Landmark union makes deal

March 6, 2013

PHOTO BY ERNEST A. BROWN

WOONSOCKET — The health workers union at Landmark Medical Center has reached a tentative contract agreement with a New Jersey hospital group whose offer to buy the struggling hospital last November was never considered because it missed a bid deadline.
Landmark Hospital Holdco LLC surfaced after the Superior Court granted exclusive bargaining rights for the assets of Landmark Health Systems to Prime Healthcare Services of California.
The United Nurses and Allied Professionals Local 5067 already has a collective bargaining agreement with Prime, which is presently preparing an application to buy Landmark for state regulators. But UNAP disclosed Wednesday that it’s reached a tentative accord with Holdco, which doesn’t have a seat at the bargaining table for Landmark, and never has.
In an interview, Chris Callaci, general counsel for UNAP, told The Call that the deal with Holdco is, in part, a backup for the union in case Prime’s negotiations for Landmark collapse. But he says the union held out for terms it believes would make Holdco a leading suitor for Landmark if another round of bidding is necessary to get the ailing hospital sold.
“Our position is very simple,” said Callaci. “We respect the regulatory process, but it can be very unpredictable, as we learned from the situation with Steward Health Care. We want to make sure in the event Prime doesn’t make it to closing, we have a solid candidate that is ready, willing and able to go.”
Callaci said “the commitments Holdco has made to Woonsocket and the surrounding communities are far superior than those made by Prime Healthcare.”
Unlike Prime, he said, Holdco has agreed to a one-year moratorium on layoffs after closing; preservation of clinical lines of service for at least two years; and to refrain from selling the hospital for at least three. No other hospital group interested in buying Landmark has matched that level of protection of the public interest, according to Callaci.
“The commitments Holdco has made to hospital employees and their families in the tentative agreement are also far superior to those made by Prime,” said Callaci, adding that the union will vote on whether to approve the pact within a few days.
The UNAP counsel said he has no reason to believe that Prime’s application to buy Landmark is in trouble. But he said UNAP looks upon published reports that Prime has been served with subpoenas from the federal Department of Justice amid allegations of Medicare fraud in California as a red flag. Prime has downplayed the allegations, saying they’re without merit.
“We’re concerned,” Callaci said.
Lawyer Jonathan Savage, the special master in charge of running Landmark, cautioned against reading too much into UNAP’s move.
“We have every confidence that Prime Healthcare Services’ acquisition of Landmark Medical Center will continue to move forward in a productive manner and conclude successfully,” he said. “Chris Callaci and UNAP have always maintained that it is their obligation, despite the work involved in doing so, to negotiate collective bargaining agreements with every interested party. Nothing more should be read into their effort to do so.”
Savage said UNAP’s relationship with Holdco “will have no effect” on the regulatory review of the sale or Landmark’s existing asset-purchase agreement with Prime.
Savage said Prime has been “open and transparent” with regulators and defended the organization’s track record. Recently, he said, eight of Prime’s hospitals were included in a list of the nation’s top 100 hospitals by Truven Health Analytics, an independent group that rates quality of care and patient satisfaction.
Landmark’s ability to operate would be in jeopardy without the “significant capital investment” Prime has already made in the hospital while the sale is pending, said Savage, adding, “We are fortunate to have an organization such as Prime committed to healthcare in northern Rhode Island and the acquisition of Landmark Medical Center.”
Prime emerged as the main suitor for Landmark last fall, when Steward Health Care of Boston abruptly terminated 16 months of negotiations for the Cass Avenue hospital after failing to reach an accord on reimbursement rates with Blue Cross/Blue Shield of Rhode Island.
A family-owned, for-profit chain with 20 hospitals in California, Texas, Nevada and Pennsylvania, Prime submitted an application to purchase Landmark under the Hospital Conversions Act in January, but state regulators later deemed the paperwork incomplete. Attorney General Peter Kilmartin has given Prime until March 15 to rectify the omissions.
Superior Court Judge Michael Silverstein appointed Savage to run Landmark in June 2008, when the hospital filed for receivership. On Savage’s request to table all eleventh-hour offers on the hospital, Silverstein granted Prime exclusive bargaining rights for Landmark and the Rehabilitation Hospital of Rhode Island on Sept. 26.
Holdco surfaced weeks later, issuing several public statements that were critical of the arrangement, saying other suitors should have been given more time to make an offer.
“These decisions, we believe, are negatively affecting the welfare of the Woonsocket, Rhode Island community, as well as the doctors and staff who faithfully serve it,” Holdco said at the time. “Not only is our offer economically superior to other potential buyers, but more broadly, it is absolutely more favorable for patients, staff and the Rhode Island community.”
Like Prime, Holdco is a for-profit entity with a record of turning around financially troubled hospitals. It currently owns three hospitals in New Jersey, including Hoboken University Medical Center, Bayonne Medical Center and Christ Hospital in Jersey City.
Callaci said that since Prime began negotiating for the hospital, over 50 hospital employees have been laid off, about 35 of them UNAP members, including nurses and other health care workers. A few have been called back after a rebound in the patient census, he said.
UNAP represents about 600 health care workers at Landmark and its affiliate, the Rehabilitation Hospital of Rhode Island, or roughly half the combined workforce of the two hospitals.