The deal, which is pending state regulatory review, is expected to close as early as January.
“Today is a significant day for both hospitals,” said Bruce Cummings, president and CEO of Lawrence and Memorial, in the news release. “For the Westerly Hospital, it marks the first step in restoring financial stability to a fine hospital that has been providing excellent care to its community for generations.”
Terms of the agreement include maintaining Westerly as an acute-care facility for at least five years, continuing clinical services for at least two years, providing an initial payment of $6.5 million and investing $30 million over a five-year period in technology, equipment and the physical plant.
Lawrence and Memorial said it plans to return Westerly to profitability within three years.
Westerly is one of two hospitals in Rhode Island that is in receivership.
Steward Health Care System, a Boston-based, for-profit system, is also seeking to acquire Landmark Medical Center, a 133-bed hospital in Woonsocket, R.I., that has been in receivership since 2008. As part of Steward's amended asset-purchase agreement, lawmakers passed legislation permitting for-profit companies to buy more than one hospital in the state every three years.
Earlier this week, the Rhode Island attorney general granted an extension for the deal's closing date to allow for ongoing negotiations between Steward and Blue Cross and Blue Shield of Rhode Island.