Rhode Island Departments Approve L+M Bid For Westerly Hospital

Lawrence + Memorial Hospital has cleared some of the final hurdles in its effort to purchase Westerly Hospital.

Both the Rhode Island attorney general and the Rhode Island Department of Health gave their approval this week to L+M’s $69 million bid to acquire the hospital’s assets. The Department of Health had up to 90 days to review the application after finding it complete in January.

Both the attorney general and Department of Health were required to approve L+M’s change of effective control application and other filings per the state’s Hospital Conversion Act. L+M was the first entity to make an application under new state regulations expediting the process by reducing the approval period from 120 days to 90 days after an application is found to be complete.

“What that means is that we have now completed the Rhode Island regulatory review process successfully,” said L+M spokesperson Michael O’Farrell. “So now we’re on target to close on or before June 1.”

Attorney General Peter F. Kilmartin’s conditional approval included 18 requirements, such as Westerly Hospital having a board of directors independent of L+M and the retention of charitable assets within the state of Rhode Island unless the attorney general approves them for use elsewhere.

“I commend the transacting parties and the special master for their efforts in providing our office with the necessary information to make this decision ahead of the April 29, 2013 deadline,” said Kilmartin. “All parties recognize the critically important role Westerly Hospital plays in providing quality healthcare to the residents of the area and as an important economic engine for the region.”

Westerly Hospital filed for receivership in December of 2011. Prior to that decision, L+M was exploring the possibility of aligning their missions to improve health care in the region due to overlapping coverage areas.

Under L+M’s bid, which was approved last year, the Lawrence + Memorial Corporation will assume Westerly Hospital’s $22 million debt, implement a five-year $30 million capital improvement program, and invest $6.5 million in capital funds. The offer would assume the hospital’s physician contracts and offer employment to all clinical, trade, and service personnel while maintaining minimum staffing levels.

L+M has also said it intends to keep the Westerly Hospital name and non-profit status, with all clinical service retained for the first two years of the bid and the operation of the hospital as an acute care center for five years.

Kilmartin said public hearings on the proposed acquisition were sparsely attended. He said those who attended were mostly in favor, although some had reservations about Westerly Hospital’s decision to stop delivering babies. No one responded to a call for written feedback on the bid.

O’Farrell said L+M has been working with special master Mark Russo and that L+M employees have had a regular presence in Westerly in an advisory capacity. Some final steps, including the arrangement of bond and banking matters, will be required before the close of the transaction.

“This is a very important step to have gotten to in this process, and now we continue to work on operational and financial things before we can move to close,” said O’Farrell.

At their annual meeting in December, L+M said the purchase of the hospital is part of an effort to adapt to changes in health care and patient trends. The 2013 fiscal year budget has an investment of $79.4 million in capital projects, including $21.5 million toward the acquisition of Westerly Hospital.

Kilmartin also said he thought the purchase was a part of an effort to adapt to health care changes.

“It is clear that the landscape of hospitals in Rhode Island is changing. With the trend toward pushing health care to settings other than hospitals, Rhode Island hospitals will by necessity have to adapt,” Kilmartin said in his report. “The instant flurry of hospital conversions is only one way in which healthcare will change in the future for the people of the state of Rhode Island. Hopefully these changes taken together will result in better healthcare for all Rhode Islanders and the continued success of our hospitals.”

Follow us on Facebook and Twitter.