PROVIDENCE — While standing in front of a packed room of hospital workers and executives, CharterCARE chief executive Jeffrey H. Liebman said that when the two hospitals he leads in Rhode Island went up for sale, there was only one organization that came forward that could take them over.
The Centurion Foundation “was the only viable candidate,” said Liebman during a public information meeting on Tuesday night at Rhode Island College regarding the sale of Roger Williams Medical Center and Our Lady of Fatima Hospital, which are managed by CharterCARE Health Partners.
CharterCARE is the local subsidy of Prospect Medical Holdings, a private equity firm based in Los Angeles that has been working to unload its hospitals in 17 states. During the last 10 years that Prospect has owned the safety-net hospitals in Rhode Island, Prospect has fought with state regulators, and the hospitals have been strapped for cash, and have started skipping payments to vendors, affecting operations and leading to rescheduled surgeries.
When Prospect decided to sell the hospitals, The Centurion Foundation, a private Atlanta-based nonprofit, stepped forward and has spent months trying to convince state regulators to approve the terms of the sale. Regulators, which include Rhode Island Attorney General Peter F. Neronha’s office and the R.I. Department of Health, have until June 11 to approve or deny Centurion’s proposal, or to approve it with added conditions.
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“We were the only proposal that met the requirements to keep these hospitals open,” said Ben Mingle, the CEO of The Centurion Foundation, on Tuesday.
If the sale is approved, Mingle said Centurion would work on returning the hospitals to nonprofit status to help find “cost savings,” such as cutting the cost of property taxes and giving the hospitals the ability to access fundraising dollars and government funds.
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Centurion is “solely focused on health care,” said Mingle.
During Tuesday night’s public comment hearing, CharterCARE executives and managers praised Centurion’s ambitions, claiming that the deal would be good for the hospitals and the state of Rhode Island. But the United Nurses and Allied Professionals, the union that represents about 1,000 workers at both hospitals, slammed Centurion’s business model.
“This is a no-cash deal,” said Chris Callaci, the general counsel of UNAP. It’s financed through “100 percent debt financing.
Centurion’s proposed deal requires the hospitals to issue $133 million in bonds.
Many opponents of the deal said getting the hospitals out of Prospect’s hands was critical for the financial viability of the facilities. Neronha, in an interview with the Globe, said if Prospect were to close the hospitals, Rhode Island’s health care system would be “in crisis.” Lynn Blais, the president of UNAP, said there was “never” a question about how important these hospitals are to the state, but that loading the hospitals with debt would not be sustainable.
“We’re not Johns Hopkins. We’re not Beth Israel Deaconess ... We don’t have that kind of funding,” said Blais. “We’re being asked to just assume it’s going to go well... after going through with the deal.”
“This is not a capitalization infusion. We are supposed to go to the bond market to borrow a principal amount of $133 million at a 6 to 7 percent probable rate. No one is getting those rates right now,” said Callaci, who told regulators that if the deal is approved, the two hospitals would be “in serious jeopardy.” “When those bonds come due in 10 years, add another $93 [million] in interest.”
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Callaci said Centurion is looking to find “untapped savings.”
“These hospitals have been trying to do that ... since 2009,” said Callaci.
Blais acknowledged that she believes that hospitals owned by a nonprofit organization would be better for patients and employees. But The Centurion Foundation has left “too many unanswered questions,” she said.
“We’re not saying we don’t want a nonprofit,” said Blais. “We’re saying we don’t want this nonprofit.”
Alexa Gagosz can be reached at alexa.gagosz@globe.com. Follow her @alexagagosz and on Instagram @AlexaGagosz.