WOONSOCKET, R.I. (WPRI) — One of Rhode Island’s most prominent health care organizations needs a cash injection of $8 million to avoid going into receivership, laying off hundreds and ending care for 62,000 people, Target 12 has learned.

Thundermist Health Center, a federal health center that serves some of Rhode Island’s poorest residents, is facing an imminent cash-flow crisis that is drawing comparisons to the previous failures of Memorial Hospital, 38 Studios and the Steward hospital group.

The Woonsocket-based not-for-profit health group has already fired its CEO and laid off 124 of its 907 employees. Executives say the organization doesn’t have enough cash on hand to make payroll at the end of the month.

Interim CEO Maria Montanaro — who headed the organization from 1997 to 2011 — has been brought back and is now seeking $8 million from state and federal officials, health insurers, hospitals or anyone else willing to bail out the organization.

Otherwise, she said, Thundermist will go into receivership and close — leaving the rest of Rhode Island’s medical infrastructure to deal with the 62,000 residents who currently rely on Thundermist for a litany of services, including primary care, childbirth, transgender health and drug addiction.

“We’re not asking for anybody to pay for Thundermist’s mistakes,” Montanaro told Target 12. “We’re asking them to help Thundermist address these mistakes.”

Thundermist currently employs nearly 800 people after its latest round of layoffs. The organization provides health and dental services to 75% of Woonsocket residents, 50% of West Warwick residents and about 20% of the people living in South County, according to federal regulators.

The organization blames its long-term financial challenges on Rhode Island’s low Medicaid reimbursement rates compared with neighboring states, a common complaint among health executives in the state.

But Thundermist’s current financial disaster is largely self-inflicted.

Montanaro said the organization’s costs quickly exceeded its revenue beginning last year at the same time that existing revenue sources dried up. She said nobody put plans into motion to account for the mushrooming shortfall.

She blames the now-fired CEO, Jeanne LaChance, for deceiving the board regarding the organization’s true financial outlook, failing to come up with a plan to deal with it and leaving the organization in its current state of disarray.

“There’s different technical definitions of negligence, but she was clearly negligent in the performance of her responsibilities to both the board and the agency,” Montanaro said. “For that negligence, she was fired.”

Reached Monday, LaChance said she was out of the country, declined to comment and hung up the phone. She received a raise last year and had been taking home an annual compensation package of about $360,000, according to federal tax documents.

Montanaro said the board learned Thundermist was on the brink of missing payroll during the first week of September, which is when they fired LaChance, who had been hired in 2017. LaChance had previously held various executive positions at Westerly Hospital.

The issues at Thundermist started spilling out publicly in July when federal regulators visited the organization and reprimanded its leaders for allowing LaChance to serve simultaneously as the CEO, interim chief financial officer and — at one point — interim compliance officer, according to Montanaro and three people familiar with the situation who agreed to talk on the condition of anonymity.

“It’s kind of ridiculous, honestly, that she would hold those three roles because they are points of control,” Montanaro said.

The financial disarray resulted in Thundermist starting its fiscal year on Sept. 1 without a completed budget. The organization has asked the state’s Medicaid office to increase its reimbursement rate under existing law, which Montanaro said will help with the long-term financial deficit.

Without approval, she said, the $8 million financial gap turns into $11 million.

“The health center cannot survive, going paycheck to paycheck,” she said. “We will lose our providers, we’ll lose the faith of our community partners. We can’t operate like that. People will start to leave. We have 200 primary care providers in heavy demand. They’re not going to stay if every month they’re wondering if they’re going to get a paycheck.”

Over the past few weeks, Montanaro has sought financial assistance from House Speaker Joe Shekarchi, Health and Human Services Director Richard Charest, U.S. Sens. Jack Reed and Sheldon Whitehouse, Neighborhood Health Plan, Blue Cross and Blue Cross of Rhode Island, Lifespan, Care New England, and the dean of Brown University’s medical school.

