CharterCare, Prospect has made a commitment to maintain the Catholic identity of St. Joseph Health Services and Fatima Hospital,” Kilmartin added. “It was clear from comments by patients, employees and the community that it was important that the hospitals stay true to their Catholic heritages and continue to adhere to the standards of excellence of care and faith the facilities are known for.”
A spokesperson for CharterCare did not immediately respond to requests for comment on the announcement of Kilmartin’s approval.