CharterCARE’s Future in Jeopardy after Bankruptcy Developments

Categories: Breaking NewsEconomyHealthNews

The future of CharterCARE is in jeopardy as bankruptcy impacts operations.

News Summary

CharterCARE’s future remains uncertain following the bankruptcy of its parent company, Prospect Medical Holdings, which has impacted bond sales essential for hospital acquisitions. The RIHEBC is struggling to finalize a $140 million bond sale necessary for Centurion Foundation to manage CharterCARE hospitals. Concerns arise due to Centurion’s lack of experience in hospital operations and potential financial implications for Providence. This situation reflects broader challenges faced by healthcare providers in Rhode Island, signaling potential layoffs and operational changes.

Providence, Rhode Island – The future of CharterCARE is in jeopardy following the recent bankruptcy of its parent company, Prospect Medical Holdings. This development follows the sale of Prospect’s 11,000-provider network to Astrana, a healthcare firm previously known as Apollo Medical Holdings. The transfer of these providers, which spans locations in Southern California, Texas, Arizona, and Rhode Island, has raised concerns regarding the viability of CharterCARE’s bond sale efforts aimed at securing its financial future.

The Rhode Island Health and Education Building Corporation (RIHEBC) has been striving to sell bonds totaling $140,665,000. This funding is crucial to facilitate the acquisition of CharterCARE hospitals, specifically Roger Williams Hospital and Fatima Hospital, by the Centurion Foundation based in Georgia. However, efforts to finalize the bond sale have stalled, as it was projected to close on May 29, but no substantial amount of bonds has been sold.

The bonds, which received a BB- rating with a negative outlook from the credit rating agency S&P, were intended to support the transition of CharterCARE hospitals to new management under Centurion. Centurion, however, does not possess prior experience in hospital operations, raising further apprehensions about the future direction of these healthcare facilities.

Industry expert Josh Nemzoff noted that the sale of Prospect’s provider network has stripped away profitable assets, leaving the remaining bonds in a precarious position. Despite these challenges, RIHEBC spokesperson Chris Hunter confirmed that efforts to market the bonds continue, although the outlook remains uncertain.

Astrana’s acquisition of Prospect Health totals $708 million, a decrease from the original purchase price of $745 million, indicating financial pressure within the organization. This acquisition aims to enhance Astrana’s capability to provide high-quality healthcare solutions across the nation.

The struggle of CharterCARE is part of a broader trend, as several healthcare providers in Rhode Island have faced layoffs and operational closures, including significant impacts on Thundermist and Anchor Medical. Currently, CharterCARE employs approximately 2,400 full and part-time staff, more than half of whom are members of labor unions.

If the bond sale eventually succeeds and Centurion takes control of the hospitals, CharterCARE is anticipated to transition from a for-profit to a not-for-profit status. While this shift could potentially stabilize operations, it would also result in an estimated loss of $6.5 million in tax revenue for Providence and North Providence, raising concerns among local officials.

Combined, Roger Williams Hospital and Fatima Hospital operate 552 beds, have conducted over 17,000 surgeries in the current year, and managed more than 377,000 patient visits last year. The significant scale of these hospitals underscores the critical role they play in healthcare delivery within the region.

As events unfold, the financial stability of CharterCARE remains uncertain, with the implications of both the bond sale and the strategic moves made by its new parent company affecting the health institution landscape in Rhode Island and beyond.