L&M to take closer look at possible purchase of The Westerly Hospital
Lawrence & Memorial Hospital is planning to hire a financial consultant to determine whether it should offer to purchase all or parts of the financially troubled Westerly Hospital.
"We are looking at parts and not necessarily the whole," Mike O'Farrell, L&M spokesman, said Monday.
L&M agreed to consider making a purchase offer after two recent meetings with attorney Mark Russo, the court-appointed special master overseeing The Westerly Hospital since it entered receivership late last year. Since then, Bruce Cummings, L&M president and chief executive officer, has received approval from the L&M Board of Directors to hire a financial consultant to review information about The Westerly Hospital and advise L&M about any assets that would be worth acquiring.
"We will only submit a proposal if we are absolutely convinced that acquiring Westerly could be done without any adverse impact on L&M, our staff, our current operations or financial position," Cummings wrote in an employee newsletter last week.
Along with the main hospital, which sits on a 10.6-acre parcel about a mile and a half from downtown Westerly, The Westerly Hospital also owns a medical center in a newly renovated building in North Stonington as well as several medical offices along Wells Street in Westerly. Russo said Monday that six parcels would be offered for sale separately from the main hospital and its assets.
"The plan is to sell those in advance of the hospital sale," Russo said.
O'Farrell said a Feb. 3 announcement that the region's other hospital - The William W. Backus Hospital in Norwich - has begun discussions with Hartford Hospital toward a formal affiliation, "has no direct impact" on L&M's level of interest in The Westerly Hospital.
All hospitals are seeking the best ways to become stronger institutions in advance of changes in health care that are likely to impact hospital finances and other areas, and L&M has not decided on the best strategy, O'Farrell said. "Do we adapt within our current resources, or do we adapt by adding resources to it?" he asked.
L&M and The Westerly Hospital undertook discussions last year toward a possible merger, but that process ended abruptly when the Rhode Island hospital voluntarily entered receivership. Similar to bankruptcy, receivership is intended to allow an institution to restructure.
The hospital entered receivership in December after ending fiscal 2011 with a $5.7 million operating deficit - the latest of several years of red ink - and insufficient cash to continue without legal protection from creditors.
Russo said an official request for proposals for the purchase of all or part of the hospital would be advertised in March, with a 40- to 60-day deadline for offers to be submitted. He said he has met with several other potential buyers in addition to L&M.
"I'm network-marketing now," he said.
The best offers would be presented at a court hearing, and by late summer Russo hopes the court will approve one buyer for the entire package or more than one for various parts. State hospital regulators would also have to approve any sale agreement.
Consultants hired by Russo have begun an analysis of the hospital's operations "to identify the root causes of the ... current financial difficulties," according to a recent court filing. That information will be made available confidentially to parties planning to make a purchase offer, Russo added.
The receivership has had no impact on day-to-day hospital operations, Russo said. "There's been no dip in the patient census and no curtailing of services," he said.
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