The end is in sight for the long-awaited sale of Roger Williams Medical Center in Providence and Our Lady of Fatima Hospital in North Providence, with a closing date finally named: January 2025.

Otis Brown, a spokesperson for CharterCARE Health Partners, revealed the expected close in an email Monday afternoon, hours after the deal received the final license approval required from the Rhode Island Department of Health. 

The $80 million sale of two of the state’s urban safety net hospitals is a long time coming. Prospect Medical Holdings, the Los Angeles-based parent company of CharterCARE, first pitched the sale to nonprofit The Centurion Foundation in May 2023. But convincing the health department and state attorney general, who under the state’s Hospital Conversions Act have oversight on hospital conversions to nonprofit status, was no easy feat.

The initial application was rejected, the second deemed incomplete, before a third and final proposal was accepted in December 2023, and in June, conditionally approved. Even then, it was unclear whether CharterCARE was willing to meet the 85 conditions imposed on the sale.

After months of negotiations, Rhode Island Attorney General Peter Neronha announced on Nov. 15 he would ease up on a few of the non-financial conditions imposed by his office, paving the way for the deal to advance. Meanwhile, the separate but parallel license change application received a positive recommendation from the appointed state health panel on Nov. 12.

On Monday, Dr. Jerry Larkin, state health director, confirmed the Health Service Advisory Council’s recommendation to approve the license change, removing the final state regulatory hurdle in the complex review process.

“Rhode Island needs a stable network of hospitals that supports the health and wellness of every community in the state,” Larkin said in a statement. “In light of the historical and ongoing financial and operational challenges at the hospitals, RIDOH’s Change in Effective Control decision and our Hospital Conversions Act decision came with conditions carefully developed to restore local control, help stabilize these two facilities, and help ensure that the new operators would be positioned to provide consistent, safe, high-quality care.”

The license approval comes with a few extra requirements beyond those tied to the nonprofit conversion. CharterCARE must submit regular, written reports to the health department, including data on finances and demographics of its patients, upon request, and details of any proposed changes to its board of directors. The new owners must also maintain national accreditation for the hospitals, alongside home health and hospice facilities within the network, and create a referral plan for charity care cases.

Brown indicated Monday that the buyer and seller were willing to meet these requirements.

“This is welcome news for our 2,700 employees and for the thousands of patients we treat annually,” Brown said. “The transacting parties will now focus attention on executing the legal sale closing, scheduled for later in January 2025. We appreciate the time and effort of the Health Services Council, and the health department staff, in reviewing these extensive applications and for the Director’s prompt decision.”

Brown did not respond to specific questions about the status of financing for the deal. On top of the requisite $80 million sale price, the parties are also required to put $80 million in capital directly into the hospitals, while setting aside $66.8 million to be held in escrow, reserved for uses other than executive compensation or management fees.

According to its application, Prospect plans to finance much of the transaction through new debt, composed of a mix of taxable and tax-exempt bonds. Another $47 million in funds already held in state escrow — tied to a 2021 state agreement when Prospect bought out former majority stakeholder Leonard Green & Partners — will be put toward the new, $66.8 million escrow fund.

The financing has been a key source of concern for critics, including the United Nurses & Allied Professionals, which represents 1,200 members who work for CharterCARE. Under Prospect’s ownership, hospital operations and balance sheets have suffered substantially, with $124 million in cumulative operating losses from fiscal 2020 to 2024, alongside $24 million in unpaid vendor bills in 2023 alone.

Prospect finally paid $17 million of its outstanding vendor bills, per court order, in July 2024. 

But Neronha believes that the financial set-asides required of Prospect and the newly created CharterCARE Health of Rhode Island, Inc. will prevent conditions from worsening, while reporting mandates will allow him to proactively file to put the hospitals into court-appointed receivership before any potential bankruptcy declarations arise.