Prospect Medical expects to sell CharterCare hospitals in January

Rhode Island's Director of Health Dr. Jerry Larkin signed off on Prospect Medical Holdings' pending sale of two CharterCare hospitals to the Centurion Foundation.

On Monday, Larkin accepted the state Health Services Council's recommendation to approve the sale, which involves Providence-based Roger Williams Medical Center and North Providence-based Our Lady of Fatima Hospital, according to a news release from the Rhode Island Department of Health. The council advises the state's health department on facility licensing and proposed ownership changes.

Related: Prospect Medical given conditions to sell 2 CharterCare hospitals

The deal is expected to close in January, a CharterCare spokesperson said.

Rhode Island Attorney General Peter Neronha granted conditional approval in June for the proposed deal, which transfers the two hospitals to nonprofit ownership under the Centurion Foundation. The foundation works with nonprofit providers to develop facilities, arrange financing and lease facilities.

This week's decision was the final step in state regulatory approval, according to the release.

The approval comes with conditions. Under the agreement, the Centurion Foundation must provide data on finances, utilization and demographics to the health department upon request; submit written reports regularly to the department; maintain national accreditation for ambulatory surgery, home health and hospice; and create a referral plan for charity care cases.

Prospect Medical and the foundation must also abide by conditions from the health department's Hospital Conversions Act. Those conditions include ensuring the hospitals remain in good financial standing, hiring a chief restructuring officer and avoiding significant reductions in healthcare services without approval. Prospect must settle outstanding balances with vendors and fund repairs at the hospitals.

The conditions are meant to "restore local control, help stabilize these two facilities and help ensure that the new operators would be positioned to provide consistent, safe, high-quality care," Larkin said in the news release.

Los Angeles-based Prospect took full ownership of the two safety-net hospitals in 2021 when it acquired private equity company Leonard Green & Partners' stake. State regulators rejected Prospect's initial application in May 2023 to sell the hospitals but accepted another application several months later.