A bill, backed by ever-expanding powerhouse Steward Health Care System, to eliminate a rule that for-profit hospitals must wait three years in between hospital acquisitions is up for a Senate hearing this afternoon.
Steward's support of the bill (2012-S 2180) follows its intent to purchase Landmark Medical Center in Woonsocket, R.I. Although Steward has not announced any official efforts in Rhode Island facilities, it did apply to purchase Landmark, according to a state house press release this week.
Introduced Jan. 24, the legislation, if enacted, would enable Steward to buy more nonprofit community hospitals in the state without having to wait the required three years, Providence Business News reported. Under the Hospital Conversions Act, for-profit companies, such as Steward, must wait three years before buying another nonprofit hospital.
"For distressed hospitals, there's a lot of urgency, and speed is a necessity," hospital spokesperson Chris Murphy told FierceHealthcare. The bill could open up options to struggling hospitals. Many community hospitals in Rhode Island are in challenging financial situations, including Landmark, which is in state-run bankruptcy, he explained. For example, if two hospitals in a system were looking to partner with an outside for-profit, under the Hospital Conversation Act, they could wait a minimum of six years to complete the transaction. "[The existing Act] removes an option for community hospitals desperately looking for sources of capital," Murphy said.
Blue Cross Blue Shield of Rhode Island expressed opposition to the proposed legislation, citing concerns about outsiders buying local medical centers, Rhode Island NPR reported. Blue Cross Blue Shield said it would support the legislation with amendments, such as reducing the waiting period from three years to six months between hospital deals, as well as a rule in which hospitals must negotiate individually with health insurance companies instead of as an entire system, the report noted.
The capital infusion from a larger system could help IT investments, physician recruitment and infrastructure and therefore patient care, Murphy noted.
Steward has acquired 10 hospitals in Massachusetts. "In about a year, Steward successfully saved 10 hospitals that were on the verge of going bankrupt, which includes saving 17,000 jobs, repaid $200 million in debt, fully funded the pensions of 13,000 retirees, and saved 10 vital community hospitals," Murphy said. Without Steward, a number of hospitals would have gone under, he continued.
Steward could acquire other Rhode Island hospitals down the road if the Landmark deal is successful, Murphy said, although there are no concrete plans as of yet.
The Senate Health and Human Services Committee is scheduled to hear the bill this afternoon.
For more information:
- see the House Corporation Committee press statement
- read the Providence Business News article
- listen to the RI NPR report
- read the Woonsocket Patch article
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