Landmark, Caritas to negotiate merger

LANDMARK MEDICAL CENTER has been given the go-ahead to negotiate exclusively with Caritas Christi Health Care. /
LANDMARK MEDICAL CENTER has been given the go-ahead to negotiate exclusively with Caritas Christi Health Care. /

(Updated, 3:00 p.m.)

WOONSOCKET – Landmark Medical Center, the financially troubled hospital that put itself into receivership last year to get time to find a buyer or merge with another entity, received court approval Thursday to negotiate a merger with Caritas Christi Health Care.

R.I. Superior Court Judge Michael Silverstein approved Landmark’s request to enter into exclusive merger negotiations with Caritas, the Woonsocket hospital said in a news release Thursday. The request was presented to the court by Landmark’s special master, Jonathan N. Savage.

Talks have been ongoing for months between Landmark and Caritas, the Archdiocese of Boston’s chain of six community hospitals, but until now both sides had kept the negotiations under wraps.

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A deal with Caritas “would ensure Landmark continues to provide the same high-quality hospital care, as it always has to the people of northern Rhode Island,” Savage said.

Neither Dr. David R. Gifford, director of the R.I. Department of Health, nor R.I. Attorney General Patrick C. Lynch objected to the request. Under a rigorous process outlined in state law, both their offices would have to review any deal reached by the two sides before it could be finalized.

“Landmark is an integral part of Rhode Island’s health care delivery system,” Gifford said in a statement. “I am hopeful today’s announcement will bring much needed financial stability to Landmark.”

Caritas Christi is the second-largest health care system in New England, with 12,000 employees, six hospitals and several community-based facilities in Eastern Massachusetts, Southern New Hampshire and Rhode Island, including St. Anne’s Hospital in Fall River.

Like Landmark’s, much of Caritas’ patient base is low-income and urban. But while the Boston chain’s finances are far stronger than the Woonsocket hospital’s, it too has struggled, losing $20.4 million in the fiscal year that ended Sept. 30, 2008.

Two years ago, Ascension Health of St. Louis announced plans to buy Caritas but ultimately backed out because of its financial condition.

However, Caritas officials recently told The Boston Globe that a major overhaul was turning the company around, and that they expect to post operating income of $31.1 million for the fiscal year ending that ends next Wednesday, Sept. 30.

Landmark entered receivership in June 2008 after struggling for years because of the cost of caring for the poor and low reimbursement rates from public and private payers. The hospital lost $6.14 million last year, according to the R.I. Department of Health, although that was reduced from an $8.09 million loss in 2007 due to deep cost-cutting by management.

Gov. Donald L. Carcieri issued a statement hailing the proposed merger and saying he plans to meet with Dr. Ralph de la Torre, president and CEO of Caritas, to discuss it.

“Caritas Christi has a reputation of resurrecting financially struggling hospitals through innovative new programs,” Carcieri said. “I am confident they will repeat their success here with Landmark.” The governor also said it is “critical” that the roughly 1,200 jobs at Landmark are preserved.

Should Landmark merge with Caritas, it would be the second independent community hospital in Rhode Island to join forces with a religious institution. Roger Williams Medical Center is in the process of merging with St. Joseph Health Services, the Diocese of Providence’s health care system.

Gifford’s office has already approved the Roger Williams-St. Joseph deal, while Lynch is still reviewing it.

Richard R. Charest, Landmark’s president, noted in a statement that the hospital had gone into receivership last year “expressly to protect Landmark’s assets and to extend our operations until we could successfully identify and negotiate with a strategic alliance partner.”

Charest added: “This is a great day for Landmark, its employees, the Greater Woonsocket community, and most importantly, the patients who utilize the critical services we offer on a daily basis.”

Caritas CEO de la Torre also attended Thursday’s court proceedings. Landmark will remain under court-supervised receivership during the negotiation process, the hospital said.

Landmark Medical Center is a 214-bed, acute care hospital, providing emergency, diagnostic, medical, surgical, psychiatric, cancer, cardiac and obstetric care. It handles about 7,000 inpatient visits, more than 45,000 emergency room visits and 130,000 outpatient visits annually. Additional information is available at LandmarkMedical.org.

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