Prospect Medical Holdings files for bankruptcy

PROVIDENCE, R.I. (WLNE) — Prospect Medical Holdings, which owns Our Lady of Fatima Hospital and Roger Williams Medical Center, announced that it has filed for Chapter 11 bankruptcy.

In a statement on the company’s website, it said it initiated “voluntary Chapter 11 proceedings in the U.S. Bankruptcy Court for the Northern District of Texas.”

“Chapter 11 is a legal tool that enables companies to restructure their finances or implement agreements while strengthening operations for long-term success,” the company said. “It does not mean that Prospect Holdings is going out of business. Rather, Prospect Holdings is utilizing the Chapter 11 process to facilitate its organizational realignment as expeditiously as possible.”

The company said the goal in the filing is to sell its hospitals outside of California at an expediated rate.

It added that during the proceedings its hospitals, medical centers, and physicians’ offices will remain open, and that patient care and services will continue uninterrupted.

Prospect has been attempting to sell both of its Rhode Island hospitals, and was ordered by a superior court judge to pay $17 million in unpaid medical bills, which Attorney General Peter Neronha later filed to hold the company in contempt over.

In a statement reacting to the bankruptcy announcement, Neronha said that his office has known that the announcement may come, and that they have “stepped up” their preparations.

“I want to make one thing clear: the only thing that has changed here is the circumstances,” Neronha said. “Since 2021, my office has been deeply committed to ensuring that these hospitals stay open and able to provide quality healthcare to Rhode Islanders. We will continue to help facilitate the responsible transfer of these hospitals to new ownership, leaving behind the dark days of private equity ownership, which is inherently destructive, and moving towards a future where we give our safety net hospitals a fighting chance.”

Meanwhile, Sen. Sheldon Whitehouse said that “bad outcomes for patients and providers are par for the course when private equity firms take over hospitals.”

Neronha’s full statement can be read below:

This morning, my office was advised that Prospect has filed for Chapter 11 bankruptcy in the federal bankruptcy court in Dallas, Texas. In a press release issued late last night, Prospect stated that its proposed bankruptcy plan includes going forward with the sale of Roger Williams and Fatima to the Centurion Foundation.

For the immediate future, we expect our Rhode Island hospitals to operate as normal. I know that the word “bankruptcy” can be frightening to many, especially when paired with a potentially unknown future of two hospitals that are integral to the survival of Rhode Island’s healthcare system. But I’ll say again what I said earlier this week: this office is prepared for all scenarios. The possibility of this filing is not new to us; in fact it has been looming for some time. And we have stepped up our preparations as the filing seemed to become more likely. We will be in Texas to represent the interests of Rhode Islanders, with only one goal: to ensure that these hospitals, through the work of their outstanding employees, continue to deliver high quality healthcare to the people of Rhode Island.

I want to make one thing clear: the only thing that has changed here is the circumstances. Since 2021, my office has been deeply committed to ensuring that these hospitals stay open and able to provide quality healthcare to Rhode Islanders. We will continue to help facilitate the responsible transfer of these hospitals to new ownership, leaving behind the dark days of private equity ownership, which is inherently destructive, and moving towards a future where we give our safety net hospitals a fighting chance.

This is personal to me, as I know it is to Rhode Island residents. I have a couple of physicians in my family who regularly relay to me the challenges of providing quality care in the current healthcare landscape. And I’m certainly well aware of the struggles of our failing system here in Rhode Island. This is tough stuff, but it can and should serve as a catalyst for Rhode Island leadership to meet the moment and attempt to provide real solutions, not just lip service.

We will share more as we learn more, but know that we’re ready for this, and we will see this through here in Rhode Island and in person in the Northern District of Texas.

We will share updates as we learn more information.

Whitehouse’s statement can be found below:

Bad outcomes for patients and providers are par for the course when private equity firms take over hospitals. On the Budget Committee, we investigated what happens when private equity companies and health care operators like Prospect take over facilities and bleed them dry, and the end result is almost always harmful both to patients and to hardworking hospital staff. The positive news for Rhode Islanders is that the conversion process for local Prospect-owned hospitals was already well under way, and disruption to the state’s health care system can be minimized. But as we make decisions about our health care system moving forward, we need to be very clear that the priorities for a hospital must be its patients and workers – not greedy private equity investors.

The United Nurses and Allied Professionals, which represents employees at the two hospitals, also released a statement on the bankruptcy announcement:

It will be an all out catastrophe for Rhode Island’s health care system if Prospect shutters these important community hospitals and health care facilities. Our system doesn’t have the capacity to treat the patients who would be displaced in the event of closure, and Rhode Island’s other hospitals would be completely overwhelmed with a flood of new patients. Hundreds of nurses and other health professionals would lose their jobs. That’s why we are calling on state leaders – the governor, the senate president, and the Speaker of the House – to immediately come up with a plan to keep Our Lady of Fatima Hospital, Roger Williams Medical Center, and Prospect Home Health and Hospice open and operational regardless of what happens with this bankruptcy. And we’re calling on Prospect to do right by Rhode Island and keep these facilities open until the sale to Centurion Foundation is final. Our union will do all we can to secure the future of these health care facilities, ensure we protect these jobs and continue providing critical care for the families who depend on them.