PROVIDENCE — The sale of Woonsocket's Landmark Medical Center and its subsidiary, the Rehabilitation Hospital of Rhode Island in North Smithfield — possibly to different buyers — could be a done deal by April 13.
Though the identities of some of the bidders vying for Landmark's assets has started to leak out, the special master in charge of the financially struggling hospital said he would release the full text of all the bids after a Superior Court hearing tomorrow.
Those details and others emerged during a hearing before Judge Michael Silverstein on Monday — ostensibly to discuss whether any portion of the bids should not be disclosed. But Jonathan Savage, the special master in charge of the struggling hospital, told the judge the issue may be resolved before tomorrow's hearing.
Bill Fischer, a spokesman for Landmark, clarified the bid picture after yesterday's hour-long session. Contrary to the information released after the bid deadline last week, Fischer said only four parties — not five — bid for both Landmark and the Rehabilitation Hospital. A fifth has bid for the rehabilitation hospital only.
To the question of whether the two hospitals could be sold off to unrelated entities, Fischer said it was too soon to know, but “that's certainly a scenario that could play out.”
Savage also told Silverstein that he will not make a recommendation in support of any particular bid, as he originally planned. Stephen DelSesto, a lawyer who represents the special master in the proceedings, said Savage believes he should maintain a posture of impartiality at this phase of the selection process.
“Ultimately, it's the court's decision,” said DelSesto. “There's a concern (the special master) could be at odds with whoever the judge ultimately picks.”
The decision to distance himself from the proceedings may have been prompted by the return to the bargaining table of Transition Health Care of Tennessee. During a hearing that lasted for days, Savage argued strongly against allowing Transition to make an offer on the hospital in late 2009, months after Silverstein had granted exclusive bargaining privileges to Caritas Christi Health Care of Massachusetts. Savage eventually prevailed.
Yesterday, Transition Healthcare was represented by legal counsel who confirmed the company had a new bid pending in open court. Later, another Transition representative – business consultant Greg Mercurio – declined to elaborate, though he said the hospital group has the same financial backers it did previously, the New York-based Falcon Investment group.
“The Transition proposal was very well thought-out and addresses a very significant issue of tying together health care in northern Rhode Island,” Mercurio asserted after the hearing.
Another Tennessee-based group, RegionalCare Hospital Partners, confirmed last week that it is vying for Landmark and the Rehabilitation Hospital, as expected. Savage disclosed earlier that he had signed a non-binding letter of intent to sell Landmark's assets to RegionalCare, which has backing from a large private equity company, Warburg Pincus.
As it was when Caritas Christi and Transition Health Care were battling in court for rights to bid on Landmark's assets, next week's hearing to air the merits of the offers now on the table is expected to be a highly contentious, competitive affair. The hearing begins on April 13, but Silverstein has advised lawyers to keep their schedules open the following day, if necessary.
“It might just be that after the bids are made public one or more of them may withdraw,” Silverstein said at one point. “To a great extent this is an adversarial hearing.”
The selection hearing has been billed as a full-blown evidentiary procedure, which means bidders have the right to call witnesses in support of their offers and their statements are subject to challenge. Savage told the court he has requested his consulting advisor, Price Waterhouse Coopers, to provide an accountant for guidance through the hearings.
To that, Silverstein shot back, “You might want to suggest to them that it's more than a request.”
Theodore Orson, a lawyer who represents the state Department of Health, told Silverstein he wants to put the full text of the bids online – a suggestion that Silverstein seems open to. Presumably, that would happen shortly after the bids are made public during Wednesday's hearing in court.
Others in court yesterday included Attorney General Peter Kilmartin and Asst. Attorney General Genevieve Martin. Together, the attorney general and Interim Health Director Michael Fine (or his successor) are the key government regulators who must grant final approval of the sale under the Hospital Conversions Act, a process that could take months.
Meanwhile, Landmark has a busy week in court on other issues that have become increasingly volatile as the sale approaches. Fischer said Blue Cross/Blue Shield of Rhode Island wants to be heard on a motion today to sever its health care contracts with Landmark. If that happened, Blue Cross members wouldn't be covered for treatment at Landmark, and there would be no coverage for Landmark's workforce.
Fischer said the issue has arisen previously, but Blue Cross began pushing it again after Landmark filed suit against Blue Cross two weeks ago, claiming unfairly low reimbursements rates from the health care provider had pushed Landmark to the brink of insolvency. Blue Cross denied the allegations, saying mismanagement and bad business decisions crippled the hospital.
“It's an old matter the judge has previously not allowed it to go forward,” said Fischer. “It would leave 1,300 employees without access to health care or dental care at this critical juncture. It's retaliatory and it's offensive.”
Hospital officials previously pegged the combined workforce of Landmark and the rehab hospital at about a hundred employees less than the figure Fischer was citing. But now they are attempting to refine the definition of a full-time equivalent in a way that is the same for all the bidders, a process that is ongoing, they say.
Facing a financial meltdown, Landmark has been operating under a form of receivership, dubbed special mastership, since June 2008, when it petitioned the court for protection from creditors. This is the second round of bids sought by the special master in attempts to secure a “strategic acquisition partner” to save the hospital. It began less than three months ago after Caritas Christi broke off nearly two years of exclusive talks with Landmark in December, citing the Blue Cross reimbursement issue.