Judge rules Steward Health Care can negotiate takeover of troubled Landmark hospital in R.I.
A judge in Rhode Island ruled that Boston's Steward Health Care Systems LLC could move forward with negotiating a takeover of financially troubled Landmark Medical Center in Woonsocket, which has been in court-appointed receivership for the past three years.
Landmark had begun talking about a sale to Steward's predecessor, Caritas Christi Health Care, in 2009 but talks broke off without an agreement last December. The parties recently resumed negotiations and were working to finalize the terms of a buyout agreement.
The deal, which will require approval by state regulators in Rhode Island, would represent Steward's first out-of-state acquisition. The eight-month-old holding company has been building a chain of for-profit community hospitals in Massachusetts and beyond under the direction of its ambitious chief executive, Ralph de la Torre.
Steward was created by private equity firm Cerberus Capital Management to run the six Catholic hospitals in the Caritas system it bought last fall, including St. Elizabeth's Medical Center and Carney Hospital in Boston, converting them from non-profit to for-profit status.
Since then, it has purchased two for-profit hospitals, Merrimack Valley Hospital in Haverhill and Nashoba Valley Medical Center in Ayer, and struck deals to buy two non-profit hospitals, Morton Hospital and Medical Center in Taunton and Saints Medical Center in Lowell.
The talks with 214-bed Landmark had bogged down last year partly because Steward executives were unable to negotiate higher payments from Blue Cross Blue Shield of Rhode Island, the state's largest health insurer.
Blue Cross and Steward still have not agreed on a new insurance contract for Landmark, and the insurer today objected to the pace at which Landmark's talks with Steward is moving.
Blue Cross is one of Landmark's largest creditors and is owed $3 million by the Woonsocket hospital, said Kimberly Reingold, a spokeswoman for the insurance carrier. Since the Landmark talks with Steward broke off last year, Blue Cross has been negotiating with several other potential buyers of the community hospital, she said.
"There are a number of unresolved issues, including Steward negotiating a contract with us, as well as how Blue Cross Blue Shield of Rhode Island will be made whole on the $3 million in back debt that is owed to us," Reingold said in a statement. "Blue Cross Blue Shield of Rhode Island has been and remains willing to negotiate a fair and reasonable contract with any bidder, but we have not yet been approached on contract specifics since Steward reentered negotiations."
Steward spokesman Chris Murphy declined to discuss the Blue Cross statement or the negotiations with Jonathan Savage, the court-appointed special master bargaining on behalf of Landmark. Bill Fischer, a spokesman for Savage, didn't return phone calls.