WOONSOCKET — Seven weeks before the court-imposed deadline for choosing a buyer, Landmark Medical Center has signed a non-binding letter of intent calling for a Tennessee-based hospital chain to buy the Cass Avenue hospital and the affiliated Rehabilitation Hospital of Rhode Island in North Smithfield.
Pawtucket lawyer Jonathan Savage, the court appointed special master who runs Landmark, said RegionalCare Hospital Partners of Brentwood, Tenn., is committed to maintaining Landmark as a full-service community hospital and would pump millions into an expansion of Landmark's emergency room, the fourth-busiest in the state despite its comparatively cramped quarters.
But he released few other details of the prospective sale in yesterday's surprise announcement.
“RegionalCare Hospital Partners was selected based upon their commitment to keep services open, their significant access to capital, their management team's experience in dealing with hospitals similar to Landmark and their willingness to move quickly to complete the transaction,” Savage said.
The announcement came exactly one week after Superior Court Judge Michael Silverstein, at Savage's request, set March 25 as the deadline for fielding new bids for Landmark's assets following the collapse of merger talks with Caritas Christi. Landmark has been operating under a form of receivership, with Savage at the helm, since the hospital petitioned the court for protection from creditors in June 2008, saying it was on the brink of collapse.
Savage has until April 6 to recommend one of the bids for Silverstein's approval.
Bill Fischer, a spokesman for Landmark, said the announcement does not mean a merger with RegionalCare Hospital Partners is a done deal. Under Silverstein's order, Savage must entertain all bids received before the deadline, and the special master still has the latitude to choose a competing offer if he believes it outshines that of RegionalCare.
“Other potential suitors still have the opportunity to make an offer,” said Fischer. But he added, “We have an extraordinary offer on the table we're not going to pass up. If there are other parties truly interested in purchasing Landmark Medical Center, now is the time to step up.”
How much capital RegionalCare Hospital Partners intends to sink into financially struggling Landmark is unknown, but the lion's share is expected to come from Warburg Pincus, one of the largest private equity companies in the country. Warburg Pincus is the primary shareholder in RegionalCare.
Savage identified the principals of RegionalCare as Marty Rash, the chairman and chief executive officer, and John Rutledge, the president and chief operating officer. Between them, he said, the hospital execs have experience running more than 300 hospitals, primarily as former administrators of another company, Province Healthcare.
With backing from Warburg Pincus, the two men formed RegionalCare as a for-profit hospital company in 2009. The company's holdings consist of four hospitals, Clinton Memorial Hospital in Wilmington, Ohio; Eliza Coffee Memorial Hospital in Florence, Ala.; Shoals Hospital in Muscle Shoals, Ala.; and Ottumwa Regional Health Center in Ottumwa, Iowa.
In a phone interview, Jeffrey Atwood, RegionalCare's vice president of communications, affirmed the company's commitment to running Landmark as a full-service hospital.
“We have access to capital and we have experience running hospitals like Landmark Medical Center for the last 25 years,” he said. “This isn't just about the health and well-being of the community, but it's also an economic driver and we want to make sure it's just that.”
Atwood said representatives of RegionalCare have already visited the hospital and will return periodically over the next few weeks, starting today, to follow through on the continued evaluation of the potential acquisition, a process formally known as due diligence.
In a statement, Rash said RegionalCare was “delighted to have the opportunity to add Landmark Heath Systems” to its company.
“We are extremely impressed with the quality of services provided by Landmark Health Systems, and we believe the experience we have in operating community hospitals will ensure that Landmark continues to provide outstanding care to the citizens of Northern Rhode Island. It is our intention to make a significant long-term investment in Landmark.”
Savage said the letter of intent was “exciting news” for employees and patients of the hospital. He said RegionalCare has “a vast amount of experience in managing community hospitals” and it is “committed to a full-service model at Landmark where clinical services will not be diminished.”
Though Savage said the terms of the deal cannot be released yet, RegionalCare is committed to “a significant capital investment in the hospital” over the next five years, as well as a “multi-million dollar expansion of Landmark's emergency room services.”
RegionalCare was identified as a potential bidder as a result of a nationwide search conducted by Joshua Nemzoff, president of Nemzoff & Co., a Pennsylvania-based mergers-and-acquisitions consulting firm, according to Savage.
Over the next four weeks, Savage said he would be negotiating a formal asset purchase agreement with RegionalCare for Landmark and the Rehabilitation Hospital of Rhode Island – subsidiaries of Landmark Health Systems. He said his goal is to have an agreement signed by March 15.
The letter of intent and the asset purchase agreement would both require Silverstein's approval before the deal could be handed off to regulators, including Attorney General Peter Kilmartin and the Department of Health, for review under the complex Hospital Conversions Act.
Located at 115 Cass Ave., Landmark is a 214-bed acute care hospital offering a full range of diagnostic, medical, surgical, psychiatric, cancer, cardiac and obstetric care. The hospital logged about 7,000 admissions, 75,000 outpatient visits and 45,000 emergency room contacts last year.
The hospital was founded 135 years ago and remains the linchpin health care provider in the Greater Woonsocket area, with a workforce of some 1,300 nurses, clinicians and other health care workers. Only CVS/Caremark employs more people in the city.