How AG Neronha played hardball over health care

Posted 6/9/21

The fight over control of Rhode Island's third-largest hospital group got relatively little local attention for a long time. The lawyer for Prospect Medical Holdings, the California-based parent of Roger Williams Medical Center and Our Lady of Fatima

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How AG Neronha played hardball over health care


The fight over control of Rhode Island’s third-largest hospital group got relatively little local attention for a long time.

The lawyer for Prospect Medical Holdings, the California-based parent of Roger Williams Medical Center and Our Lady of Fatima Hospital, downplayed the significance of a proposed ownership change.

In April, Rhode Island’s advisory Health Services Council, part of the state Health Department, recommended approving the deal, even after a leading accounting firm cited how Prospect had more than $1 billion more in liabilities than in assets in 2020.

But critics of Prospect had long sounded an alarm – and Attorney General Peter Neronha played hardball after completing a length review of the proposed transaction.

“We feel validated,” said Chris Callaci, general counsel for United Nurses and Allied Professionals, which represents hundreds of workers at Fatima. That was after Neronha announced his approval last week for a change in Prospect Medical’s ownership structure, based on such conditions as the establishment of an $80 million escrow account and a five-year hold on the possible sale or lease of the real estate for Prospect’s Rhode Island hospitals.

Prospect did not directly comment on Neronha’s critical findings. The company said it will continue “to deliver high-quality health care and enhanced patient and provider experiences.”

Neronha’s review ultimately backed up critics’ view that Prospect faced financial uncertainty, due to debt and how $457 million in dividends was paid to top company executives and other investors. As the AG’s office put it in a PowerPoint presentation, the situation was due to “the transacting parties putting shareholder profits before financial security and their healthcare mission.”

While the conditions on Prospect are in place for five years – a time length determined by the state’s Hospital Conversions Act – the resolution to this case shows how elected officials can influence the state’s health care landscape.

Providence’s pension quagmire

Without action, the annual cost of the Providence pension fund for the city and its taxpayers will more than double, to more than $200 million, by 2040. But Mayor Jorge Elorza’s latest proposed fix – using more than $700 million in pension obligation bonds to shore up the pension system – faces a lot of questions.

As I reported in an overview last week, pension obligation bonds are very risky. And in a move that leaves some observers scratching their heads, Providence is using on the proposal the financial adviser that was sued by the state over 38 Studios.

Down the stretch

June is typically the last month of the General Assembly session, and this year is expected to follow that trend, with a budget emerging in House Finance as soon as toward the end of this week.

Meanwhile, with a lot of differences still to be resolved among competing proposals for recreational marijuana, don’t be surprised if lawmakers return to consider that during a session later this year.

Gorbea in campaign mode

In her first long-form interview with The Public’s Radio since becoming an announced gubernatorial candidate, Nellie Gorbea was a bit vague on some issues.

Asked how she would address the state’s housing crisis, Gorbea, the former director of HousingWorks RI, called it an issue of supply and demand.

“We absolutely need to make sure that we work on this,” Gorbea said. “Part of the problem has been, yes, local zoning restrictions and the Balkanization of costs and permits and all that. And we need to figure out a statewide solution that helps unblock that. We need to from a thousand building permits to five thousand building permits a year …”

Pressed for more specifics on how to achieve this, Gorbea said: “It is exactly in working with the cities and towns and providing resources from the state level to unblock some of the barriers at the local level. Each community has different issues. If you go to Charlestown, they’re going to raise certain issues that the people in Providence are going to raise different ones. So you have to take a very careful approach, but one that addresses the barriers to building housing in this state.”

Roundtable topics included Gorbea’s pitch for being governor, charter schools, Providence schools, taxes, voting issues, and more.

Another Providence mayoral candidate

Michael Solomon, the former Providence City Council president who went to work as a senior adviser in the Elorza administration, tells me he plans to formally announce his latest mayoral campaign in August.

Fellow Democrats Gonzalo Cuervo, Nirva LaFortune and Brett Smiley are already off and running.

Back in 2014, Smiley teamed up with Elorza while describing Solomon as the wrong choice for Providence voters – and Solomon returned fire.

This time around, Solomon said he believes his experience as an elected official who has served in the administration gives him a unique perspective on how to move Rhode Island’s capital city forward.

Raimondo on apprenticeships

Politico dubs U.S. Commerce Secretary Gina Raimondo “the Democrat business leaders are learning to love.” The same article includes Raimondo’s view that going to a four-year college has been over-emphasized in America, and that her top priority is boosting apprenticeships and other forms of practical training: “Providing more chances for people to ‘earn while they learn’ is ‘critical to American wage growth and frankly to equity,’ according to Raimondo. ‘We need digital, cybersecurity, accounting, quality assurance apprenticeships: all of the jobs in the digital backbone,’ she said.”

MIA workers (cont’d)

My colleague Antonia Ayres-Brown reports on how the soft labor market is affecting Newport businesses like O’Brien’s Pub, where GM Kerrie Philbin was filling in for one of her cooks on a recent weekday: “O’Brien’s Pub would usually have 50 or 60 employees by the beginning of June. Right now, Philbin said, the staff’s at about 35 people. In past summers, she said she used to receive stacks of job applications. This year, they’ve just trickled in – so Philbin has had to get creative with staffing, like solving a jigsaw puzzle with missing pieces. During some weekends in April, Philbin had her bartenders step in as servers. On this particular morning, she was also missing a dishwasher – another hole she said she’d find a way to fill, even if it meant doing it herself. As of May, there were about 1,000 open positions in the hospitality and tourism industries on Aquidneck Island, according to Erin Donovan-Boyle, the executive director of the Greater Newport Chamber of Commerce. ‘That's really troubling. Particularly because we're such a seasonal economy,’ she said. ‘It’s very important during June, July, August, September and October that we are at full capacity, because so many businesses rely on that four to six months of peak operation to carry them through for the full year.’”

Pairing LG Gov?

While Gov. Dan McKee dismissed the idea that political considerations influenced his pick of Lt. Gov. Sabina Matos, you don’t have to be a strategist to realize that Matos will boost McKee’s appeal in Providence next year.

While certainly not a monolith, Latinos are an important bloc in Rhode Island elections, so Matos could potentially erode support for Secretary of State Nellie Gorbea and another expected gubernatorial candidate, Providence Mayor Jorge Elorza.

Asked by guest panelist Dan McGowan on Political Roundtable whether she favors pairing the gov/LG as a ticket, Gorbea said in part: “Other candidates can do whatever they want. Our current form of government is one where every candidate runs individually. I do think it might be time to reexamine the role of the lieutenant governor within the executive branch …”

Why local news matters

Via FiveThirtyEight.com: “A growing body of research has found that government is worse off when local news suffers. In fact, inadequate local news has been linked to more corruption, less competitive elections, weaker municipal finances and a prevalence of party-line politicians who don’t bring benefits back to their districts. It’s not just government performance, however. My research with Matthew Hitt of Colorado State University and Johanna Dunaway of Texas A&M University shows that when local newspapers close, people don’t find another local option.”

New season of ‘Mosaic’

“Mosaic,” the immigration podcast from The Public’s Radio, has launched its third season, with a new focus on community conversations. You can sign up to keep informed or listen to the many excellent past episodes of the pod at explore.thepublicsradio.org/mosaic-podcast.

Ian Donnis can be reached at idonnis@ripr.org. You can follow him on Twitter

@IanDon. For a longer version of this column, visit www.thepublicsradio.org.

politics, AG


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