The Rhode Island Department of Health (RIDOH) announces that it has given conditional approval to Chamber Prospect CharterCARE’s Change in Effective Control (CEC) and Hospital Conversion Act (HCA) applications. This transaction allows investors to end their relationship with the parent company, Ivy Holdings, Inc., with extensive conditions in place.
The approval of the HCA application is in alignment with, and includes, the financial conditions the Office of the Attorney General announced earlier today.
“This conditional approval is the result of extensive and thoughtful review and deliberation of hours of testimony under oath, analysis of our consultant’s findings, public comments, transcripts, and the information and data submitted by the applicants,” said Director of Health Dr. Nicole Alexander-Scott. “Our continued priority is to assure quality, equitable, and accessible healthcare for Rhode Islanders served by Roger Williams Medical Center, Our Lady of Fatima Hospital, and other Prospect CharterCARE (PCC) facilities. The specific and strategic conditions we have included in RIDOH’s approval allow us to closely monitor the hospitals and their future viability. Most notably, we are not allowing any layoffs for a period of one year.”
Other key elements of the conditional approval require:
Both hospitals to remain open and operational, providing access to quality healthcare services, for at least five years;
Submission of quarterly reports to RIDOH on quality improvement initiatives;
No material reduction or elimination of healthcare services without RIDOH approval;
Participation in RIDOH and community statewide health equity initiatives, including support for local Health Equity Zone (HEZ) initiatives;
Participation in statewide health information technology initiatives;
Contributions to primary care and the State health planning initiatives;
Elimination of management fees paid by both hospitals; and
Strong and timely financial reporting and notification, including fiscal and public health monitoring for a period of no less than five years.
PYA, P.C. (PYA) served as RIDOH’s expert financial consultant for the HCA review. RIDOH met with PYA staff on an ongoing basis as part of the review and analysis of documents submitted by the applicants.
As an expert in the hospital and healthcare accounting industry, PYA provided key financial observations and assisted in RIDOH’s review of the HCA application. PYA acknowledged that both hospitals face long-term financial viability risks and have operated at a financial loss since their acquisition in 2014. Since 2014, Prospect Medical Holdings (PMH) has funded operational shortfalls and capital investments while also reporting limited liquidity and a highly leveraged position in recent fiscal years. However, PYA concluded that “Despite these general observations, utilizing the information made available to us by the Transacting Parties, we did not observe impacts from the Proposed Transaction which directly affect the financial condition of PCC. We do note that PCC may be impacted indirectly as a result of any potential material effects to PMH caused by the Proposed Transaction.”
“Including these conditions for the applicants allows RIDOH a more focused and distinct ability to monitor these facilities while achieving important public health goals,” said Alexander-Scott. “The basis for this decision is in close alignment with the RIDOH’s long-standing strategic priorities to ensure quality and accessible health services, including healthcare, for all Rhode Islanders, regardless of their ZIP code.”