Prospect Medical pulls application for ownership change at Roger Williams, Fatima hospitals

 Rhode Island Attorney General Peter Neronha said the owners of Roger Williams Medical Center and Fatima Hospital care more about "lining their own pockets" than patients after the company withdrew an application for an ownership change Friday.

Prospect Medical Holdings had asked Neronha and the state Department of Health to sign off on majority owner Leonard Green, a private equity firm, leaving the company.

But on Friday morning, hours before Neronha was set to release his decision, the California-based hospital chain pulled its application and asked a Superior Court judge to block Neronha from making his decision public.

In a lengthy midday news release, Neronha blasted the private equity firm, which he said wants to "walk away with $12 million more in its pockets and absolved of billions of dollars in debt."

"Our robust review of the proposed transaction revealed a national company whose principals and investors extracted hundreds of millions of dollars from the hospitals and services they own," Neronha wrote. "As a result, the company now faces risks to its financial viability, which is required to respond to challenges that may arise in a volatile healthcare market, potentially putting every hospital in its system – including our Rhode Island hospitals – at risk of a reduction in services, sale or closure."

Conflict between Prospect and Neronha flared on Thursday when the hospital chain threatened to close the hospitals, and take legal action, if the state imposed significant new conditions to approve the ownership change. In particular, the company expected that it would be ordered to place up to $150 million in escrow if the sale was to go though.

"The imposition of such an escrow is unreasonable, unacceptable and unprecedented," Prospect spokesman Bill Fischer said in a statement Thursday that noted four other states have approved the transaction.

But Prospect's ownership and financial condition have become a source of controversy in Rhode Island, with union leaders and politicians objecting to what they see as insufficient investment in the hospitals.

Senate President Dominick Ruggerio, whose district includes Fatima, called the two hospitals "essential to the health and well-being of our communities."

Sen. Louis DiPalma, D-Middletown, said testimony in the Senate Oversight Committee, which he chairs, "raised several red flags with regard to the financial viability of Prospect’s hospital systems, and we are grateful that Attorney General Neronha has conducted a thorough review as part of the regulatory process."

Prospect bought Roger Williams and Fatima in 2014. The hospitals employ 2,800 people and provide essential safety-net services.

In a request for a temporary restraining order filed Friday morning in Superior Court, Prospect said Neronha's decision, which was shared with the company, "contains confidential information and numerous factual inaccuracies that — if publicly disclosed — would cause irreparable harm to the hospitals, their employees, their healthcare providers, and their patients."

But Neronha said the public deserves to know more about what's happening behind the scenes at the hospitals.

"Under the proposed transaction, majority owner Leonard Green, having made its money at the expense of the financial health of the hospitals, now wants out," Neronha wrote. "You chose to get into healthcare.  Act like you believe in it."

https://www.providencejournal.com/story/news/politics/2021/04/30/prospect-medical-holdings-withdraws-request-under-pressure-ri-ag/7409161002/