West­erly draws suit­ors

Nine of­fers made to ac­quire ail­ing R.I. hospi­tal

Modern Healthcare - - REGIONAL NEWS - Jaimy Lee

At least nine health­care or­ga­ni­za­tions, in­clud­ing six out-of-state hos­pi­tals, have made bids to ac­quire a small, strug­gling hospi­tal in a beach­front Rhode Is­land town. West­erly (R.I.) Hospi­tal, a 100-bed fa­cil­ity, is un­der re­ceiver­ship. Lawrence & Me­mo­rial Hospi­tal, a 252-bed in New London, Conn; South County Hospi­tal, a 77-bed hospi­tal in Wake­field, R.I.; and West­erly Hospi­tal Holdco con­firmed that they have sub­mit­ted bids for the hospi­tal.

West­erly Hospi­tal Holdco shares “some com­mon own­er­ship” with the own­ers of Bay­onne Med­i­cal Cen­ter and Hobo­ken Univer­sity Med­i­cal Cen­ter, both in New Jer­sey, ac­cord­ing to a spokes­woman.

Mark Russo, a lawyer in Prov­i­dence, R.I., and the hospi­tal’s spe­cial mas­ter, said in an April 24 e-mail that nine hospi­tal sys­tems have pro­vided con­fi­den­tial of­fer­ing mem­o­ran­dums. Of the nine or­ga­ni­za­tions, three have sub­mit­ted pre­lim­i­nary pro­pos­als. Russo de­clined to pro­vide ad­di­tional in­for­ma­tion about the bid­ders, although he said that six of the nine are not based in Rhode Is­land. Ac­cord­ing to bond doc­u­ments, the dead­line to sub­mit let­ters of in­ter­est is June 1.

“We are at the be­gin­ning stages of a very rig­or­ous and trans­par­ent bid­ding process,” Russo said. “With the level of ac­tiv­ity that we have en­joyed, we are con­fi­dent that we will re­ceive cred­i­ble pro­pos­als.”

West­erly Hospi­tal filed for re­ceiver­ship pro­tec­tion in De­cem­ber. In a Fe­bru­ary rat­ings up­date, Moody’s In­vestors Ser­vice cited the hospi­tal’s very weak cash po­si­tion, with less than 11 days’ cash on hand and an op­er­at­ing loss of $5.8 mil­lion through 10 months of fis­cal 2011.

West­erly an­nounced last year an ex­clu­sive non­bind­ing let­ter of in­tent with Lawrence & Me­mo­rial Hospi­tal. At the time, West­erly of­fi­cials said they had been search­ing for a part­ner for four years. “Our pre­lim­i­nary pro­posal shows the sig­nif­i­cance of our in­ter­est in West­erly Hospi­tal,” a Lawrence & Me­mo­rial spokesman said.

West­erly Hospi­tal isn’t the only Rhode Is­land hospi­tal gen­er­at­ing in­ter­est from neigh­bor­ing states.

Stew­ard Health Care Sys­tem is pur­su­ing the ac­qui­si­tion of the 133-bed Land­mark Med­i­cal Cen­ter in Woonsocket. The Bos­ton-based for-profit health sys­tem is also seek­ing changes to leg­is­la­tion that cur­rently lim­its for-profit com­pa­nies from buy­ing more than one hospi­tal in Rhode Is­land ev­ery three years. The state Se­nate passed the bill this month that would amend the Hospi­tal Con­ver­sion Act (April 23, p. 17).

How­ever, the bill in­cludes pro­vi­sions that would also ben­e­fit state providers, such as re­quir­ing lo­cal gov­ern­ment boards, re­strict­ing fi­nan­cial in­cen­tives to pa­tients who re­ceive care out­side of Rhode Is­land, and re­duc­ing the ap­pli­ca­tion and re­view process for all deals.

Moody’s noted last week that the leg­is­la­tion, which it ex­pects to pass, “would be a credit pos­i­tive for Rhode Is­land’s strug­gling small com­mu­nity hos­pi­tals, but a credit neg­a­tive for the larger not- for- profit providers in the state.”

In a news re­lease an­nounc­ing its dis­cus­sions with West­erly Hospi­tal, South County Hospi­tal Pres­i­dent and CEO Louis Gian­cola em­pha­sized the need for “health­care that is non-profit, com­mu­nity-based, high qual­ity and af­ford­able.”

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