Last hurdle for Landmark sale could be cleared this week

Last hurdle for Landmark sale could be cleared this week

WOONSOCKET - It has taken five years, dozens of court hearings and millions in loans to keep the hospital afloat.

But the sale of Landmark Medical Center to a for-profit entity approached completion this week, with just one last obstacle to clear before the transaction could be finalized.

The petition for sale of Landmark to California-based Prime Health Services needed an official stamp of approval from Rhode Island Superior Court Judge Michael Silverstein,

Since 2008, Silverstein has worked with Special Master Jonathan Savage, hospital President Richard Charest and a slew of state regulators to plan a future for the fiscally troubled facility. Other potential buyers, including Caritas Christi and Steward Health Systems have courted the hospital, only to ultimately walk away.

Silverstein is expected to issue his decision on Friday, Nov. 15. Visit valleybreeze.com for updates on this story.

With the end, and the transfer of Landmark's assets to Prime, finally in sight last Friday, detractors repeated many of the same arguments and objections heard in the courtroom over the past five years.

"We're not here objecting to the sale. We're here objecting to our treatment as a consequence of the sale," said Joseph DiOrio, attorney for Blue Cross Blue Shield of Rhode Island. Blue Cross filed a "limited objection" referencing $3 million the company says it's owed as a creditor.

Landmark spokesman Bill Fischer, however, said that those claims are disputed, and Savage's attorney Preston Halperin argued that they should not hold up the sale.

"What we have here is clearly a bona fide dispute. It's been before this court multiple times," said Halperin.

Prime officials have yet to work out a contract with the state's largest insurer, but unlike with Landmark's last suitor, Steward, they have not indicated that negotiations are crucial to the purchase.

In fact, Prime has not listed any conditions for the sale, leaving few obstacles to the purchase's completion after approval from the judge.

"Throughout this process I have never heard anyone from Prime at any time say that they were going to walk away from this deal. With the previous deal that threat had been made several times," said Assistant Attorney General Jodi Bourque.

Landmark is set to become Rhode Island's first for-profit hospital once the sale is closed, and the purchase process has been governed by the state's the Hospital Conversion Act, requiring a lengthy review by both the Department of Health and the state attorney general. Both regulatory offices signed off on the application in October.

"Frankly, at this point, now that we've done two full Hospital Conversion Act applications, I don't even want to think about doing a third application," said Bourque.

According to the petition filed by Savage, Prime will forgive a loan of $3.6 million, advanced over the past year to pay the hospital's bills throughout the regulatory process, and will pay back $10 million in loans to Caritas Christi, Northborough Capital Partners and Steward Medical Holdings. The buyer will take on payables totaling some $3.5 million, and pay off state hospital licensing fees of $10.5 million from the past two years. Prime will also honor accrued sick and vacation time of employees and honor all contracts.

And that's just immediately after closing.

Over the next five years, Prime has committed to invest no less than $4.5 million in physician recruitment, no less than $15 million in "routine replacements" and no less than $30 million in technology, capital improvements and/or expanded services.

"In all, your honor, it's been an over $80 million purchase and investment for the hospital and approximately half will be paid at or near the closing," said Attorney Stephen DelSesto.

An attorney representing Prospect Medical Holdings, the for-profit company that currently has a asset purchase agreement to acquire both Roger Williams Medical Center and St. Joseph Health Services of Rhode Island/Our Lady of Fatima Hospital, also asked on Friday to officially be considered as a backup bidder for Landmark, a request that Silverstein denied after objections from Bourque.

"Ultimately this just isn't the time to discuss a backup bidder," said Bourque. "This is a hospital. This isn't a factory or a mill building full of condominiums, and this process has been as thoughtful as it can be."

The parties in the transaction are seeking a closing date no later than Dec. 31, but say they hope to finalize the deal by Nov. 30.

Prime operates 23 hospitals in five states and was recognized by Thomson Reuters and Truven as a Top 15 Health System in the nation for quality patient care three times in the past five years.