Copyright The Boston Globe
The Centurion Foundation, the lone bidder with regulatory approval, has struggled to secure financing. The delay has created an opening for Prime Healthcare, the country’s fifth largest for-profit health care chain with connections to state Health and Human Services Secretary Richard Charest. At issue is Charest’s decision to reach out to Prime sometime in the last year to gauge the company’s interest. Charest’s involvement has raised questions about the state’s neutrality in the process, and also created a high-stakes tug-of-war over who controls the future of the hospitals. During a press conference Tuesday outside of Fatima, workers and union leaders with United Nurses and Allied Professionals, the union that represents thousands of workers at both Prospect’s Rhode Island hospitals, urged state officials to focus on closing the Centurion deal. “We have a $14 billion [state] budget,” said Chris Callaci, UNAP’s general counsel. The state “should be able to come up with the funding to cover the losses and to allow Centurion a little bit of breathing room to get that deal done.” Centurion President Ben Mingle told the Globe Tuesday night the foundation has asked the state for financial support at several points this year, but he believes “the state’s financial support should now be directed to funding these facilities to allow sufficient time for our financing to close.” Mingle said Centurion is working daily with Bank of America on a financing plan. Centurion was approved to purchase the hospitals more than a year ago with 40 strict conditions. Based in Georgia, the nonprofit has no endowment, has never owned a hospital, and has struggled to secure the $165 million in bond financing once expected in May. If the deal closes, both hospitals will convert from for-profit to nonprofit. Charest, who worked for Prime as the chief executive of Landmark Medical Center in Woonsocket until 2017, said the state reached out to Prime Healthcare Foundation, a nonprofit public charity, because of its “unique ability to save and improve hospitals in times of crisis nationally and ensure award-winning quality, equity and access for communities,” according to a statement sent to the Globe by Prime Healthcare spokeswoman Noel True “Time and time again they have saved hospitals even amidst the greatest challenges and have the national scale, leadership, clinical quality, and dedication to charitable care that can ensure these hospitals continue their missions,” Charest added in the statement. When asked why Prime was distributing a statement for a cabinet-level official, Charest said he “was not concerned” by it. Charest has previously declined to be interviewed by the Globe, and has not answered questions about when he first reached out to Prime or the Prime Healthcare Foundation. In an interview with the Globe on Monday, Callaci accused Charest of acting as “a mouthpiece for Prime,” misleading Rhode Islanders about their past, and interfering in a business transaction that could expose the state to a lawsuit. “As an attorney, that looks to me like a smoking gun of tortious interference [of] business relations, which opens up a big lawsuit against the state from Centurion,” said Callaci. “It’s astounding to me that he would allow himself to be publicly humiliated like that, played like a fool or put another way, that he’s now a proxy for or spokesperson for Prime.” “This is so extraordinarily inappropriate,” added Callaci. In a statement late Tuesday, Charest said he reached out to Prime “not because I favor one potential buyer over another, but because Rhode Island lacked a back-up plan if…Centurion was still not able to close the deal.” “Without a back-up plan, Rhode Island runs the risk of having both hospitals close their doors,” he said. True told the Globe that Prime Healthcare Foundation is conducting diligence on the two hospitals. Callaci detailed issues at Prime, which include allegations of Medicare fraud, overbilling, false claims, and kickbacks that have resulted in multiple settlements with the Justice Department. Prime and Prime Healthcare Foundation have independent boards and governance, but share some of the same management in clinical and operational areas. Several hospitals have been donated from the Prime Healthcare system to the Prime Healthcare Foundation so they can operate as not-for-profit entities. This happened in Rhode Island at Landmark in 2017, when Prime was fined $1 million for repeatedly misleading state officials, who at the time called it an illegal transaction without waiting for the necessary approval. McKee spokeswoman Olivia DaRocha said the administration wants any qualified buyer, “whether Centurion, Prime, or another party, [to] complete a deal that keeps the hospitals operating.” The administration is working in good faith with Centurion, DaRocha said, but is also “developing a Plan B to ensure the hospitals remain open if that deal does not move forward.” “This is the responsible step... to prevent another situation like Memorial Hospital,” said DaRocha. It was also Prime Healthcare that first expressed interest in taking over Memorial Hospital before talks failed and the hospital closed in 2017. Last week, Prospect and the state struck a new, short-term deal to keep Fatima and Roger Williams operating while a longer-term solution is worked out in bankruptcy court. Prospect attorney Thomas Califano told the Globe a long-term plan must be reached by Nov. 18, when the state and Prospect are expected to present a deal during a court hearing in Texas as part of Prospect’s bankruptcy case. Prime “can move really quickly because they’ve done acquisitions in the past,” said Califano, who said Prime is in the “earliest stages” of conducting diligence. “If it was somebody else at that early stage, I’d be much less confident.” Prospect, which is based in California, owes $3 billion to creditors. Since 2022, Prospect has shuttered hospitals, cut services, and faced lawsuits in Pennsylvania and Connecticut, accusing it of “corporate looting” and endangering patients. In Pennsylvania, several of Prospect’s hospitals have closed. If the Rhode Island hospitals close, it would be catastrophic for anyone seeking care in Rhode Island, local health leaders say. Emergency departments will be overrun, and other systems spread thin. “People who will die because they couldn’t get care,” said Lynn Redding, a registered nurse at Roger Williams and president of the nurse’s union there. “And that’s the real crime here.”
