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 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. —Bob HermanFollow Bob Herman on Twitter: @MHbherman