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Prime tenders amended application for Landmark

March 14, 2013

WOONSOCKET – California-based Prime Healthcare Services submitted its amended application to buy Landmark Medical Center to state regulators Thursday – a day after the hospital employees union ratified a contract with a rival company that complained it has been unfairly shut out of the bidding.
The United Nurses and Allied Professionals Local 5067 unanimously approved a five-year collective bargaining agreement with Landmark Hospital Holdco LLC of New Jersey on Wednesday.
Chris Callaci, UNAP’s general counsel, said the 600-member union embraced Holdco because it’s unsure Prime will survive regulatory scrutiny and it believes Holdco’s proposal would protect the public interest more fully than Prime.
“This is not just some ordinary exercise whereby we meet with the bidder and we reach agreement and we vote on it,” said Callaci. “The commitments Holdco made, especially with respect the public interest are far superior to those not only of Prime, but any other bidder who expressed an interest in buying Landmark since the hospital entered receivership in June 2008.”
Prime, a 20-hospital, for-profit chain headquartered in Ontario, Calif., submitted an amended application to purchase Landmark to Attorney General Peter Kilmartin and Health Director Michael Fine on Thursday, according to Peter Hanney, spokesman for the state Department of Health. The regulators have 10 days to decide whether the application is complete.
Prime originally filed the voluminous application to purchase the hospital to the state regulators, as required under the Hospital Conversions Act, in January. But the regulators deemed the application incomplete, sending in back to Prime to fill in whatever was missing – the regulators never elaborated on the details.
Prime’s deadline for returning the amended application to the regulatory agencies was today.
Callaci said the union has no special insight into the prospects for Prime’s application.
But he said the union is concerned about continuing reports of irregularities in the administration of Prime’s federal insurance programs at some of its California hospitals. The Star-Ledger of Newark, New Jersey, reported last week that a California Medicaid audit flagged $2.8 million in questionable expenses charged to the program by Prime, including lease payments on a Beverly Hills home, depreciation of a Bentley and rooms at a Las Vegas hotel. The Ledger picked up the story because Prime wants to buy St. Mary’s and St. Michael’s hospitals in New Jersey.
After announcing that it had reached a tentative agreement with Holdco last week, Jonathan Savage, the court-appointed special master in charge of running Landmark, downplayed UNAP’s relationship with the rival suitor, saying the union has traditionally negotiated collective bargaining agreement with any and all interested parties.
Savage also said he was confident that Prime would ultimately acquire Landmark after a successful review of its application under the HCA.
Holdco criticized Savage last year for refusing to entertain its bid for Landmark and the affiliated Rehabilitation Hospital of Rhode Island, in North Smithfield, but the special master dismissed the overtures as an eleventh-hour offer. By then, the Superior Court had already granted exclusive bargaining rights for Landmark to Prime, which surfaced days after Steward Health Care of Boston abruptly terminated a lengthy effort to acquire the financially troubled hospitals.
In their contracts with UNAP, both Prime and Holdco pledge to continue operating Landmark as an acute care hospital with an “open and accessible” emergency department for five years after the closing of the sale.
Unlike Prime, however, Holdco agreed to a one-year moratorium on layoffs, to preserve clinical lines of service for at least two years and to refrain from selling the hospital for at least three. “No other entity that has expressed an interest in acquiring LMC and RHRI has made that kind of commitment to protect the public interest,” he said.
Like Prime, Holdco is also a for-profit chain. It owns just three hospitals, all in New Jersey, including some in the same markets where Prime is vying for new acquisitions.

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