UPDATED: Prospect Withdraws Change of Ownership and Hospital Conversions Applications
Friday, April 30, 2021
Prospect Medical Holdings -- owner of ChaterCARE hospitals Roger Williams and Fatima -- has flipped the proverbial table.
The company notified Rhode Island Attorney General Peter Neronha and the Department of Health Friday morning of its formal withdrawal of the organization’s hospital conversions act and change in effective control applications. “The withdrawals conclude the regulatory review process,” said the company in a press release.
Prospect operates under the CharterCARE brand in Rhode Island and is a for-profit -- it pays the City of Providence $2.8 million and North Providence $875,000 in taxes. They are among the largest taxpayers in both of those respective cities.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTThe impact is that the company will continue to be owned in part by the private equity group Leonard Green, an investment firm that has been under scrutiny by everyone from members of Congress to the Wall Street Journal.
With no change of ownership application pending, Prospect can move forward potentially with closures of certain operations at the hospital by applying only to RIDOH and excluding Neronha’s office.
In response to the announcement, the United Nurses and Allied Professionals President Lynn Blais, RN, released a statement, "Prospect CharterCARE's business model is neither sensible, nor sustainable. They are, first and foremost, about making rich men wealthier at the expense of patient care and frontline health workers. Our members have lived, sweated and breathed the reality of their greed for far too long."
Blais went on to say, "This application lacked legitimacy from its introduction, and shame on the members of the Health Services Council who voted to support it in the face of a damning report from their own consultant. Long after Sam Lee and David Topper have lost interest, Fatima Hospital will continue to be a trusted place where our community receives world-class care. We're in this for the long haul and we've seen it all. These two wannabe robber barons can't shake us."
The Wall Street Journal reported last June, “Four members of Congress have accused Leonard Green & Partners of extracting millions of dollars from a hospital operator, adding to a recent chorus of criticism of private-equity practices in the medical sector. The Democratic representatives demanded the private-equity firm return the fees and dividends it earned from its ownership of Prospect Medical Holdings Inc., a Los Angeles-based hospital and medical group operator the buyout firm bought a decade ago. Reps. Katie Porter (D., Calif.), Lloyd Doggett (D., Texas), Mary Gay Scanlon (D., Pa) and Rosa DeLauro (D., Conn.) made the demands in a June 4 letter to the Los Angeles-based investor that was viewed by The Wall Street Journal."
Prospect on Thursday announced that if Neronha was going to use his regulatory powers to try to stipulate that Prospect place between $120 and $150 million in a de facto escrow account as a condition of approving the change of ownership application the company would move to close their Rhode Island operations.
This move by Prospect now could see the company move forward with operational reductions and layoffs according to sources.
