By JOSEPH FITZGERALD

NORTH SMITHFIELD — State officials are reviewing a proposal to convert ownership of the Landmark Medical Center-owned Rehabilitation Hospital of Rhode Island on Eddie Dowling Highway to a Missouri-based company that provides physical rehabilitation program management services.

The Department of Health and Attorney General’s Office has received an application for a sale of the ownership of the hospital from RehabCare Hospital Holdings and Landmark Medical Center doing business as Northern Rhode Island Rehab Management Associations (NRIRMA). This is the first hospital conversion application to be filed with the state and basically entails an out-of-state for-profit entity — RehabCare —buying an in-state hospital.
Rehabilitation Hospital of Rhode Island, an 82-bed hospital which provides acute inpatient and outpatient rehabilitation services, is housed in Landmark’s Fogarty Unit at 116 Eddie Dowling Highway. The joint venture between Landmark and RehabCare would pave the way for a 41-bed long-term acute care hospital at the facility. Under the agreement, RehabCare will own 80 percent of the joint venture.
“It’s a win-win situation for everybody,” said Landmark spokesman Bill Fischer. “This will afford a capital infusion into the current facility and allow it to evolve. They (RehabCare) bring a lot of expertise and a lot of capital to the table. This will bring stability and growth to the facility.”
Landmark approached RehabCare last year and an agreement was struck last August, Fischer said.
RehabCare Group is a leading provider of contract therapy and program management services for hospital inpatient rehabilitation, skilled nursing units and outpatient therapy programs in conjunction with more than 890 hospitals and skilled nursing facilities in 37 states, the District of Columbia and Puerto Rico.
If the application is approved, it would pave the way for a newly-created 41-bed Rehabilitation Hospital Center at the Eddie Dowling facility and operate as a newly-created for-profit limited-liability company. The company will be owned 20 percent by Landmark Medical Center and 80 percent by RehabCare Hospital Holdings.
“They would have management control and contract locally for employees and services. People that are there now won’t be losing their jobs,” Fischer said.
The proposal would involve 41 beds, 448 annual admissions, capital costs of about $3.8 million dollars and operating costs of about $6 million dollars. If approved by the state, the project would be implemented in July.
As part of its ownership conversion application, Landmark proposes to contribute certain assets to RehabCare. Concurrent with that transaction, Landmark will sell 80 percent of its member interest in Rehabilitation Hospital of Rhode Island. RHRI will then seek licensure from the Department of Health to operate the 41-bed rehabilitation hospital center.
“The benefit to the community of this transaction will be the preservation of a  rehabilitation hospital center in the state of Rhode Island,” the application states. “Were the operations of NRIRMA not to be sold, regardless of the form of the transaction, the services currently offered through NRIRMA and proposed to be offered through RHRI would be curtailed in the near to intermediate term.”
State health officials will review the application and give the applicants 30 days to correct any deficiencies. The Department of Health and Attorney General’s Office will then have 10 days to make a decision to either approve or reject the application.
“We will be looking at the application to ensure that such a sale will be beneficial to Rhode Islanders,” said Department of Health Director David R. Gifford. “Specifically, the Health Department is interested in how this new entity will help meet Rhode Island’s rehab needs, address issues of charity care and specialty care and utilize health information technology.”
“Pursuant to our responsibilities under the revised Hospital Conversions Act, we have been working with the applicants to ensure a smooth and thorough review of the sale of the Rehabilitation Hospital of Rhode Island,” said Attorney General Patrick C. Lynch. “I will be paying particular attention to how the new entity will continue the unique mission of the Rehabilitation Hospital of Rhode Island, providing important rehabilitation services to the citizens of Rhode Island.”
Once the application is deemed complete, the review process begins and must be completed within 180 days. The state will hold at least one public informational meeting during the review process. The public will be notified of the dates of public meetings and the written comment period.