Neighborhood has already given Thundermist a $1 million advance on money it will owe the organization in the future, Montanaro confirmed. Neighborhood spokesperson Sara Brandon said the insurer wouldn’t publicly discuss its financial arrangement, but that it was “here to support the community health center.

“Thundermist is a key provider to 62,000 Rhode Islanders through its three primary locations and one specialty clinic, and we ask other community organizations to consider how they too might support Thundermist as it navigates through this difficult time,” she added. “It is important we pull together to sustain Rhode Island’s safety net assistance programs.”

Montanaro said the Neighborhood money is helping in the short term but won’t solve their long-term problems and is already accounted for in the current $8 million shortfall.

Montanaro said she is currently scheduling meetings with Congressmen Gabe Amo and Seth Magaziner, along with Gov. Dan McKee’s office. Montanaro said she is slated to meet with the governor’s team on Wednesday, but she didn’t expect the governor to be there.

Asked what the governor thinks of the situation, McKee spokesperson Olivia DaRocha said in a statement, “The stability and performance of Rhode Island’s health care system is of the utmost importance to Governor McKee and the agencies under his leadership.”

“The Executive Office of Health and Human Services is in communication with leadership at Thundermist Health Center to better understand their financial challenges,” she continued. “The state is committed to reviewing all options available to assist Thundermist that are in line with the state’s budget, policies and procedures, CMS regulations, etc. These efforts and discussions are ongoing.”

Without the $8 million outside infusion, Montanaro said Thundermist will be forced to file for receivership — a state-level version of bankruptcy — and ultimately close. It has maxed out all its existing lines of credit with traditional financial institutions.

“You’ll see an exodus of primary care providers from the state and 62,000 people will pressure the already-strained primary care system largely by going to the emergency room for care,” she said. “When that happens, the effect on the primary-care system would be significant.”

“Every hospital will be flooded with patients, every school will have to accept children who aren’t immunized, and all of these services will have such an impact that the cost to the state will be far greater than amassing the working capital that we’re willing to pay back,” she added.

Montanaro also suggested the $8 million would be a long-term fix, saying she has a plan to ensure Thundermist’s financial stability if that money becomes available. She said the plan wouldn’t require additional job cuts.

The board has already signed a contract for a new CEO, Montanaro added, although she declined to disclose his name, saying he hadn’t finished notifying his current employer.

Over the long term, Montanaro said Thundermist can pay back the $8 million because it’s due $10 million in employee retention tax credits from the federal government.

Shekarchi confirmed he’d met with Montanaro and said he encouraged her to reach out to the governor, so lawmakers can consider the organization’s request as part of McKee’s upcoming tax-and-spending plan, which is due in January.

But Shekarchi spokesperson Larry Berman said the speaker made no promises that the state would give the bailout, expressing concern with how Thundermist ended up in this financial disaster.

“Before any legislation is even considered, he is demanding accountability and detailed answers as to how this crisis plunged to such dramatic financial depths,” Berman said in an email.

“As a major provider to the Medicaid populations in the Woonsocket, West Warwick and South County regions, Speaker Shekarchi is very concerned about Thundermist’s future because of the impact on other health care centers and hospitals,” he added.

Montanaro said Thundermist can’t wait until the start of the new legislative session next year to figure things out.

While Thundermist currently has enough cash on hand to pay its employees through the first two weeks of October, Montanaro said absent an immediate injection of cash the organization will not make payroll in the last week of the month.

Over the long term, Montanaro said the state has to boost its Medicaid reimbursement rates — which she alleged are illegally low — or else more health care institutions will fail.

“While we’re the first domino to fall, we wouldn’t be the last because no amount of good management is going to make up for these rates,” she said.

Eli Sherman ( esherman@wpri.com ) is a Target 12 investigative reporter for 12 News. Connect with him on Twitter and on Facebook .

Thanks for signing up!

Watch for us in your inbox.

Subscribe Now

Daily Roundup

For the latest news, weather, sports, and streaming video, head to WPRI.com.