WOONSOCKET – After a five-and-half-year odyssey in court-supervised receivership, Superior Court Judge Michael A. Silverstein on Tuesday cleared the way for Landmark Medical Center to be acquired by Prime Healthcare Services of California.
The ruling came in the form of two orders by Silverstein, one granting court-appointed Special Master Jonathan Savage’s petition to sell Landmark’s assets to Prime Healthcare Services-Landmark LLC, “free and clear of liens, claims and encumbrances,” and the other approving a compromise on Landmark’s payment of “all claims of Blue Cross & Blue Shield of Rhode Island.”
The judge also approved a closing date of Dec. 31 for the transaction while reserving the option of an extension “by order of this court” after a notice and hearing.
The decision approving the hospital’s transaction also noted it was subject “to the compromises negotiated with Blue Cross, Blue Shield of Rhode Island,” and the entities set forth in the court’s orders.
It covers Prime Healthcare’s acquisition of Landmark, the Rehabilitation Hospital of Rhode Island in North Smithfield, and related Landmark properties near its Cass Avenue campus under a transaction expected to total $80 million in proceeds, capital investments, cost settlements, loan repayments, and staff development and retention contributions.
Silverstein’s decision follows earlier action by state Department of Health Director Dr. Michael Fine and Attorney General Peter Kilmartin granting similar nods of approval to the sale.
The state officials reviewed the proposal under the terms of the state’s Hospital Conversion Act and in recommending Landmark’s acquisition, also cleared the way for the first nonprofit acute care hospital to assume for-profit operation if the transaction is completed.
“It is not possible to thank everyone who has brought us to this moment,” Rick Charest, president of Landmark and Rehabilitation Hospital of Rhode Island, said of Silverstein’s rulings on Tuesday.
“During the last five-and-a-half years we have certainly seen our share of highs and lows,” Charest said. “This could not have happened without the support, patience and dedication of our hardworking employees and medical staff, and the support of the community.”
Charest also pointed to the “unprecedented” investment Prime Healthcare Services will be making in the northern Rhode Island community, and offered “that without their support it is hard to envision how we would have remained operational. Their commitment to capital improvements, physician recruitment and quality outcomes will truly benefit the greater Woonsocket community and the Northern Rhode Island healthcare consumer,” Charest said.
Although a key healthcare provider and employer of 1,100 in Northern Rhode Island, Landmark has long been burdened by the costs of serving a high population of uninsured or underinsured patients, racking up significant annual operating deficits in the process. During the state’s review of Landmark’s proposed conversion to for-profit operation, consultants and health regulators pointed to Prime’s experience in turning around financially-troubled institutions as a potential asset in stabilizing Landmark and preserving its role serving elderly residents and young families in its market.
Landmark unsuccessfully sought acquisition by other prospective buyers in recent years, but Prime is described as committed to adding Landmark to its network of hospitals.
The settlement agreements approved by Judge Silverstein will require Prime to pay $800,000 on $3 million in claims from Blue Cross that predate Landmark’s receivership and another $191,800 on more recent claims by the health insurer.
The related settlement will include a two-year contract between Blue Cross and the Prime-operated Landmark allowing Blue Cross members to retain their coverage when using Landmark.
The agreement for future coverage was a major component of the settlement in regards to Landmark patients with Blue Cross coverage, according to Bill Fischer, the hospital’s spokesman.
“What is important is that we have been able to reach agreement with Blue Cross/Blue Shield and Blue Cross subscribers will know that they can go to Landmark and they will be covered,” he said.
The action by Judge Silverstein was also the last needed to move Landmark and Prime Healthcare to a closing of the transaction, he noted. The date of that closing has been established in the ruling as Dec. 31, a date which will represent the conclusion of the acquisition process.
“Effective Jan. 1 of the new year, Landmark Medical Center will formally be a part of Prime Healthcare Systems, a 23-hospital network,” Fischer said. Landmark will become the 24th hospital in that network, he added.