Health Dept. orders new financial oversight at Roger Williams, Fatima hospitals

PROVIDENCE, R.I. (WPRI) — The R.I. Department of Health on Thursday ordered the owner of Roger Williams Medical Center and Our Lady of Fatima Hospital to take immediate steps to stabilize their finances after finding the two facilities are struggling to pay their bills.

The Health Department said its compliance order follows an extensive review that determined California-based Prospect Medical Holdings is underfunding both facilities, calling the infraction part of a larger pattern of noncompliance.

In a release, the department said its investigation discovered that more than 30% of the hospitals’ 830 vendors would only deliver supplies to the facilities if they were paid at the time of delivery, a practice vendors usually reserve for clients with “a history of non-payment.”

The department pointed out that at least 19 elective surgeries — including endoscopies, eye surgeries, and a spinal surgery — had to be canceled last month, as the necessary equipment and supplies were not available due to that history of non-payment. (The Health Department said there was no indication that these supply issues ever prevented emergency procedures from being performed.)

“The health care providers at Roger Williams Medical Center and Our Lady of Fatima Hospital are amongst the best in the state. People receive very high-quality care at these hospitals,” interim Director of Health Dr. Utpala Bandy said. “However, these facilities need more consistent support from their corporate owners.”

State officials have been expressing concerns about Prospect’s stewardship of the two hospitals for years. In 2021, the company fought unsuccessfully to stop Attorney General Peter Neronha from releasing a scathing report about its practices. At the time he ordered the company to take a series of steps, including putting aside $80 million for the hospitals.

Neronha has been ratcheting up his criticism of Prospect in recent weeks, and on Thursday his spokesperson Brian Hodge hinted that the attorney general had already taken the company to court in a case that apparently remains under seal.

“This office has already taken stronger action in recent days with respect to Prospect, and we expect to be able to share that action with the public in a matter of days,” Hodge said. “We are unsure why RIDOH took this administrative action today. We were not consulted in advance of the filing.”

He added, “We are continuing to work hard to protect these health care resources, and are working hard to ensure we can share more with the public in the coming days.”

The compliance order requires Prospect to hire an independent fiscal monitor to determine the operating costs of its Rhode Island hospitals, as well as an independent on-site operations manager who will report to the Health Department on the extent to which vendor non-payment has previously impacted patient care.

Prospect must also fully cover the operating costs of both Roger Williams and Fatima as determined by the fiscal monitor, instead of issuing them an inadequate weekly operating allowance.

The Health Department also demands that Prospect create a “cash on hand” escrow account to ensure the financial stability of both facilities, and reserves the right to issue a cease and desist on the company’s daily practice of sweeping all patient revenue from its hospitals.

When asked for comment Thursday night, Prospect told 12 News it hadn’t yet had adequate time to review the compliance order.

“The letter we received from the Department of Health referencing this action was delivered simultaneously with the issuance of their press release. We have no comment as we have not had an opportunity to review the letter and its implications.”

Ted Nesi contributed to this report.