Judge receives progress report on financial health of hospital

By RUSS OLIVO

PROVIDENCE — Although Landmark Medical Center had expected to find an acquisition partner by now, the financially troubled hospital still does not have a commitment from a potential suitor.

But Pawtucket lawyer Jonathan Savage, the court-appointed special master in charge of running the Woonsocket facility, said the setback was caused by nothing more than “scheduling issues” and that a merger could be announced soon.
“There have been no substantive issues that have put us off,” Savage said. “I’m hopeful we are a few weeks out. It’ s a very complex transaction and there’s a lot of elements...We’re still in very serious negotiations.”
Superior Court Judge Michael Silverstein appointed Savage a year ago this week to keep the hospital from sinking into insolvency while it searched for another health care entity to take over permanently. Savage spoke to reporters Tuesday after he delivered the latest in a series of progress reports to the court and asked to be paid $72,785 for expenses incurred during the month of May. Silverstein granted the request, but not before Attorney General Patrick Lynch’s office expressed some concerns.
Asst. Atty. General Maureen Glynn, Lynch’s health care advocate, said Savage initially asked for slightly more money, but the figure was reduced on the request of the attorney general’s office after screening the bills. Prior reimbursement requests have also been scaled back, she said.
Glynn said she was not calling into question the quality of Savage’s work, but raising concerns about the long-term viability of Landmark. The hospital is “an economic driver” for the Woonsocket area and its failure would pose a tremendous hardship not just for the city, but all of northern Rhode Island, Glynn said.
“It’s not a question of the work being done. We’re not questioning the quality of the work,” said Glynn. “It’s a concern that every dollar spent on  special mastership is a dollar less spent on health care.”
Savage told the court, however, that his management team is “focused with great energy on reducing costs at all levels, including the special master’s fees.”
Bill Fischer, a spokesman for Landmark Medical Center, said the cost of the special mastership represents not just Savage’s fees, but those of up to a dozen lawyers and support personnel from his firm who are managing hospital-related issues at any given time. Fisher said Savage is also handling all the legal work for the hospital, which cost $780,000 in the year prior to mastership, a form of receivership.
Overall, said Savage, the special mastership has been a resounding success. When Silverstein appointed him special master, the goal was to stabilize the finances of the hospital and keep it from going under. With an operating deficit of some $7 million at the time, the hospital was projected to collapse financially in six to nine months.
Landmark is no longer on the brink, says Savage. While the hospital must eventually develop a plan to satisfy the debt that predates the mastership petition, Landmark now has about $6.5 million cash on hand. There have been no layoffs under the mastership, the hospital is current on all of its post-petition bills, the patient census is up and the  future of Landmark looks bright, he said.
“Here were are today, standing strong and in negotiations with a potential partner,” he said.
Asked how Landmark was able to achieve the reversal of fortune, Fischer said a critical factor was that the mastership allowed the hospital to stave off pre-petition debt to vendors. It was also vital that area residents did not abandon the use of the hospital simply because of the perception that it was in trouble, he said. Since the petition was filed the patient census has remained constant, if not increased slightly, a reflection of wide community support for Landmark. Over half of the hospital’s 214 beds are filled at the moment, officials said.
Speculation about a potential suitor for the hospital has focused on Caritas Christi, the second-largest health care network in New England, with approximately a half-dozen major facilities concentrated in the Boston area and Fall River. Savage told reporters he remains in negotiations with one potential suitor — the same one he was involved with during the last update to the court — but he declined to say whether it was Caritas Christi.
Rick Brooks, the director of the United Nurses and Allied Professionals, the union that represents health care workers at Landmark, said hospital administrators circulated a memo several months ago advising employees that representatives of Caritas Christi would be touring the hospital. Brooks, who attended Tuesday’s hearing, said employees later confirmed that representatives of Caritas Christi were seen in the hospital.
UNAP represents about a thousand nurses and other health care professionals employed by Landmark Medical Center, making it the second-largest employer in the city, behind CVS/Caremark. North Smithfield-based Rehabilitation Hospital of Rhode Island, an affiliate of Landmark which may be included as part of the merger deal,  also employs over 100 people.
The union, whose contracts with Landmark expire in September, is anxious to see the hospital form a partnership with another facility that will ensure the longevity of homegrown health care in Woonsocket.
“Of course, like everybody we want to see the hospital on solid footing,” said Brooks. “Obviously, for the long term, it’s important to us that there is a strong partner committed to providing a full-service hospital in Woonsocket.”
Though the process may be taking longer than expected, Landmark President Richard Charest praised the mastership, saying he was confident of Landmark’s long-term prospects for finding a solid acquisition partner.
“The importance of the process is to maintain a viable community hospital while we look for a partner,” said Charest. “I’m optimistic we’ll find a suitable partner.”