Char­terCare forms venture with for-profit firm

Modern Healthcare - - REGIONAL NEWS - —Bob Her­man

A dis­tressed, not-for-profit health sys­tem in Prov­i­dence, R.I., has forged a new iden­tity with an out-of-state for­profit com­pany.

The joint venture be­tween Char­terCare Health Part­ners and Santa Ana, Calif.-based Prospect Med­i­cal Hold­ings went into ef­fect June 20. The two sys­tems worked on the deal for more than a year and signed a de­fin­i­tive as­set pur­chase agree­ment in Septem­ber. The Rhode Is­land Depart­ment of Health and state At­tor­ney Gen­eral Peter Kil­martin ap­proved the joint venture in May.

A new lim­ited li­a­bil­ity com­pany,

Prospect Char­terCare, now owns the Rhode Is­land sys­tem. Prospect Med­i­cal Hold­ings paid about $45 mil­lion for its 85% own­er­ship in­ter­est, with most of that money al­lo­cated to pay off debt and bet­ter fund the sys­tem’s pen­sion plan. Dur­ing the next four years, Prospect will in­vest $95 mil­lion in Char­terCare’s hos­pi­tals, physician-en­gage­ment strate­gies and other ex­pan­sion projects. Af­fil­i­ated with Los An­ge­les-based pri­vate-eq­uity firm Leonard Green & Part­ners, Prospect Med­i­cal Hold­ings has own­er­ship stakes in two other health sys­tems.

Char­terCare, which has an­nual rev­enue of about $300 mil­lion, op­er­ates two hos­pi­tals in Prov­i­dence: 95-bed Roger Wil­liams Med­i­cal Cen­ter and 126-bed St. Joseph Health Ser­vices of Rhode Is­land, which in­cludes Our Lady of Fa­tima Hos­pi­tal. Both hos­pi­tals are now for-profit in­sti­tu­tions, but the hold­ing com­pany has pledged to main­tain all ser­vices at the hos­pi­tals for at least five years.

Char­terCare spokesman Brett Davey said the new en­tity will con­tinue to fol­low the Catholic-based sys­tem’s eth­i­cal and re­li­gious di­rec­tives.

Our Lady of Fa­tima Hos­pi­tal is part of two-hos­pi­tal Char­terCare.

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