Woonsocket hospital conversion could hurt city tax rolls

Woonsocket hospital conversion could hurt city tax rolls

WOONSOCKET – Noting that the company's payment of taxes was a factor in regulators' decision to approve the sale of the hospital in 2013, city officials have come out against the application of Prime Healthcare Service, Inc. to convert Landmark Medical Center back to a non-profit hospital.

Prime, the parent company of the Cass Avenue facility since the hospital came out of receivership in 2013, submitted an application to the Department of Health on Tuesday, Dec. 31 to become a nonprofit. If the request is approved, the city stands to lose some $1.6 million in taxes from the hospital.

It is a reversal of actions the California-based healthcare chain once took to become the owner of the state's first for-profit facility. The hospital was previously considered tax exempt and in 2013, the city collected only $240,291 from the state through a “payment in lieu of taxes” program for non-profits. Both Landmark and the city were on the brink of bankruptcy at the time, with the Woonsocket under its own form of receivership: fiscal control of a state-appointed Budget Commission.

Prime officials had indicated early on that they intended to contribute their share to the fiscally struggling city, but the change to for-profit status required extensive review from the DOH, and approval from the Attorney General. Local legislators, led by Sen. Roger Picard, pushed a law through the General Assembly authorizing the city to tax the hospital once it became for-profit.

The $62 million purchase of Landmark by Prime was also reviewed in state courts, and was ultimately approved, by Rhode Island Superior Court Judge Michael Silverstein.

That year, Prime agreed to pay Woonsocket more than $900,000 in taxes, an agreement cited in the Attorney General's decision.

"The payment by Prime of substantial real estate taxes is a significant factor in this department's decision with regard to the proposed transaction," the October 2013 decision from the Attorney General's office noted. "Prime has indicated that it has not and will not seek a tax treaty from the city of Woonsocket. The payment of real estate taxes to Woonsocket, that so desperately needs the resources, is a clear, tangible benefit directly resulting from the proposed transaction. While it remains a question whether this benefit will outweigh the possible risks of allowing Rhode Island hospitals to be purchased by for-profit entities remains to be seen, payment of real estate taxes to Woonsocket certainly represents a positive attribute of Prime."

The company was even monitored by the Attorney General's office in the first year following the sale, with a compliance report noting that the company had not sought a tax treaty.

It's such factors that have made Mayor Lisa Baldeli-Hunt question if the latest application should pass with regulators.

"I am deeply concerned and disappointed by Prime Healthcare Service’s recent filings with state agencies that indicate their attempt to revert their operations back to a nonprofit status," said the mayor. "This move would have a detrimental impact upon taxpayers of Woonsocket by placing approximately $1.6 million of annual tax revenue in jeopardy and is not in the best interest of the city of Woonsocket."

"I stand in opposition to this attempt and look forward to meeting with state officials and regulators.”

Baldeli-Hunt has said she plans to meet with Gov. Gina Raymond and Attorney General Peter Kilmartin to discuss the proposal.

The company, which owns 32 hospitals across the country, has since invested millions in Landmark, and is credited with the turnaround of northern Rhode Island's only facility. In 2016, Prime paid the city around $1.6 million on real estate and tangible assets.

Prime has reportedly turned several for-profit facilities into non-profits, and if the change is approved, company officials have said that staffing and care would remain the same.

The application to become a nonprofit would also affect assets at Landmark's sister facility, the Rehabilitation Hospital of Rhode Island in North Smithfield. It cites Landmark’s history of helping underserved populations and Woonsocket’s median income that’s below the state average.

Once the application is deemed complete by the DOH, the Health Services Council will have 60 days to review it and make a recommendation to Health Director Nicole Alexander-Scott, who will make the final decision.

Comments

How much are they donating to local politicians.

It's time for the Woonsocket administration to disclose all city non profits and their current tax contribution. Based on the property value assessment of the Stadium Theater, it would be interesting to see their tax contribution to the city coffers!

Many non-profits have PILOTs and the Stadium property is exempt by state law.

I hate one-sided articles that don't attempt to get the other sides' feedback on the story. I have no interest in defending Prime, but I wouldn't be surprised to find out, that after all of their investments in the three facilities in Woonsocket, that the state shorted them on Medicare and Medicaid payments. Given the area, that is probably a large portion of their clientele. I would think it is extremely difficult to compete in a Liberal market where most of the other competing medical providers are non-profits. I would also think that letting them turn non-profit would be better economically than losing them altogether. That's a lot of unemployment to pick up, if they go under. This would be a non-issue if the city's politicians, didn't blow the water deal.

how did we handle this when they used to be a not for profit?

Just let this hospital die. It's on life support now. Besides, if you have a chronic medical condition like type 1 diabetes you wont come out alive. Type 1 and type 2 are different conditions. I speak from experience.

McGovern: As Sandy's story says, prior to Prime, in 2013, the city received "payment in lieu of taxes" from the state of $240,291 as a non-profit. If it goes back to that, the city loses about $1.35 million annually. No matter what, though, Prime has made significant improvements to both the Woonsocket and Rehab hospitals in North Smithfield.