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Landmark deal wins HSC nod

September 24, 2013

PROVIDENCE — The state Department of Health’s full Health Services Council on Tuesday gave an overwhelmingly vote of support to the proposed acquisition of Woonsocket’s Landmark Medical Center by Prime Healthcare of California.

In all, 12 of the council members present voted in favor of Landmark’s acquisition by the for-profit healthcare chain, with just two others, one employed by Blue Cross & Blue Shield of Rhode Island, indicating they abstained. Member Steven Lonardo had also abstained over his work with Blue Cross while the council’s Project Review subcommittee voted to recommend the acquisition to the full council last week. He was joined in abstaining on Tuesday by Roberta Feather.

The decision will send Department of Health Director Michael Fine the council’s recommendation that Landmark’s acquisition by Prime be approved, one of two pending steps Landmark and Prime must clear in order for the purchase to be completed.

Council member Wallace Gernt made the motion to recommend approval of Landmark’s acquisition by Prime with conditions set by the department, and said he based that position on “the evidence that has been presented before us.

“I believe,” Gernt said. “It has been overwhelming in support of their application, so I move the motion.”

Health Services Council Chairwoman Victoria Almeida also spoke prior to the vote, and thanked the applicant and Superior Court Judge Michael Silverstein’s special master supervising the long-fiscally troubled hospital for providing all the information the council had requested as part of its review.

“It was very thorough, and I think Mr. Gernt said the evidence is overwhelming and it is unconverted,” she said. The review did consider issues raised over an ongoing federal review of Prime’s billing practices at some of its 17 member hospitals, but Almeida said those issues were “inconclusive and do not weigh heavily on the matter of our deliberations as far as I’m concerned.”

She also offered support to Landmark, telling CEO Richard Charest, “Landmark is and has always been a diamond in the rough worth preserving and worth protecting.”

Almeida said more importantly, the people served by Landmark are also “worth preserving and worth protecting and we’re not about to turn our backs on them.”

Prime, she said, was accepting a responsibility to Landmark’s patients with its proposed acquisition of the 214-bed hospital and was “accepting this responsibility ethically and morally with their commitment to the community.”

Before the panel began a roll call vote, Almeida also indicated the decision would be part of the state’s consideration of approving its first “for-profit” hospital operation and said, “this is a historic moment for Landmark and our community.”

The decision had been supported by a final presentation by Charest on Landmark’s role in its community, and also from some personal testimony by state Sen. Roger Picard (D-Dist. 20, Woonsocket, Cumberland).

Charest noted there has been a hospital in northern Rhode Island for about 140 years, with the Woonsocket Hospital that became Landmark being incorporated in May of 1873.

Landmark today is a not-for-profit hospital corporation based on Cass Avenue that also includes the Rehabilitation Hospital of Rhode Island in North Smithfield, amd serves a financially distressed population of patients made up predominately of the elderly and low-income families.
Landmark’s long-standing fiscal troubles, its financial losses totaling $58 million as of June, are largely due to the hospital’s service of patients with lower reimbursement coverage or an inability to pay for their care, according to Charest.

“In fact, Landmark has not gone into distressed (status) because of a lack of business, but rather it is distressed because of the population that we serve,” he said.

Approximately 76.3 percent of the patients treated at Landmark have Medicare, Medicaid or self-paid coverage for their billings, he said. Those on self-billing essentially “have no coverage at all,” and their costs must be carried by Landmark, according to Charest. Landmark lost approximately $11 million last year as a result of such coverage, and since that time has been working with the Prime network, a system sharing costs in purchasing and management practices and systems, to lower its operating costs, according Charest.

In the most recent seven months of that effort, Charest said the cooperative work has shown some improvement in Landmark’s operating costs. That performance shows that Prime has “the expertise to help us get to where we need to be so we that we be a strong and vibrant hospital and continue to take care of the population of northern Rhode Island and our surrounding communities.”

Picard told the council that he was a native of Woonsocket who had been born at Landmark and knows how the city needs its hospital.
“It’s my community, and we strongly would like to see this go through for a number of reasons,” Picard said.

The fact Landmark employs 1,200 people, many of whom live in Woonsocket, is an “obvious” reason to support keeping Landmark viable, he noted, and Landmark is also considered to be an “economic generator,” because of its “spinoff” support of other businesses.
The most important reason for Landmark, however, is the “quality of health care it provides to our community and the neighboring communities of northern Rhode Island,” Picard said.

“There is a comfort level with having a hospital in your home town, and it really brings the community together and allows the people who have loved ones in the hospital the ability to go see them very quickly,” he said.

Picard said his own family experienced that level of care three weeks ago when he had the onset of a medical problem requiring him to be kept in the intensive care unit for a period of time.

Picard said his wife was able to get all the information she needed from hospital’s staff. “It allowed her a real level of comfort knowing that I was getting very good care there and that I was getting quality attention,” Picard said. “The reassurance that she had, and my family had, was very dear to me and it was very important, and I know that is the same feeling that the rest of the people in my community feel,” Picard said.

After the vote, Charest said he was pleased Landmark had again made a step forward in the state’s review of its proposed acquisition and was “extremely pleased,” the Council’s decision had essentially been “a unanimous vote, with two abstentions.”

“And I think it shows the committee’s recognition of the need for the hospital’s existence in northern Rhode Island,” he said.

The next step in the change in effective control process would be a final decision by Fine on that matter. A second process, a review of the acquisition under the state’s Hospital Conversion Act, a process reviewing Landmark change from non-profit to for-profit operation, is still in the works, Charest noted.

Both Fine and Attorney General Peter Kilmartin are involved in making a decision on that aspect of Landmark’s acquisition, and a hearing has been scheduled as part of their review for Sept. 30 at Woonsocket High School from 4 to 7 p.m., he said.

Prime President of Hospital Operations Luis Leon said he too was pleased the review process was moving forward.

“We feel excited about the opportunity to come to Woonsocket to provide the health care that the community is certainly expecting of us,” he said. He also credited the Health Services Council with doing “hard work” and necessary “due diligence” to review the hospital application.

“We appreciate every effort that everyone has made to ensure that it was a process that we feel comfortable with,” he said.

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