Healthcare Business News

R.I. Senate votes to remove limit on acquisitions

By Jaimy Lee
Posted: April 13, 2012 - 2:15 pm ET

The Rhode Island Senate voted 36-0 to amend the state's Hospital Conversion Act to remove a prohibition that prevents for-profit companies from acquiring more than one hospital during a three-year period.

The legislation is tied to an effort by Boston-based Steward Health Care System to acquire Landmark Medical Center, a 133-bed hospital in Woonsocket, R.I. According to the terms of the deal between the two organizations, the for-profit healthcare system can walk away from the transaction if lawmakers fail to change the law.

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Current law prohibits for-profit companies from acquiring more than one not-for-profit hospital during a three-year period.

The bill would also allow the state health department and attorney general (PDF) to impose conditions, such as keeping the hospital open for a specified length of time, committing to a minimum investment, maintaining a local governing board, contributing financially to state health planning and primary care, and restricting financial incentives to patients receiving hospital care outside the state.

In addition, it would shorten the application and review process to 120 days from 180 days and would create an expedited 90-day review for “distressed hospitals when the proposed applicants are Rhode Island nonprofit entities.”

A distressed hospital is defined as meeting one of several criteria that includes having less than 50 days cash on hand, an inpatient occupancy rate of less than 50%, or an operating loss for the two most recent fiscal years.

“The goal here is to be flexible, since every hospital's situation is different, but to do what is in the interest of the public, public health and the strength of the community,” said state Sen. Roger Picard in a news release. “Ultimately, regardless of whether they are for-profit or nonprofit, we want hospitals and to provide high-quality health care to the public while employing local people.”

Picard had introduced the legislation in January.

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