Hospital ownership transfer stalls over financial conditions

Attorney General Peter Neronha. Photo by Steve Klamkin WPRO News

By WPRO News and The Associated Press 

The owner of two Rhode Island hospitals has withdrawn its transfer of ownership applications with the state over objections to financial conditions placed on the transaction by the state attorney general’s office.

Prospect Medical Holdings, the California-based company that owns Roger Williams Medical Center and Our Lady of Fatima Hospital, was seeking state approval to let private equity firm Leonard Green sell its majority stake in the company.

Attorney General Peter Neronha in a statement Friday said he was prepared to approve the deal under certain financial conditions “to cover ongoing operating expenses and necessary capital investments” that would assure the continuity of health services and operations for at least five years.

The conditions included putting up to $150 million in escrow.

Prospect in a letter to Neronha on Thursday called the conditions “unreasonable and unacceptable,” and warned that if the ownership transfer was unsuccessful, the hospitals could close.

“There’s no reason to close the hospitals, that’s a scare tactic,” Neronha told WPRO’s Dan Yorke late Friday.

Prospect in a statement Friday said the formal withdrawal of its applications “concludes the regulatory review process.”

The current ownership has asked for, and was granted, “an additional short window of opportunity” to consider the attorney general’s conditions, Neronha said Friday.

The hospitals employ a total of about 2,800 people.