"I will not allow hospital ownership change without strong conditions that will ensure the continuity of healthcare services and operations of these hospitals."
Today, this Office – having concluded an exhaustive, year-long review of the proposed transaction in accordance with the Hospital Conversion Act – was prepared to issue a detailed decision approving the proposed transaction by the owners of Roger Williams Medical Center and Our Lady of Fatima Hospital involving a change of ownership, but only with strong conditions absolutely and unquestionably necessary to ensure the continuity of healthcare services and operations at the hospitals for at least five years. Those conditions included financial security in an amount necessary to cover ongoing operating expenses and necessary capital investments, increased commitment to charity care, maintaining current service and staffing levels, and close financial monitoring, among others.
The owners of our Rhode Island hospitals, having received our anticipated decision last night, in accordance with standard practice, advised this Office this morning that they would be withdrawing their application for approval of a transaction that would allow the change in ownership.
The owners' withdrawal of their application, designed to avoid the issuance of our decision, is telling. It reflects the owners' unease with the public receiving a full and complete picture of the rationale behind this Office's insistence that they provide adequate and reliable financial commitment to ensure that these hospitals continue to operate at the levels they do today.
Put another way, they do not want the public to know what has gone on here, and why.
This morning, the parties asked – notwithstanding their irresponsible statements yesterday – for an additional short window of opportunity to convince this Office that they are prepared to provide the guarantees of financial security for the hospitals that are a necessary condition of our approval of this transaction. I have decided to afford them that limited opportunity. But the people of Rhode Island can be assured that this Office will continue to fight to protect and defend them in every way possible.
As a regulator with the immense responsibility of reviewing business transactions involving hospitals in our state, this Office must contemplate outcomes that safeguard the delivery of quality, accessible, and affordable healthcare for all Rhode Islanders. I take that responsibility – and potential impacts on healthcare delivery in our state – seriously.
Assurances from those entrusted with elements of our healthcare system, upon which Rhode Islanders so critically rely, cannot be taken on faith alone. The ability and commitment to stand behind those assurances must be verified by this Office. To do otherwise would be to abandon our mission, and correspondingly the people of this state.
Our robust review of the proposed transaction revealed a national company whose principals and investors extracted hundreds of millions of dollars from the hospitals and services they own. As a result, the company now faces risks to its financial viability which is required to respond to challenges that may arise in a volatile healthcare market, potentially putting every hospital in its system – including our Rhode Island hospitals – at risk of a reduction in services, sale or closure.
The people of Rhode Island deserve the truth. It is a hard truth: that those who claimed to care about healthcare here in Rhode Island and around the country cared much more – orders of magnitude more – about lining their own pockets than about the people they purported to serve.
Now much is at risk. And the 60 percent majority owner of the hospitals, private equity firm Leonard Green & Partners, L.P., wanted to walk away with twelve million dollars more in its pockets and absolved of billions of dollars in debt. This Office, and Rhode Islanders generally, were being asked to rely on the assurances of the current minority owners and would-be new owners that all is well, and all will be well. I am not willing to take the risk that acceptance of such assurances, without more, requires.
The owners have always had a simple choice. They could move forward with the proposed change in ownership with these conditions, which are absolutely necessary to ensure the continued operation of these hospitals. Or they could maintain their current ownership structure. Let us be clear: there is nothing about this latter alternative that puts the hospitals in a worse financial condition. That is simply the status quo.
Ultimately it comes down to this. Under the proposed transaction, majority owner Leonard Green, having made its money at the expense of the financial health of the hospitals, now wants out. So be it. But that choice comes at a price: remedy the malady you have created.
You chose to get into healthcare. Act like you believe in it.