By Richard Asinof
PROVIDENCE – Transition Healthcare Company of Franklin, Tenn., withdrew its bid late Friday to purchase the financially troubled Landmark Medical Center in Woonsocket.
Its $1 million deposit, held in anticipation of executing an escrow agreement for purchase of the hospital, was released.
At issue was the manner by which the rules materially changed, Transition said, referring to a decision to allow the court-appointed special master Jonathan N. Savage to begin communications with potential bidders outside the current process.
During an in-chambers session last week, Superior Court Judge Michael A. Silverstein said that he would allow Savage to begin preliminary conversations with new bidders in a “preparatory” manner.
“Transition does not believe it is fair or appropriate to allow new potential bidders to communicate with you about acquiring the Landmark assets at this late stage,” said William S. Fish Jr. of Hinckley, Allen & Snyder, a local attorney representing Transition, in a letter dated May 13, sent to the court-appointed special master. “Transition believes that this is grossly unfair to the current bidders who have expended significant time, effort and expense in reliance on a process that clearly did not contemplate this possibility.”
Transition said it was not willing to continue committing significant dollars and time “in a process where the rules can materially change,” Fish said.
Silverstein twice delayed deciding between Transition and two other for-profit hospital systems, RegionalCare Hospital Partners of Franklin, Tenn., and Prime HealthCare Services of Ontario, Calif., on April 27 and May 10.
Silverstein had directed bidders at both hearings to renew efforts to settle outstanding issues that, without resolution, might enable a bidder to walk away from an agreement after being selected.
At issue for Transition was its inability to reach an asset purchase agreement with the special master, according to Fischer.
“They had not successfully negotiated an asset purchase agreement; they had not completed negotiations with Blue Cross & Blue Shield of Rhode Island. In addition, there were repeated requests that had not been met for Transition to submit, to both the special master and the court, documentation to support their financing,” Fischer said.
Nevertheless, there is no reason to believe that the process won’t conclude on May 27, Fischer said while confirming there has been some “initial outreach to other potential bidders to gauge interest if - and only if - the current process does not come to a successful conclusion.”
The issue of whether or not to allow Savage to engage in discussions had been raised at the April 27 hearing. Theodore Orson, an attorney representing the R.I. Department of Health, objected, saying: “If the bid process is changed at this time, we believe that not only would the credibility of the process with respect to Landmark be compromised, but Rhode Island would lose credibility in the future to those outside bidders looking for an opportunity to purchase a distressed hospital.”
At that time, Silverstein forbid Savage from communication with other potential bidders. When asked why the judge had apparently changed his mind, Fischer declined comment. “Time is the most significant variable in preserving Landmark,” he said.