CharterCARE Owners Announce Closure of Roger Williams and Fatima if AG’s Demand for $150M Holds
Thursday, April 29, 2021
Prospect Medical Holdings (Prospect) has informed the Department of Attorney General and the Department of Health today that proposed financial conditions from the Attorney General associated with an ongoing Hospital Conversions Act Application will jeopardize the future operations of Roger Williams Medical Center and Our Lady of Fatima.
The showdown, if it comes to a closure, would mean the loss of 2,800 jobs between the hospitals.
Prospect operates under the CharterCARE brand in RI and is a for-profit and pays the City of Providence $2.8 million in taxes and North Providence $875,000.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTGoLocal has been informed that Governor Dan McKee is also aware of the emerging situation.
CharterCare recently made a $27 million settlement payment to the receiver for the St. Joseph pension fund collapse.
The hospital claims in a statement, "Prospect has provided robust proposed conditions of approval to ensure the continued viability of the hospitals to provide needed, quality services to their patient populations, including the underserved. If the regulatory process cannot be completed with adequate and reasonable conditions, Prospect is prepared to initiate a closure plan including a wind-down immediately of some services and ultimately the closure of both institutions. The transaction that is the subject of the HCA Application was authorized in four other states many months ago."
“Prospect has continued to negotiate in good faith on the conditions of the transaction with Attorney General Peter F. Neronha and Dr. Nicole Alexander-Scott. Unfortunately, the Attorney General has insisted on imposing a condition of approval that PMH place $120M-$150M in escrow to purportedly ensure the financial viability of the hospitals. The imposition of such an escrow is unreasonable, unacceptable, and unprecedented. The demand for such an escrow as a condition to continue to do business in RI would leave Prospect with very little choice but to initiate a wind-down of its RI operations,” said Bill Fischer, spokesperson for Prospect. “Everyone involved in this transaction needs to understand that there are dire consequences for Rhode Island’s 3rd largest hospital system if this transaction is not approved.”
Prospect believes the proposed escrow on its face is unlawful and would exceed the scope of the Attorney General’s powers under the HCA. The effect of the escrow condition would be catastrophic for the two hospitals, two vital elements of the State’s healthcare safety net, resulting in curtailing operations - including services to the underserved population.
“The imposition of a $120-$150M escrow jeopardizes the future existence of Rhode Island’s 3rd largest hospital system and its 2800 employees. The escrow condition the Attorney General is seeking is unnecessary. Prospect is financially viable. Prospect is well capitalized with liquidity and resources enabling it to continue to invest in Roger Williams and Fatima. Prospect has approximately $325M in cash on hand and an unused JP Morgan line of credit of $200M,” added Fischer.
Prospect has yearly revenues in the amount of $2.7B. Moreover, Prospect’s recent financial audit completed in December 2020 by BDO (and earlier audits) confirms that Prospect has substantial cash and liquidity with no going concern issues raised.
Prospect looks forward to appropriate conditions of approval so that the important local community hospitals can continue to provide needed, quality services to their patient populations including the underserved.
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