Four states where Prospect owns its hospitals — including Pennsylvania — allowed the deal to go through. But in Rhode Island, a group of state officials and a union for hospital workers held out. There, a combination of regulatory powers and diligence appears to have allowed the state to dodge a bullet — the same bullet that has Crozer Health on life support.
Rhode Island’s ‘strict regulatory scheme’ saves its hospitals
There was a tremendous amount of pushback against the deal from United Nurses & Allied Professionals (UNAP), the Rhode Island union representing some of the healthcare workers that would’ve been affected by the deal.
Rhode Island officials, including Attorney General Peter Neronha, subjected the deal to a rigorous amount of scrutiny out of fears that there were “significant, financial vulnerabilities that may threaten the viability” of the two Prospect-owned hospitals in Rhode Island, Roger Williams Medical Center, and Our Lady of Fatima Hospital.
Neronha’s office released a PowerPoint presentation in June 2021 that “revealed the root causes of those financial vulnerabilities — the transacting parties putting shareholder profits before financial security and their healthcare mission.”
Citing the review of thousands of pages of records from the parties involved in the deal, as well as a public hearing, Neronha was worried. He found that the two Rhode Island hospitals were fiscally dependent on a company that was in an increasingly “less secure financial position” than it once was.
In fact, Prospect’s growth was linked directly to selling most of its hospital properties to a real estate investment trust and increasing its debt. The presentation ultimately predicted a “liquidity crisis” that could happen as early as the end of 2022.
“As PMH goes, so go Roger Williams and Fatima,” the findings read.
Neronha approved the deal in June 2021 with strong conditions to ensure that the hospitals would be secure.
This came at a rather large cost to the company.
Prospect was ordered to create an $80 million escrow account to cover the operating expenses and capital improvements for the next five years at the hospitals. Additionally, Prospect was required to invest about $72 million in new equipment and renovations.
On top of that, the hospitals cannot be sold or leased until 2026, the hospitals have to remain open until 2026, Prospect can no longer charge management fees, and there can be no reduction in essential health services.
Rhode Island’s attorney general had this authority under the state’s Hospital Conversions Act.
WHYY News reached out to Neronha for an interview, but his office declined to speak due to time constraints.
Chris Callaci, general council for UNAP, told WHYY News that their disputes with Prospect have turned into “wars.”
“They could care less, for the most part, about the idea of providing quality care and have, in our experience, been driven by profit from day one when they showed up in Rhode Island in 2014,” Callaci said.
As an attorney for the union, Callaci was already keyed into some of the issues happening behind the scenes of Prospect’s deal. In order to get the attention of officials, the union ran radio spots and television advertisements. They even picketed. Callaci said that Neronha “embraced” the union’s concerns.
He also credited Rhode Island’s “strict regulatory scheme” when it comes to hospital ownership changes.
“And so by doing this, we secured the financial well-being of our hospitals, which otherwise would have been left out there in a very precarious position, had Prospect gotten away with what they were hoping to get away with — and what they may very well be getting away with in Pennsylvania,” Callaci said.
“It breaks my heart to hear that they are as inhumane and continue to be the animals that they are when it comes to showing extraordinary disregard to people in the communities where they own hospitals,” Callaci added.
Pennsylvania does not currently have a law on the books that gives the state the power to thoroughly vet and potentially block hospital deals. While a group of Chester County legislators are currently working on a bill to do just that, hospital systems in the Commonwealth remain vulnerable.
Although the Rhode Island hospitals have received a safety net, Callaci said that “it’s still a struggle.” The necessary equipment is on backorder, according to the attorney. The healthcare workers are having trouble getting the supplies that they need.
Callaci believes that there is power in numbers and in knowledge. He told WHYY News that the communities impacted by Prospect’s business transactions “all have a responsibility to do something about it.”
