By JOSEPH FITZGERALD

WOONSOCKET — After a more than five-hour hearing in Providence County Superior Court Thursday, Judge Michael A. Silverstein granted Landmark Medical Center's request for a court-appointed special master to oversee the financial and day-to-day operations of the beleagured hospital which now appears on the brink of collapse.

Late yesterday afternoon, Silverstein approved a petition filed by Landmark's lawyers to designate Pawtucket lawyer Jonathan N. Savage — who specializes in receiverships — as the special master for the financially distressed hospital. The appointment takes effect immediately.
Landmark Medical Center, which could close by the end of the year unless someone buys it, has debts that exceed its assets by $7.2 million.
“Landmark and its predecessors have provided high quality healthcare for almost 135 years. Landmark is one of the most efficiently run hospitals in the state. A low endowment and a large number of indigent patients have made operations challenging,” Richard Charest, president of Landmark Medical Center said yesterday.
“Although the hospital is in a negative net asset position, based upon current operations, Landmark has sufficient cash on hand to continue operations through the first quarter of 2009. During that time, the special master will actively seek and evaluate potential acquisitions, partnerships and other financial solutions,” he said.
When asked the question yesterday, Landmark spokesman Bill Fischer adamently denied the hospital is in receivership, which by definition, is a form of bankruptcy in which a company can avoid liquidation by reorganizing with the help of a court-appointed trustee.
Receivership is an administrative stage in which a company that is in the midst of bankruptcy proceedings attempts to put its affairs in order with the help of a court-appointed trustee. A company is said to be in receivership if it is attempting to avoid liquidation.
“I want to stress that the traditional way in which a receivership works is that a business entity will approach the courts as a first step to dissolve or liquidate its assets because a business has already failed. Landmark is not a failed business,” Fischer said. “What we did is look forward. Today's action was a pro-active step not to liquidate the hospital's assets, but to preserve them under a court process.”
“The goal is to save Landmark,” he added. “The residents of Northern Rhode Island and the employees of Landmark should not panic. Today's actions were to protect Landmark's assets.”
As a court-appointed special master, Savage will assume control of all of the hospital’s assets and its day-to-day operations. As an arm of the court, he has full authority with regard to the operations of the facility. Savage will also negotiate with parties interested in potential acquisitions.
“I want to assure Landmark’s 1100 employees that normal business operations will continue,” Charest said. “Today’s action is the first step under a court supervised process to maintain Landmark’s operations. Landmark will continue to deliver high quality healthcare to the residents of northern Rhode Island.”
Yesterday's court action provides for the temporary appointment of a special master. The court will reconvene in 21 days to decide if the special master will be a permanent designation.
Savage is a partner with Pawtucket-based Shechtman, Halperin and Savage, LLP. Savage focuses his practice in areas such as receiverships, real estate law, and business and commercial law. Savage has been appointed by the courts on a regular basis to act as the fiduciary for businesses in financial distress.
Representatives from the Department of Attorney General and the Department of Health also participated in Thursday's court hearing.
“We will do everything we possibly can, with the court's approval and assistance, to ensure that Landmark Medical Center remains a vital and viable hospital, employer, and community asset in Northern Rhode Island,” Attorney General Patrick C. Lynch said in a statement yesterday. “Accessibility is a prime component of quality health care. Everybody who is a party to this process shares the value that preserving and protecting Landmark and putting it on a path toward self-sustainability and profitability is extremely important not only for the people of Woonsocket and the residents of the many other communities of Northern Rhode Island who rely on it, but also for our whole state.”
“If Landmark fails, it will be a shock to our whole health-care system. I urge all of the key stakeholders - employees, patients, vendors, creditors, and, of course, Rhode Island's citizens - to be aware that this is a process that will unfold over the next several months,” Lynch said. “As important as the process and our ultimate goals are, overly emotional reactions to today's news won't be productive. I appreciate the court's grasp of the import of this matter and its quick intercession to try to preserve Landmark as a community asset.”
In a statement released yesterday, Maria Montanaro, president and CEO of Thundermist Health Center in Woonsocket, said “as the largest primary care provider in Woonsocket, Thundermist has a very strong interest in the problems facing the hospital and we are strongly committed to doing whatever we can to ensure that needed services remain in the community and continuity of care is continued. I look forward to meeting with Mr. Savage in near future to discuss our perspective on what direction Landmark may need to take to strengthen its ability to best address community needs and to discuss ways in which Thundermist may be able to assist in those efforts.”
The appointment comes a week after General Assembly failed to take action on a bill that that would have helped expedite the state review process for any acquisition of Landmark.
The bill sponsored by Sen. Roger A. Picard and Rep. Jon D. Brien would create within the Hospital Conversion Act a category for financially stressed hospitals like Landmark so that if the hospital is able to attract a potential buyer it would not be required to undergo the HCA process review. Instead, it would be subject to what is being called a “change of effective control” review, in which the Department of Health and Attorney General would have to render a decision within 90 days of acceptance of an application.
Landmark has been aggressivelyt seeking a potential buyer and most recently has been negotiating with Memorial Hopsital of Rhode Island whereby Landmark could become part of Memorial, a move officials for both hospitals believe will preserve continuous healthcare for the region.
But according to the way the HCA is written now, if a purchaser were to aquire Landmark today, it would trigger a mandatory review that would take up to a year to complete. And because of Landmark's tenuous financial situation, the hospital would not be able to sustain operations while the review is completed regardless of whether not the state ultimately approves the transaction. The HCA was passed by the General Assembly 10 years ago to protect small community hospitals from an out-of-state for-profit corporate entities.
Landmark is the only hospital in Rhode Island in a “negative net asset” position. The situation is so bad, that hospital executives anticipate closing the facility by the end of the year unless they can find a buyer. Despite continued efforts over the past three years to partner with stronger institutions, to improve insurance reimbursements and to reduce costs, Landmark has been struggling under severe financial distress.
Last month, Landmark Medical Center recieved state permission to retreat from full cardiac surgery services at its Cass Avenue campus. As a result, Landmark stooped offering high level cardiac surgeries such as coronary artery bypass, heart valve replacement and other surgical interventions as of  June 1. Instead, the hospital will concentrate on maintaining its related coronary artery balloon angioplasty and diagnostic cathererization services.
The hospital won state authorization to offer the complex heart services in 2000 but has not met the goals set at that time for a specified number of heart surgeries each year.
The realignment of cardiac efforts at Landmark comes as the hospital continues to struggle with declining insurance reimbursements and a heavy burden of uncompensated care from low to moderate income patients in its Northern Rhode Island market.
The hospital is currently in merger talks with Memorial Hospital in Pawtucket as a way to stem its continuing losses and address other pending market changes expected with a possible merger of the large Lifespan and Care New England hospital networks in the state.
Lifespan includes Rhode Island Hospital, Hasbro Children's Hospital and Miriam Hospital in Providence, Newport Hospital and the children's psychiatric Bradley Hospital in East Providence. Care New England includes Women and Infants and Butler hospitals in Providence and Kent Hospital in Warwick. The companies have said the merger would allow them to economize and cut costs, particularly as they anticipate cuts in Medicare and Medicaid funding.