The Rhode Island Department of Health has approved the affiliation between Memorial Hospital of Rhode Island in Pawtucket and Care New England Health System, based in Providence, R.I.
Southeastern Healthcare System, the parent company of Memorial Hospital, has experienced major financial troubles, including losses of $3.8 million and $8.6 million in fiscal years 2010 and 2011, respectively, according to a report by the state health department. The health system averaged an estimated 4.47 days cash on hand in the third quarter of FY 2012, lost $13.3 million last year and is on track for similar losses this fiscal year.
Under the proposed acquisition, Care New England will not pay for debt financing but will refinance or discharge $11 million of Memorial's bond debt and cover its estimated $27 million to $36 million operational deficits through Sept. 30, 2016. Care New England's board will grow by four seats and govern Memorial, which will nominate three at-large directors for Care New England approval. Memorial will freeze its defined benefit pension plan and isn't expected to receive capital investments from Care New England as part of the transaction, but it will continue all current service lines. Memorial will also keep its teaching affiliation with Brown University's medical school.
More Articles on Hospital Acquisitions:
What Does the Tenet-Vanguard Merger Mean for Healthcare?
11 Recent Transactions and Partnerships
Cottage Health System to Acquire Sansum Clinic, Medical Foundation