L+M purchase of Westerly Hospital heads to next phase

With the first public meeting of Rhode Island hospital regulators scheduled for next week, the pending sale of The Westerly Hospital to Lawrence + Memorial Hospital moves into an active phase that could reach its conclusion by the end of March.

"We're all excited that we're past the application phase," Attorney Mark Russo, court-appointed special master for The Westerly Hospital, said Thursday. "I'm confident this next phase won't take the full 90 days. We're at the point where we can see the goal line."

Russo and top L+M administrators gave an update of the sale process, which began in August when the judge overseeing Westerly Hospital's receivership approved the New London hospital's $69 million offer, pending approval by Rhode Island agencies.

In November, L+M submitted an application to the Rhode Island Department of Health and Attorney General's Office. The application was deemed complete Jan. 29.

On Feb. 14, the first public meeting on the application will take place. At 2:30 p.m. at the health department's operations center at 3 Capitol Hill, Providence, the Project Review Committee of the Health Services Council will begin its consideration of the application.

As the regulatory process moves forward, L+M and Russo are preparing for the transition. L+M officials have been working with Westerly "on a department by department basis," including information technology, finance and nursing, to bring systems and services there in line with L+M's, said Russo and Bruce Cummings, president and chief executive officer of L+M. The plan is to ensure that on the day the closing for the sale takes place, there will be seamless transition to new ownership, they said.

Also in preparation, 17 doctors in the Atlantic Medical Group, a Westerly Hospital physicians organization, have signed agreements to join Lawrence + Memorial Physicians Association, said Pamela Kane, executive director of LMPA. Atlantic Medical Group will be dissolved. All but two or three Atlantic Medical Group doctors who transferred elsewhere joined LMPA, she added.

Cummings emphasized that the two hospitals will operate separately, each maintaining its own pharmacy, labs, imaging, critical care and emergency services departments. Administrative services will be consolidated, however, with top L+M officials spending time at each hospital. The administrative consolidation, along with renegotiated union contracts, are projected to reduce expenses for payroll and benefits at Westerly from $45 million in fiscal 2013 to $42.5 million in fiscal 2015.

"But we're not consolidating in terms of clinical services," Cummings said. "We're maintaining as broad a suite of clinical services (at Westerly) as possible."

He noted that in its application, L+M committed to maintaining Westerly as an acute care, community hospital for at least five years, and to continuing all clinical services provided at the time of closing for at least two years. That includes maintaining the intensive care unit and surgical care services at Westerly, he said. It is also committing to investing $36.5 million in improvements.

"We would like to see services (at Westerly) grow," Lou Inzana, chief financial officer of L+M, said.

With these commitments, Cummings said, the community can be assured that Westerly will continue to be a full-service hospital. L+M could not, as some fear, significantly pare down services at Westerly, because L+M "does not have the capacity to absorb those patients," he said. Inpatient beds at L+M are frequently 85 to 90 percent full.

The plan to discontinue obstetrics services June 30, Cummings added, "was not something we orchestrated." L+M is working to recruit an obstetrician and a nurse-midwife who would provide prenatal and postpartum care in Westerly, but perform deliveries at L+M.

Russo said he tried unsuccessfully for at least five months to recruit obstetricians to practice at Westerly, only to conclude that the service was not sustainable because there were too few deliveries there. Westerly is currently served by two obstetricians, each of whom plans to discontinue handling deliveries there after June 30.

Even without obstetrics services, L+M will provide a broad range of women's health services at Westerly, said Lauren Williams, vice president of patient care services.

One new service that may be added to Westerly is a special 10-bed unit for patients who no longer need full hospital or nursing home care, but aren't yet ready to go home. These "swing bed" patients typically would stay one to two weeks. An application to create a "swing bed" unit is pending with the state health department.

Russo submitted the application at the suggestion of L+M officials, because "we need to add some new revenue streams" to ensure that Westerly maintains financial stability. Cummings said "swing beds" are not a familiar concept in Connecticut or Rhode Island, but that regulations allow such units at smaller hospitals such as Westerly that meet specific criteria. He said these units were started at hospitals he previously headed in Maine and New York.

Cummings said some L+M patients recovering from procedures such as hip or knee replacements could be transferred to the "swing bed" unit at Westerly.

Two nursing homes have sent letters to the health department opposing the "swing bed" plan out of concern it would erode an important revenue stream for their operations.

j.benson@theday.com

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