Retooling a mostly-empty behavioral heath care wing at Our Lady of Fatima Hospital to take new, Medicaid-eligible patients would help clarify funding and oversight of the program, while easing the state’s critical shortage of mental health services, state officials and health care providers agree.
But it’s unclear if Gov. Dan McKee’s proposal to inject $10 million in unspent state and federal funds into the 21 long-term psychiatric beds at Fatima will rise above other budget demands this year. Also in question: Will a new state investment make the struggling hospital more attractive to investors, and in turn, secure its sale to new owners?
McKee’s office insists his May 27 budget amendment has nothing to do with the not-yet-finalized sale of Fatima and Roger Williams Medical Center in Providence from its now-bankrupt owner, Prospect Medical Holdings, to new owner The Centurion Foundation.
The budget proposal was unveiled two days before CharterCARE Health of Rhode Island, the local subsidiary formed by Centurion, expected to close on the sale of $140.7 million in tax and tax-exempt bonds, according to Morningstar. The financing is necessary to cover the $80 million capital injection — on top of an $80 million purchase price — for both parties to meet requirements set by the Rhode Island Office of the Attorney General and Rhode Island Department of Health.
And the bonds may be a hard sell to potential investors, given the less-than-favorable rating from S&P Global Ratings Agency. The credit ratings on March 25 gave the bonds a BB- rating, which denotes a relatively high risk for a non-investment grade bond. S&P analysts noting “significant uncertainty” surrounding future financial, strategic and operating performance, anticipating a 33% chance of a rating downgrade within a year.
Otis Brown, a spokesperson for CharterCARE Health, did not return multiple inquiries for comment regarding the bond sale. Bond underwriter Barclay’s also did not immediately return inquiries for comment Thursday.
Jeffrey Liebman, CharterCARE CEO, attended a preliminary hearing on McKee’s budget proposal at the State House Thursday, but did not reference the bond sale during brief remarks to lawmakers.
‘Catastrophic results’
Lynn Blais, a nurse at Fatima and president of the United Nurses and Allied Professionals, which represents 1,000 CharterCARE employees, is worried.
“If these bonds aren’t sold, there are going to be catastrophic results for health care in Rhode Island,” Blais said in an interview Thursday.
Rhode Island Attorney General Peter Neronha also warned of the precarious state of the safety net hospitals, which have been struggling for years due to financial and operational mismanagement under its former private equity ownership.
“When we look at Roger Williams and Fatima, we’re on the edge of a knife there,” Neronha said at a press conference Wednesday. “We’re on the edge of a knife as to whether they survive or not, and if they don’t, there will be one reason why not, because we haven’t acted quickly enough.”
A $10 million boost to Fatima’s existing psychiatric services — which already span 60 beds across three units dedicated to acute, long-term and geriatric care — could help seal the sale deal, assuring investors of a new source of income and the state’s willingness to keep its facilities running, Blais said.
If these bonds aren’t sold, there are going to be catastrophic results for health care in Rhode Island.
But lawmakers might not be willing to part with $10 million easily given the state’s projected $185 million deficit and the threat of federal funding cuts.
House Speaker K. Joseph Shekarchi expressed concern, noting the “challenging budget year,” in a statement Thursday. However, Shekarchi pledged to “reserve judgment” until after an initial hearing before the House Committee on Finance Thursday night.
Senate President Valarie Lawson remained noncommittal on McKee’s proposal, awaiting further legislative review.
“Our Lady of Fatima and Roger Williams Hospitals are critical components of Rhode Island’s health care system, and we will explore all options to support their long-term stability,” Lawson said in a statement.
Filling a shortage
McKee’s office describes the impetus for his proposal very differently.
“This proposal is neither in response to a request from CharterCare nor is it necessary to sell the CharterCare Bonds,” Olivia DaRocha, a spokesperson for McKee, said in an emailed response Thursday. “EOHHS have been contemplating ways to support Our Lady of Fatima, including with the behavioral health unit, for years. The State is taking this step because we have unmet needs for patients with significant behavioral health conditions in Rhode Island. The intent of this proposal is to address those needs.”
Fatima opened a 20-bed behavioral health care unit in 2016 under an agreement with the Rhode Island Executive Office of Health and Human Services to ease capacity issues at the state-run Eleanor Slater Hospital. Fatima is a community hospital, with most of its costs for Medicaid patients reimbursed through managed care organizations. But under the agreement to take patients from Eleanor Slater, EOHHS paid $850 per patient per day directly, according to a presentation by House Fiscal Advisor Sharon Reynolds Ferland, who outlined McKee’s proposal at a House Committee on Finance meeting Thursday night.
