WOONSOCKET — Steward Health Care System of Boston is moving full-speed ahead on its plans for acquiring Landmark Medical Center.
A week after a Superior Court judge approved the $76 million deal, Landmark and Steward announced yesterday that they have have signed an asset purchase agreement, a core component of the sale. The agreement would make Landmark a part of Steward, parent company of the Caritas Christi Health Care network.
“We are excited to have reached an agreement to make Landmark Medical Center a part of Steward,” said Bob Guyon, chief operating officer. “Landmark is not just a health care provider, it is a vital economic engine for the region. Joining Steward will secure Landmark's long-term financial viability and ensure the hospital is always there to serve the Northern Rhode Island community.”
Landmark, which filed for receivership in June 2008, saying it was on the brink of insolvency, remains under the supervision of special master Jonathan Savage pending regulatory approval. A decision from the regulators, including state Health Director Michael Fine and Attorney General Peter Kilmartin, is several months away, at best.
But Savage says the approval of the asset purchase agreement is further cause for optimism about Landmark's future.
“This agreement came together as the result of the hard work and commitment of a broad coalition of stakeholders at Landmark who worked tirelessly to preserve this essential community asset,” he said.
Savage said he was particularly grateful to the members and leadership of the United Nurses and Allied Professionals Local 5067, which represents about 600 of the roughly 1,200 patient-care workers at Landmark and the Rehabilitation Hospital of Rhode Island. The latter, in North Smithfield, is included in the asset purchase agreement.
Savage said the union was “instrumental in bringing Steward back to the negotiating table at a truly critical juncture in the judicial process.”
Steward emerged as a surprise bidder for the hospital in an eleventh-hour pitch on May 27 as talks with the second round of bidders, fielded by Savage months earlier, were falling apart. It was, in effect, the company's second offer on the hospital, because Caritas Christi had bid on Landmark in early 2009, pulling out after a dispute with Blue Cross/Blue Shield of Rhode Island.
The Caritas network was later bought out by the Cerberus Capital Management of New York, a private equity firm which formed Steward as its health care arm. At the time, the Caritas group consisted of six hospitals in eastern Massachusetts, but Steward has since purchased others.
Steward now includes St. Anne's Hospital in Fall River, Holy Famly in Methuen, St. Elizabeth's in Brighton, Norwood Hospital, Carney Hospital in Dorchester, Good Samaritan in Brockton; Nashoba Valley in Ayer, and Merrimack Valley in Haverhill.
Christopher Callaci, general counsel for UNAP, says the agreement marks “a great day” for Landmark and the many patients who depend on the hospital for quality care. “We look forward to working with Steward to continue serving the residents of Northern Rhode Island for years to come.”
Guyon said Landmark will soon see benefits as a result of the agreement. He said Steward has invested more than $100 million in clinical information technology to improve efficiency and communication among network physicians. Landmark will have “immediate access to this technology and an experienced management team to oversee its implementation.”
Landmark would also experience the benefits of “operating synergies” that come from being part of a larger network, Guyon said.
“Our mission is to keep care in the community by investing in our hospitals, growing our world-class physicians network and bringing the latest medical technology to the community hospital setting,” Guyon said.
Now that the asset purchase agreement is signed, Landmark and Steward are poised to hammer out the details of another complex part of the merger – a management advisory agreement, said Bill Fischer, spokesman for Landmark. That agreement will include provisions for Steward to funnel operating revenue into cash-strapped Landmark while the marriage is under review by the state regulators, said Fischer.
There have been “initial discussions about how we approach the Hospital Conversions Act,” according to Fischer, though he said is premature to provide details about the coming regulatory review.