Rhode Island Hospital in Providence is one of five state hospitals operated by Lifespan Corp. (Alexander Castro/Rhode Island Current)
Rhode Island’s largest hospital operator has sealed the deal to buy two Bristol County, Massachusetts hospitals from their bankrupt owner for a $175 million price tag.
The tentative agreement announced by Lifespan Corp. on Thursday, pending approval by a federal bankruptcy court judge, would make the Ocean State hospital giant the owner of St. Anne’s Hospital in Fall River and Morton Hospital in Taunton.
“I am confident our team has the experience and know-how to rebuild the infrastructure of these two hospitals and operate them as successful and thriving not-for-profit organizations,” Lifespan President and CEO John Fernandez said in a statement. “Adding Saint Anne’s and Morton hospitals creates a unique opportunity to build our regional healthcare organization that will benefit the health of the communities in both states.”
Mass. is paying dearly to save its hospitals from bankrupt Steward, a fate R.I. AG wants to avoid
The pair of Massachusetts hospitals are among the casualties of Steward Health Care, national, private hospital chain operator based in Dallas. Since filing for bankruptcy in May, declaring between $1 and $10 billion in debt to more than 100,000 creditors, Steward has been ordered to unload most of its hospital portfolio, including eight hospitals in Massachusetts, to secure new financing.
Earlier this month, Massachusetts Gov. Maura Healey announced tentative “deals in principle” selling five of Steward’s community hospitals to new owners, including the two sought by Lifespan, as part of efforts to save the safety net hospitals from going under with their bankrupt owner.
“ This agreement accomplishes our goal of maintaining and protecting access to care and jobs in Southeastern Massachusetts and the Merrimack Valley, while removing Steward Health Care from Massachusetts once and for all,” Healey said in a statement on Thursday.
Another private hospital operator, Lawrence General Hospital, signed a deal to buy both campuses of Holy Family Hospital in Massachusetts on Thursday. Sales of other Steward hospitals in Massachusetts are still under review, including one the state plans to seize by eminent domain, Healey said Thursday.
Massachusetts is spending an undisclosed amount to buy St. Elizabeth’s Medical Center in Brighton. The state is also dipping into its own coffers to help the other buyers through the transition, offering $30 million via a state bridge loan along with the promise of $80 million a year for the first three years through a combination of state funding, federal money and/or extra payments through the state Medicaid program.
How much of the state funding will be carved off for Lifespan is still being finalized, according to Lifespan’s statement.
Lifespan plans to pay for its purchases, which cover the buildings, land and operations, through debt financing, according to a statement. Other details of the planned financing were not immediately available.
The deal comes a day after the state’s largest hospital operator posted its third-quarter earnings, showing $11.5 million in operating income for the quarter that ended June 30, according to an unaudited financial statement. The quarterly profits reflect a 30.6% increase in income compared with a year ago, driven by an increase in Medicaid-directed payments and pharmacy operations, the company said in its earnings statement.
However, the major state employer has also seen expenses rise, including the $10.4 million cost to hire more than 300 full-time workers, alongside hikes in prices of drugs and medical supplies. Lifespan employs 17,000 workers in Rhode Island, with over 1,100 beds across five hospitals.
Lifespan is also poised to boost its balance sheet through an expanded partnership with Brown University , which includes a $150 million investment from Brown to Lifespan over the next seven years, alongside a pending name change to Brown University Health.
A Houston bankruptcy judge is scheduled to review the pending sales at a hearing on Sept. 4. The deals also require state and federal regulatory approvals, including, potentially, a review from the Rhode Island Office of the Attorney General for state antitrust protections and Lifespan’s charitable assets, Attorney General Peter Neronha said in a prior interview with Rhode Island Current.
Two other Massachusetts hospitals under Steward’s ownership, Carney Hospital and Nashoba Valley Medical Center, will close by the end of the month because there were no “qualified bids” from prospective buyers, Healey said.
Steward did not immediately return inquiries for comment on Thursday.
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