Landmark Medical Center to negotiate

Landmark Medical Center has found a prospective buyer: Caritas Christi Health Care, a chain of six Catholic hospitals in Massachusetts.

After searching for a savior for more than a year, the financially strapped Woonsocket hospital is now talking only to Caritas Christi. And the not-for-profit Massachusetts chain is welcoming Landmark as part of its self-described mission to turn around troubled community hospitals.
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Landmark and Caritas have yet to sign any documents affirming the merger plans, and it will take many months to bring them to fruition.

But on Thursday, the efforts to save Landmark reached a milestone. Superior Court Judge Michael A. Silverstein, who has been supervising Landmark’s fiscal management for more than a year, approved the hospital’s proposal to negotiate exclusively with Caritas Christi.

In asking for Silverstein’s approval, the court-appointed special master, lawyer Jonathan N. Savage, showed that he had enough confidence in the Caritas merger idea to go public with it and to forgo negotiations with any other entity.

“I have every hope and expectation that Landmark will become a hospital within the Caritas system,” Savage said.

The news elicited a collective sigh of relief –– and a flurry of statements supporting the merger talks –– from people in health care and government, who universally describe Landmark as an endangered but essential community resource.

“This is really a great day for Rhode Island,” said Attorney General Patrick C. Lynch, who spoke in favor of Savage’s request in court and who will eventually rule on whether the plan meets the stringent requirements of state law. While cautioning that “there’s lots of work left for us to do,” Lynch pledged to expedite the approval process.

Health Director David R. Gifford, who also must approve any hospital merger, also came to court to back Savage’s plan.

Founded in 1985, Caritas Christi is the second-largest health-care system in New England. It includes St. Anne’s Hospital in Fall River and Norwood Hospital.

Robert E. Guyon, chief operating officer, said his organization is committed to maintaining Landmark as an acute-care hospital, with an emergency room and inpatient beds. But he could make no predictions about whether any services would be eliminated or curtailed, or whether there would be any job loss.

Similarly, no decisions have been made about the governance structure. At the other Caritas hospitals, the Caritas board holds the purse strings, while the individual hospitals control only such issues as quality, fundraising and medical staff credentials.

If the merger succeeds, Landmark would become a Catholic hospital and would have to conform to Church teachings forbidding abortion, contraception and sterilization. Richard Charest, Landmark president, said that Landmark currently does not perform abortions or provide contraception, and it performs fewer than 20 sterilizations each year.

Savage said Landmark and Caritas Christi will now work out a definitive agreement, a process likely to take months. Then, the hospitals must seek approval from state regulators, another lengthy process.

Meanwhile, however, Savage said he expects to take advantage of Caritas’s financial expertise. “I’m hopeful we’ll start seeing tangible results from the relationship very quickly,” he said.

The fate of the Rehabilitation Hospital of Rhode Island, which Landmark owns, remains in limbo. Savage said that Caritas is interested in acquiring the rehab hospital, in North Smithfield, but talks have focused on Landmark.

Landmark has about 1,200 employees at the two hospitals, 500 of them represented by the United Nurses and Allied Professionals. “We welcome Caritas to Rhode Island. We’re encouraged by what appears to be their commitment to having a full-service hospital,” said Christopher Callaci, UNAP general counsel. Callaci said he was also encouraged that Caritas has experience negotiating with unions.

Landmark ran into financial trouble chiefly because it has no endowment as a cushion in the tough economic times that all hospitals are experiencing. The hospital also serves a high percentage of poor and elderly people.

Facing uncontrolled losses and the possibility of shutting its doors, the hospital petitioned Superior Court for help in 2008. The court appointed Savage as “special master,” empowered to stop paying vendors for services rendered before he took over, to renegotiate contracts and to look for a new owner for Landmark.

Talks with Caritas Christi began about six months ago. More than any other hospital, Savage said, Caritas had a track record of improving the financial health of hospitals in similar demographic situations –– including Fall River and Brockton. “These folks are experts at taking over hospitals that have had financial issues,” Savage said. “They run a very, very tight ship.”

The chain expects to record a $30-million profit in the fiscal year that ends Sept. 30, Guyon said.

Savage says Landmark is in much stronger financial condition as a result of his management, with $7.2 million in cash on hand as of Thursday.

The hospital, which lost $7 million in 2007 and $19 million in 2008, projects a loss of $5 million to $6 million in the current fiscal year, which ends Wednesday. The 2009 loss represents mostly depreciation of assets, such as equipment and real estate, said hospital spokesman Bill Fischer. Currently, Fischer said, the hospital is bringing in enough money each month to pay all of its bills.