Chafee's decision also means that Steward Health Care System is likely to complete its acquisition of Landmark Medical Center, a 133-bed hospital in Woonsocket, R.I., that entered receivership in 2008.
Steward, which operates in 10 hospitals in Massachusetts, amended its purchase agreement this year to allow the system to call off the deal if the law isn't changed. Lawmakers had first introduced the bill in January. The House and Senate passed it last week.
“I am committed to maintaining reasonable oversight and monitoring provisions for hospital acquisitions by for-profit companies,” Chafee said in a June 11 letter expressing his concerns about the bill. “Our current hospital system is fragile and strong regulatory oversight is necessary to judge the impact of major changes and support the strength and vitality of Rhode Island's existing hospitals.”
The spokeswoman said Chafee plans to introduce legislation that would address his concerns about the bill's judicial review provision. She also said that he expects to use the regulatory process to revise the legislation to include a waiting period that reviews conditions of previous approvals.
“He's not a big believer in laws for individual companies, deals or situations,” the spokeswoman said. “This applies to the entire healthcare system.”
Boston-based Steward announced plans last year to acquire Landmark. Since then, Rhode Island state agencies have conducted lengthy reviews, requiring Steward to submit 15,000 pages of information in its application.
Both the health department and the attorney general set multiple conditions to their approvals, such as limiting Steward executives to no more than four of the seven or 11 hospital board positions and preventing Steward from selling the hospital for five years.
Steward has hinted to state officials that it may bring its accountable care organization model to Rhode Island—the system is one of 32 participants in the CMS' Pioneer ACO model—but the health department decision noted that the system's application lacked a “firm commitment” to preserving the hospital, bringing the ACO model to Rhode Island, and maintaining healthcare jobs in Woonsocket.
“Requiring those commitments in this decision, however, might have jeopardized the immediate future of Landmark and might have put the immediate economic survival of Woonsocket in jeopardy,” wrote Dr. Michael Fine, Rhode Island's director of health.