A distressed, not-for-profit health system in Providence, R.I., has forged a new identity with an out-of-state, for-profit 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 the state's Attorney General Peter Kilmartin approved the joint venture in May.
Our Lady of Fatima Hospital
“Our new joint venture is going to provide exciting new opportunities for physicians and other health providers to affiliate with a health system that is financially strong, committed to quality in all it does, and ready to meet both the challenges and opportunities in today's rapidly changing healthcare marketplace,” CharterCare board chair Edwin Santos said in a statement
A new limited liability company, Prospect CharterCare, now owns the Rhode Island system, according to state documents
. 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.Follow Bob Herman on Twitter: @MHbherman