Steward: Savior Or Scavenger In Rhode Island?

There's much talk of hospital takeovers at the Rhode Island State House. (Mr. Ducke/flickr)
There's much talk of hospital takeovers at the Rhode Island State House. (Mr. Ducke/flickr)

Word is that the for-profit hospital chain that has expanded rapidly in Massachusetts may be going down the same path in the Ocean State.

You might recall that Steward's plans to buy a small community hospital in northern Rhode Island have been on and off for more than a year. In the latest twist, Steward has an agreement to acquire Landmark Medical Center that hinges on changes in a Rhode Island law. Steward wants the state to remove a restriction that says for-profit corporations have to wait three years after buying one hospital before they can purchase another.

Rhode Island state senator Roger Picard says he’s pressing the change to save Landmark, his hometown hospital, and others that are struggling in Rhode Island. Picard says closing Landmark would mean the loss of 1,200 direct jobs and possibly another 800 jobs at companies that serve the hospital. Landmark is in Woonsocket, a city on the brink of bankruptcy, in the state with the highest unemployment rate in New England.

Picard says with Steward, Landmark could become part of “a whole different kind of health care delivery system in Rhode Island." New ownership, argues Picard, “will add competition, will bring in vital capital and could help a lot of our community hospitals that are really struggling to get assistance on their own.”

Some legislators expect Steward to bid on two other hospitals (Roger Williams Medical Center and Saint Joseph Health Services in the CharterCARE system) if the three-year limit is lifted and possibly Westerly and Memorial hospitals as well.

That limit appears to be on its way to oblivion. According to the Providence Business News:

"The R.I. Senate Health and Human Services Committee, by a 5-0 vote on Wednesday afternoon, approved the latest amended version of legislation changing the Hospital Conversions Act, sending it to a scheduled floor vote by the Senate on Thursday.

Steward Health Care got much of what it lobbied for – including the elimination of a three-year waiting period for for-profit hospitals in purchasing additional nonprofit hospitals in the Rhode Island market after completing an initial hospital purchase."

Edward Quinlan, president of the Hospital Association of Rhode Island, says every hospital in the state is talking to someone about a merger or affiliation. “We are seeing pressures that are unprecedented,” says Quinlan. “The ability to continue to provide services and survive on margins that are less than half of one percent is increasingly difficult.”

But other lawmakers and health care advocates worry that if the legislature changes the deal so that Steward can buy more hospitals, the company will stop performing more advanced services or close some facilities altogether and send patients to Boston. Either way, Rhode Island loses more jobs.

Steward spokesman Chris Murphy says it would not make sense for the chain to invest $30 million, as it has agreed to in Landmark, and then close the hospital. Landmark, he adds, is busy but it just isn't receiving an adequate reimbursement for the many Medicaid patients it sees. Murphy won't say if Steward plans to bid on other community hospitals in Rhode Island. The network supports changing Rhode Island's Hospital Conversion Act to "remove a barrier to investment at a critical time."

Some industry analysts suggest there's another reason Steward wants to change the state's hospital acquiistion rules: so it can sell a group of hospitals, not just one, when it is ready.

This program aired on April 12, 2012. The audio for this program is not available.

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Martha Bebinger Reporter
Martha Bebinger covers health care and other general assignments for WBUR.



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