PROVIDENCE — A new buyer may be eyeing two cash-strapped hospitals in Rhode Island as their current owner, California-based Prospect Medical Holdings, recently threatened to close the hospitals down, a move that could devastate the state’s entire health care system.
House Speaker K. Joseph Shekarchi told The Boston Globe Tuesday that Prime Healthcare has shown interest in acquiring Our Lady of Fatima Hospital in North Providence and Roger Williams Medical Center in Providence, both of which are operating at a loss as their corporate owner is facing bankruptcy.
“I’ve heard from stakeholders that Prime [Healthcare] is interested, and Prime has been doing due diligence on both hospitals,” said Shekarchi in an exclusive interview.
Prime, the fifth largest for-profit health care giant in the US, owns and operates Landmark Medical Center in Woonsocket. In total, it operates 51 hospitals in 14 states, and more than 360 outpatient offices.
Prime spokesman Noel True later confirmed to the Globe that state leaders in Rhode Island initially reached out to Prime.
“While we are in the early stages of reviewing the situation, we are honored by the trust placed in our ability to save, invest in, and improve hospitals so they can continue delivering compassionate, high-quality care to the communities they serve,” said True.
A motion filed Monday by Rhode Island Attorney General Peter F. Neronha noted the state was aware of another potential buyer.
“Prospect should pursue this alternative (or others) aggressively,” said Neronha’s office in the filing.
Representatives and attorneys for Prospect and for The Centurion Foundation, which has spent months trying to close a deal to take over the two hospitals, have not responded to the Globe’s request for comment on Prime’s interest in the hospitals.
The deal with Centurion, initially expected to close in May, has been stalled while Centurion struggles to secure financing. Prospect filed a motion in court to close both hospitals last week, indicating that the hospitals could close as soon as Dec. 31. Yet Centurion president Ben Mingle insisted Monday that the nonprofit remains “fully committed” to completing the purchase, even as Prospect signals plans to shutter the facilities for good.
Both hospitals are operating at a loss, according to Prospect. The company said the six-month delay in the sale has led to roughly $18.7 million in unanticipated losses, with another $11 million in losses expected by the year’s end. Centurion had already agreed to assume those debts after the sale closes, court records show.
While Prospect has “characterized themselves as victims of circumstances, the record tells a different story,” wrote Centurion’s attorneys in court documents. The hospitals face extraordinary challenges, “many of which stem from [Prospect’s] own actions and the deteriorating financial conditions they created through years of mismanagement.”
Centurion is not using any of its own funds to acquire the hospitals, but has been trying to close the sale with $165 million in bond financing.
The new interest marks the first time since 2021, when Prospect began marketing the hospitals, that another possible buyer has emerged. Until now, Centurion has been seen as the only viable path forward.
Governor Dan McKee told the Globe on Tuesday that the administration is “working closely with the Executive Office of Health and Human Services on contingency plans to protect patient care should all other viable options not materialize.”
McKee appointed Richard Charest, the former CEO and president of Landmark Medical Center, as the secretary of the Rhode Island Executive Office of Health and Human Services in 2023.
Kerri White, a spokeswoman for Charest, said the secretary has discussed “alternative options with Prime in the event the Centurion purchase fails.” Charest declined to be interviewed for this story.
Laura Hart, a spokeswoman for McKee, said it was Charest who first reached out to Prime to see if they would be interested in becoming “interim management” of the hospitals before ultimately purchasing them. “Prime indicated they might be interested,” said Hart.
“We do not want another Memorial Hospital,” added Hart, referencing the Pawtucket hospital that closed in 2017. Memorial had been in talks with Prime before the deal ultimately fell apart.
For more than a decade, the two hospitals have been owned by the for-profit Prospect Medical Holdings, which filed for bankruptcy in January after years of operational and financial mismanagement. Both serve some of the state’s most vulnerable patients, including many on public insurance.
But this new buyer does not interest the union that represents many of the workers at the hospitals.
Chris Callaci, the general counsel for the United Nurses and Allied Professionals, which is the union that represents nearly 1,200 employees at Fatima, said state leaders need to focus on closing the deal with Centurion.
“There is no more time to waste,” said Callaci. “Focus on getting the Centurion deal across the finish line rather than chasing Prime Health down a rabbit hole.”
If the bankruptcy judge in Texas allows the hospitals to close, it could devastate health care access for vulnerable populations across Rhode Island and overload other facilities, according Centurion and local hospital officials. Roger Williams has the state’s only bone marrow transplant program and Level IV Alcohol & Drug Detoxification Program. Fatima is the state’s second-largest behavioral health services facility.
The two hospitals see more than 50,000 emergency room visits per year, and perform routine and emergency surgeries daily.
During a hearing in a Texas bankruptcy courtroom on Tuesday, Thomas R. Califano, an attorney with Sidney Austin LLP, which is representing Prospect, confirmed that another buyer has emerged, but did not disclose the name.
“I just want these hospitals to stay open. I want to stop the bleeding,” said Chief Judge Stacey Jernigan of the US Bankruptcy Court during the hearing. She said it “might be horrific” that Centurion has taken so long to close the deal.
Suzanne A. Koenig, a court-appointed patient care ombudsman, said she was “disappointed that the residents of Providence County and the surrounding communities are facing the possible closures” of the hospitals.
Dr. Dina Himelfarb, president of the Rhode Island Medical Society, said the organization is deeply concerned about the uncertainty facing the two hospitals, saying they are essential in maintaining access to critical services. Himelfarb urged state leaders to ensure the hospitals stay open and supported.
“The potential loss of either facility would have profound consequences for patients, physicians, and the entire health care system,” said Himelfarb.
This article has been updated.
Alexa Gagosz can be reached at alexa.gagosz@globe.com. Follow her @alexagagosz and on Instagram @AlexaGagosz.