In the first deal since Rhode Island enacted one of the nation's toughest not-for-profit hospital conversion laws, Tenet Healthcare Corp. last week reached a definitive agreement to buy Landmark Medical Center, Woonsocket, R.I., after the Landmark board approved the offer.
The purchase price was not disclosed. However, Landmark said conversion of the 214-bed not-for-profit hospital and related assets to Tenet's ownership would add $36 million to the hospital's foundation.
In purchasing Landmark, Tenet would take a significant step toward building a New England network, expanding from its base at Saint Vincent Hospital, Worcester, Mass., about 30 miles north of Woonsocket. Tenet took over Saint Vincent through its purchase of OrNda HealthCorp earlier this year.
"It's a natural addition," said Ed Quinlan, executive vice president for the Hospital Association of Rhode Island. "People live and work in both markets."
Under the July conversion law , the state attorney general and health department must bless the deal before it can be consummated. The reviews will explore whether the hospital's charitable assets would be disposed in the public interest.
Tenet and Landmark must present an independent evaluation of the hospitals assets as part of their filing with the attorney general, which is expected to be made later this month. A public hearing will be scheduled as part of the health department's review, which would follow the attorney general's approval. Most of the conversion application will be considered public record.
Because this is the first deal under the new law, a Tenet spokeswoman couldn't estimate how long the review might take.
The deal would make Landmark the first for-profit hospital in the state, leaving 10 private not-for-profit facilities.
Despite the added regulatory uncertainty, Tenet decided to pursue a deal with Landmark, which has been seeking a partner for more than a year. Landmark is "a great hospital in a growing area and the sole provider in northern Rhode Island," said Tenet spokesman Harry Anderson.
Under the new law, for-profits must wait three years to buy a second hospital in the state. That appears to be less of a concern for Tenet than it was for Columbia/HCA Healthcare Corp., which last month abandoned its bid for Roger Williams Medical Center, Providence, R.I.
"Networks can cross state lines," Anderson explained.
Tenet said it plans to link Landmark with Saint Vincent. In addition, Fallon Clinic, Worcester, which is 45% owned by Tenet, is expected to take control of Landmark's physician network and related facilities if the merger is completed.
Last fiscal year Landmark posted a $3.3 million profit on revenues of $80 million.