PROVIDENCE — A deal for an out-of-state nonprofit to acquire two Rhode Island-based hospitals and their subsidiaries reached a new milestone on Friday, after the two organizations submitted their proposal to state regulators.
Prospect Medical Holdings, which owns both Roger Williams Medical Center in Providence and Our Lady of Fatima Hospital in North Providence, submitted a joint application Friday with The Centurion Foundation — a nonprofit based in Atlanta that wants to acquire the hospitals — to the Rhode Island Department of Health and Attorney General Peter F. Neronha’s office.
The Hospital Conversions Act application, more commonly known as the HCA, must be deemed “complete” by both agencies before an official review under the law can begin.
“But more info could be requested and the cycle could continue until formally deemed complete,” said Neronha spokesman Brian Hodge. He said this process could take some time, depending on what is included in the application.
Once the application is determined to be “complete,” state regulators have 30 days to either approve, reject, or approve with conditions whether The Centurion Group can acquire Prospect’s hospitals and other subsidiaries, which include Blackstone Valley Surgicare, CharterCARE Medical Associates, CharterCARE Home Health Services, Southern New England Rehabilitation Center, and St. Joseph Health Center.
If the sale is approved, then the third-largest health care system in the state, locally referred to as CharterCARE Health Partners, will revert back to a nonprofit status after years under Prospect, a for-profit hospital owner with properties nationwide. In the last year, Prospect’s owners have been looking to unload several hospitals across the country, including properties in Connecticut.
In a statement, CharterCARE CEO Jeffrey Liebman said the HCA application is an “important step in the next phase” of the system’s future as a “critical health care resource and employer.” He said a deal with The Centurion Foundation would “build on Prospect’s significant investment.”
“We want all Rhode Islanders to be confident that this proposal is in the best interest of our community, our employees and our physician partners,” said Liebman.
The news comes six months after The Centurion Foundation announced Nov. 22 that it had entered into an asset purchase agreement with the executives of Prospect Medical Holdings, a Los Angeles-based company long controlled by private equity. At the time, Neronha told the Globe that his office had “minimal information” regarding the deal and that his past experiences with Prospect told him the review process could take “many months.”
The two hospitals serve some of the state’s most underrepresented populations, and have had a long history of financial instability and grueling fights with local lawmakers over ownership changes. In 2018, the hospitals’ owner, Prospect, borrowed about $1 billion, which was used to pay a nearly half a billion dollar dividend.
QHR Health, a Tennessee-based hospital management firm managed by another private equity firm, previously assisted in the transition and provided consulting support to the hospitals’ board of directors.
It’s unclear if QHR Health still plays a role in the deal.
The Centurion Foundation was founded in 1996, and claims to help other nonprofits by “developing, arranging financing, and leasing facilities.” Centurion’s director and CEO Gregory K. Grove founded the company to establish, acquire, own and maintain health care facilities.
Prior to forming Centurion, Grove co-founded Grove Capital Corporation, which provided investment banking and underwriting services to the health care industry. He previously held executive roles at Shearson American Express and the financial services department of Oppenheimer & Company Inc. Benjamin M. Mingle is Centurion’s president. He’s a certified public accountant who then went into real estate and development. He joined Centurion in 2018.
“We believe strongly in the community-centered mission of CharterCARE,” said Mingle in a statement on Friday. “We seek to become a contributing member of the Rhode Island health care system by preserving and enhancing CharterCARE’s role to provide high quality, affordable, and accessible inpatient and outpatient healthcare.”
Previous reporting was used in this report.