Just three patients from that original 2016 transfer remain at Fatima, and unit closed to new admissions several years ago due to confusion over the oversight and funding source. McKee is now asking to tap into $4.3 million in surplus state funds from fiscal 2025, along with an assumed $5.7 million federal match, to reshape the program in order to be federally recognized and eligible for managed care organization reimbursements through Medicaid. The rate recalculation would also open the beds to begin accepting new patients, either from short-term psychiatric programs at other hospitals, or those languishing in emergency rooms while waiting for a bed to free up.
As of Thursday morning, there were 46 adults waiting in hospital emergency rooms for inpatient psychiatric care, 11 of whom were designated as a potential harm to themselves or others, Richard Leclerc, director of the Rhode Island Department of Behavioral Healthcare, Developmental Disabilities, and Hospitals (BHDDH), told lawmakers. Another 50 patients in acute, or short-term hospital psychiatric programs have been there longer than 30 days, and could benefit form longer-term treatment if it was available.
“This is filling a void for people in need,” Leclerc said.
Long-term beds generally are meant for patients who require care for weeks, months or even years in some cases, Randal Edgar, a BHDDH spokesperson, said in an email Thursday. Acute psychiatric hospital beds are for patients with “severe, life-threatening conditions” but who “can be stabilized” and may stay up to a week. Edgar said.
The state has 112 long-term psychiatric hospital beds, including those at Fatima, according to information provided by the Rhode Island Department of Health. The bulk of them, 78 beds, are through the state-run Eleanor Slater Hospital. There are also 12 beds at Roger Williams Medical Center.
Rhode Island ranked 19th among states for the number of beds for adults with severe mental illness per 100,000 residents in 2023, according to a report by the Treatment Advocacy Center.
Lack of beds forces potential patients to wait weeks for appropriate treatment, often biding their time in hospital emergency rooms, which are ill-equipped to help them with complex psychiatric and co-occurring diagnoses, Sen. Pam Lauria, a Barrington Democrat and nurse practitioner, said in an interview earlier Thursday.
“It’s a horrifying situation,” said Lauria.
The Hospital Association of Rhode Island also expressed preliminary support.
“Access to long-term behavioral health services is desperately needed for so many Rhode Islanders and we are hopeful that this unit will help alleviate some pressure on the state’s overwhelmed emergency departments,” Howard Dulude, interim president of the hospital association, said in an emailed statement Thursday.
Even McKee’s adversary, Neronha, offered a rare note of praise for the governor.
“The designation of $10 million towards health care in Rhode Island is significant, and for that I tip my hat to the Governor,” Neronha said in a statement Thursday. “Rhode Island leadership needs to come together and do everything we can to support these safety-net hospitals.”
Competing costs
Neronha stressed the need to address low Medicaid reimbursement rates, which he said are at the root of Roger Williams and Fatima’s financial struggles.
“We must invest in health care as infrastructure, and that means immediately funding Medicaid to reflect the true cost of care,” Neronha said. “Funding health care is not optional, and we need to design the state budget in a way that reflects health care as our top priority.”
Neronha on Wednesday unveiled a three-pronged strategy including litigation, legislation and a partnership with Brown University to combat the health care crisis. Among his legislative fixes is $50 million worth of Medicaid reimbursement hikes meant to push provider payments level with Medicare.
A separate pair of bills backed by the Hospital Association requires $90 million to increase Medicaid payments to physicians and advanced practice providers.
Lauria is leading the charge to reverse the drain of primary care providers as sponsor of a bill proposing a $1 million state scholarship program for doctors, nurse practitioners and physician assistants who stay and work in Rhode Island after graduation. She also co-heads a legislative panel tasked with considering the feasibility of a state medical school.
“There’s a lot of needs out there,” Lauria said. “Finding that balance is going to be key.”
A Senate committee hearing on the governor’s proposed amendment is tentatively scheduled for next week, Greg Pare, a Senate spokesperson, said in a text message.
Reynolds Ferland also pointed to a list of questions not yet answered by the governor’s office on his proposal. Among them: How soon would the state expect to receive the federal rate recalculation approval to begin accepting new patients at Fatima? Also uncertain is how the revitalization of a community long-term behavioral health care unit would affect state-run facilities at Eleanor Slater and the separate Rhode Island Psychiatric Hospital in Cranston.
Leclerc did not answer these questions during his testimony Thursday. The governor’s office referred additional details on the proposal to the Executive Office of Health and Human Services, which did not immediately respond to follow-up questions from Rhode Island Current.
This story was originally published by the Rhode Island Current.
