Owner threatens to close 2 Rhode Island hospitals over AG's escrow demands

Prospect Medical Holdings, the Los Angeles-based owner of two Rhode Island hospitals, is threatening to close the facilities after a disagreement with the state's attorney general, according to the Boston Globe

The two hospitals are Roger Williams Medical Center in Providence and Our Lady of Fatima Hospital in North Providence. Prospect Medical is the parent company of CharterCARE Health Partners, which operates the two hospitals. Prospect has held a majority stake in the two hospitals since 2014.

Prospect Medical's threats to close the two hospitals comes after its parent company, Los Angeles-based private equity firm Leonard Green & Partners, sought approval from Rhode Island to sell its ownership of Prospect, according to the report.

Under state regulation, Rhode Island's health department and the attorney general's office both need to approve the deal. A Prospect spokesperson told the Boston Globe April 29 that while the company has complied with the state's regulatory review, a requirement from Attorney General Peter Neronha to put up to $150 million in an escrow to ensure the hospitals' financial viability is "unreasonable, unacceptable and unprecedented." It would cause Prospect to wind down its operations in Rhode Island, the spokesperson told the newspaper.

In response, Mr. Neronha told the Boston Globe, "Prospect has threatened to close these hospitals. That is something the law in this state does not allow them to do without approval of our Department of Health, and that this office will challenge."

The attorney's general office plans to release its decision on the Leonard Green & Partners-Prospect deal April 30.

Read more here.

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