News Summary
CharterCARE Health Partners is struggling with the outcome of a bond sale meant to facilitate the acquisition of its hospitals. The deal to transfer Our Lady of Fatima Hospital and Roger Williams Medical Center to Centurion Foundation has faced significant challenges, raising concerns over the financial stability and future of these healthcare facilities. Following Barclays’ inability to attract buyers for the bonds, observers speculate that restructuring may be necessary, impacting the potential sale to Centurion and leaving the hospitals’ futures unclear.
Providence – CharterCARE Health Partners is facing significant difficulties as its financial deal to transfer its hospitals to Centurion Foundation has floundered. A bond package intended to raise funds for the acquisition of Our Lady of Fatima Hospital and Roger Williams Medical Center has failed to attract buyer interest. This situation raises severe concerns over the future of the hospitals, which have experienced financial instability in recent years.
The bond sale, which was essential to facilitate the transfer from the bankrupt Prospect Medical Holdings, saw Barclays, the underwriter for the bond deal, unable to sell a crucial amount of the bonds on the anticipated pricing day. Hospital executive Josh Nemzoff indicated that the lack of interest among potential buyers led to this disappointing outcome.
The bond package included two segments: $88,125,000 in revenue bonds maturing over 30 years and $52,540,000 in taxable bonds due in 10 years. Initially, there was optimism surrounding the sale, but as it became apparent that Barclays could not generate sufficient interest, the mood turned grim.
The bonds were rated BB- with a negative outlook by S&P Global Ratings, a factor that significantly impacted their attractiveness to investors. In light of the failed sale, Nemzoff stated that the future trajectory of CharterCARE would remain uncertain, complicating the situation for potential future buyers. Observers speculate that the bond deal may need to be restructured to enhance its appeal, perhaps by adjusting the interest rate or the bond size.
If the bond sale ultimately does not succeed, there is a strong possibility that the hospitals could be donated or sold to Care New England. This scenario would indicate a failure of the proposed acquisition by Centurion Foundation, a Georgia-based nonprofit aiming to restore the facilities to a not-for-profit status. Notably, if successful, this acquisition would result in a projected $6.5 million loss in tax revenue for Providence and North Providence.
In 2024, the two CharterCARE hospitals reported performing over 17,000 surgeries and handling more than 377,000 patient visits. The future for these vital healthcare institutions remains uncertain; the bankruptcy court’s decision could permit the sale to Centurion or classify the hospitals as assets for creditors.
CharterCARE employs approximately 2,400 individuals, with over 1,100 jobs being union positions. This acquisition was formulated as part of a broader strategy to solve ongoing financial difficulties and operational issues encountered under the management of Prospect Medical Holdings, which filed for bankruptcy citing challenges stemming from the COVID-19 pandemic, inflation, and a ransomware attack in August 2023.
Prospect’s difficulty managing its healthcare facilities has been scrutinized by Rhode Island healthcare leaders, who have urged quick court approval of the sale, emphasizing the importance of the hospitals for community care and services. Allegations against Prospect regarding underfunding and mismanagement have exacerbated operational complications, with a compliance order from the Rhode Island Department of Health (RIDOH) highlighting persistent issues with funding and resources that have led to surgery delays.
Additionally, the U.S. Senate Budget Committee has expressed concerns over the management of hospitals by private equity firms like Prospect. Currently, Prospect operates a total of 16 hospitals and has procured a $100 million court loan to stabilize its finances amid ongoing bankruptcy proceedings.
The financial turmoil surrounding CharterCARE underscores a critical moment for healthcare in Providence, as communities rally to support the hospitals’ future and ensure continued access to vital health services.
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Additional Resources
- GoLocalProv: CharterCARE Deal and Bond Sale
- Providence Business News: CharterCARE’s New Safety System
- Providence Journal: RI Leaders Pledge Help for CharterCARE
- Brown Daily Herald: Prospect Medical Bankruptcy and RI Hospitals
- GoLocalProv: Fate of Roger Williams and Fatima Hospitals
