Steward: Eliminating waiting period matters for Landmark deal

PROVIDENCE – A three-hour hearing was held Tuesday evening on legislation filed at the request of Steward Health Care before the R.I. House Corporations Committee. But the import of the legislation was revealed in the Statehouse corridors after the hearing concluded by Steward spokesman Christopher Murphy. Steward’s ability to purchase additional community hospitals in the Rhode Island market in a timely fashion, he told reporters, would be one of several “important factors” in Steward’s final decision to move ahead with Steward’s proposed purchase of Landmark Medical Center in Woonsocket.

The proposed bill, 2012-H7283, sponsored by House Majority Leader Nicholas A. Mattiello, seeks to eliminate the current three-year waiting period under the state’s Hospital Conversions Act that limits for-profit hospitals from purchasing additional nonprofit hospitals in Rhode Island after an initial purchase. A hearing on the Senate version of the bill, 2012-S2180, sponsored by Sen. Roger A. Picard, D-Woonsocket, is scheduled for Wednesday.

Steward’s $71.6 million application to purchase Landmark in Woonsocket and the Rehabilitation Hospital of Rhode Island in North Smithfield is now being reviewed by state regulators at the R.I. Department of Health and the R.I. Attorney General’s office. A decision is expected within the next 160 days.

Steward, a Boston-based, for-profit hospital system, was created in November 2010 with the purchase of six hospitals in the former Caritas Christi Health Care system by Cerberus Capital Management, a private-equity firm in New York City. Since that time, Steward has pursued a policy of acquisition, purchasing four additional Massachusetts hospitals and bidding for Landmark in Rhode Island. It is also exploring the potential to purchase other community hospitals in Rhode Island.

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In the fall of 2011, Steward retained two of Rhode Island’s top lobbyists, Joseph Walsh and Robert D. Goldberg, in part to help orchestrate the push for the legislated change in the three-year waiting period. At the hearing, both Walsh and Goldberg declined to answer specific questions about their lobbying activities, referring all questions to Steward spokesman Murphy. Murphy, in turn, said repeatedly that he was “unaware” of Walsh’s and Goldberg’s activities, and could not comment. Among the entities that testified in favor of the legislative change sought by Steward were CharterCARE – which filed an RFP in December asking for potential partners for its hospital system – Landmark Medical Center and Steward itself. Care New England also testified, saying it was neutral in the matter. Blue Cross & Blue Shield of Rhode Island testified against the proposed legislation, urging legislators to wait until statewide planning efforts now underway were completed.

Committee Chairman Brian Patrick Kennedy, D-Westerly, in describing Steward’s rapid growth, characterized Steward as becoming “the Herb Chambers of hospitals,” referring to the auto dealership that claims it has “the most brands and the largest selection in New England.”

In his testimony opposing the legislation and the importance of keeping the waiting period, Dr. Nicholas Tsiongas, a physician and former legislator, invoked the words of President Ronald Reagan: “Trust, but verify.”

Tsiongas said that saving Landmark was important, but, at face value, the proposed legislation “had nothing to do with the sale of Landmark.” If it did, he continued, and if Steward’s business plan included the need to establish a Rhode Island network of hospitals, Steward should then share that information.

By keeping the waiting period, Tsiongas argued, the statewide planning process now underway would be able to provide needed answers to many of the underlying questions now confronting Rhode Island hospitals, such as how many hospital beds are needed, and what services should hospitals provide on a statewide basis.

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