fb-pixelTimeline: Leading up to proposed Roger Williams, Fatima hospitals sale Skip to main content
RI HEALTH CARE

Timeline: Proposed sale of Rhode Island hospitals preceded by years of regulatory fights, funding problems

Prospect Medical Holdings, the for-profit owner of Roger Williams Medical Center and Our Lady of Fatima Hospital, could soon sell its local assets to an Atlanta nonprofit

Members of United Nurses & Alied Professionals Local 5110 stage an informational picket at Our Lady of Fatima Hospital in North Providence in 2021.Pat Greenhouse/Globe Staff

PROVIDENCE — In the 10 years Prospect Medical Holdings has controlled two Rhode Island hospitals, union leaders and state regulators have accused the Los Angeles-based company of problematic working conditions, underfunding the properties, and canceling procedures.

Rhode Island Attorney General Peter F. Neronha and the state health department said last month that the application from Prospect Medical Holdings and The Centurion Foundation, the Atlanta-based organization looking to purchase the two hospitals, is “complete.” The application was released to the public on Monday. Regulators will have to approve, deny, or approve the deal with conditions.

Prospect operates Roger Williams Medical Center in Providence, and Our Lady of Fatima Hospital in North Providence. The community hospitals are often referred to under Prospect subsidiary CharterCARE.

Advertisement



To understand the importance of the proposed sale of these hospitals, which care for some of the state’s most vulnerable and low-income patients, here are some key points of tension in recent years between Prospect and state regulators:

Our Lady of Fatima Hospital in North Providence, R.I.Pat Greenhouse/Globe Staff

October 2019: Leonard Green & Partners, a private equity firm, announces its plans to sell its 60 percent stake in Prospect Medical Holdings to Sam Lee, Prospect Medical’s CEO, and Lee’s business partner, hospital marketing executive David Topper, for $12 million plus $1.3 billion in lease obligations. Prospect Medical — not Lee or Topper — would pay Leonard Green the $12 million. This deal requires approval by Rhode Island state regulators.

February 2021: A ProPublica investigation finds that during Leonard Green & Partners’ ownership of Prospect, the firm profited while the hospitals lacked resources needed to care for patients, and had a history of patient-care violations, including some that “posed immediate jeopardy to patients.” The planned sale of Leonard Green’s stake in Prospect was approved in Connecticut, New Jersey, Pennsylvania, and California, which accounts for 15 of Prospect Medical’s hospitals. But in Rhode Island, where any major hospital transaction requires approval from the state health department and the attorney general, the deal is subjected to intense scrutiny, and state health officials repeatedly delay their decision.

Advertisement



According to a report prepared by Pershing Yoakley & Associates PC, an independent consultant, Prospect’s two Rhode Island hospitals had accumulated net operating losses of $88.1 million from Fiscal Year 2015 to Fiscal Year 2020. The report also said that health company’s liabilities exceeded its assets by more than $1 billion as of September 2020. The report found that Prospect borrowed $1 billion in 2018, which was used to pay a nearly half a billion dollar dividend.

Attorney General Peter F. Neronha. Ryan T. Conaty/Ryan T. Conaty for the Boston Gl

April 2021: Prospect Medical’s Hospital Conversion Act application to purchase Leonard Green & Partners’ stake is approved by Rhode Island’s Health Services Council, which advises the state health department on health care facility licensing reviews. However, Attorney General Peter Neronha said his office could approve the deal only if Prospect put $120 million to $150 million in escrow to “ensure the financial viability of the hospitals.” In response, Prospect withdrew its application and threatened to close Roger Williams and Fatima hospitals. A Prospect spokesman called the attorney general’s requirements “anomalous, if not unprecedented” and sought to have Neronha’s final decision blocked by filing an injunction in Rhode Island Superior Court.

June 2021: Neronha approves Prospect Medical Holdings’ Hospital Conversion Act application with a set of strict conditions, which require the corporation to put up $80 million in an escrow account to ensure the operation of Roger Williams and Fatima hospitals, preclude their lease or sale for five years, and demand the hospitals be kept “open and operational.”

Advertisement



December 2021: Prospect Medical Holdings begins seeking suitors for its assets around the country.

March 2022: Registered nurses at Roger Williams vote to join the United Nurses and Allied Professionals, or UNAP, union.

Roger Williams Medical Center in Providence, R.I.David L. Ryan/Globe Staff

November 2022: Prospect subsidiary CharterCARE, which operates Roger Williams and Fatima hospitals, announces it has entered into an asset purchase agreement with The Centurion Foundation to return the two hospitals to nonprofit status, which, again, requires approval by Rhode Island state regulators.

May 2023: The Centurion Foundation and Prospect Medical submit their Hospital Conversion Act application to state regulators, which details the Foundation’s intentions to acquire Prospect’s two Rhode Island-based hospitals. Neronha deemed the application incomplete twice because executives allegedly failed to answer hundreds of questions.

August 2023: Prospect is hit with a cyberattack, which forces facilities offline and disrupts services. The FBI is investigating the attack, for which ransomware gang Rhysida has since claimed responsibility. The group, which posted its so-called victory on the dark web, alleged it stole more than 500,000 Social Security numbers, along with “other” legal and financial documents.

November 2023: The Rhode Island Department of Health issues a compliance order against Prospect, claiming it has underfunded its R.I. two hospitals to such an extent that it is impacting operations and has led to canceled surgeries. An investigation by the health department reveals that as of late October, more than 250 of the hospitals’ approximately 830 vendors were operating on a “cash on demand” basis with the hospitals.

Advertisement



A day before the health department’s compliance order is issued, Neronha’s office sued Prospect for a series of violations that the attorney general said raised “significant concerns” about the financial viability of the hospitals.

December 2023: Neronha and the state health department deem the transaction application from Prospect and the Foundation complete. It is the third time the two transacting parties had attempted to file this application to state regulators over the last year.

January 2024: State regulators publicly release Prospect and The Centurion Foundation’s Hospital Conversion Act application.

Material from previous Globe articles was used in this report.


Alexa Gagosz can be reached at alexa.gagosz@globe.com. Follow her @alexagagosz and on Instagram @AlexaGagosz.