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A potential twist is looming in Steward Health Care’s bid to purchase Landmark Medical Center in Woonsocket and the Rehabilitation Hospital of Rhode Island in North Smithfield for $71.6 million – one that has Steward exploring a possible legislative fix, according to three sources with knowledge of the discussions.
At issue is a provision in the Hospital Conversions Act that bars for-profit hospitals from making additional purchases of nonprofit hospitals in Rhode Island for three years after purchasing a nonprofit hospital.
In May, Superior Court Judge Michael A. Silverstein approved the purchase of Landmark Medical Center and the Rehabilitation Hospital of Rhode Island, which had been in receivership for about three years, pending state approval.
Steward’s bid to purchase Landmark is now being reviewed by state regulators – the R.I. Department of Health and the Rhode Island attorney general’s office – under the Hospital Conversions Act.
Meanwhile, a number of financially fragile nonprofit community hospitals – including Westerly Hospital and CharterCARE Health Systems (Roger Williams Medical Center and St. Joseph’s Health Services) and South County Hospital – have had discussions about partnering with Steward that are ongoing, according to two sources who confirmed the talks on condition of anonymity.
Steward’s Landmark purchase was never viewed as a “one and done” deal by Rhode Island health care industry observers, based on the company’s expansion strategy in Massachusetts, according to a source familiar with Steward’s negotiations with Landmark who asked not to be identified.
In the last year in Massachusetts, Steward, the for-profit hospital division of Cerberus Capital Management, a New York-based equity firm, has aggressively added four community hospitals to its growing network since purchasing six hospitals of the Caritas Christi Health Care System in November 2010. These include: Morton Hospital and Medical Center in Taunton, Merrimack Valley Hospital in Haverhill, Nashoba Valley Medical Center in Ayer and Quincy Medical Center in Quincy. In addition, Steward has moved into the health-insurance business, joining forces with Tufts Health Plan of Massachusetts in June 2010 to launch a new health-insurance product, Steward Community Choice, targeted at small businesses in Massachusetts.