Steward Health Suing Blue Cross Rhode Island

Steward Health Care System, the upstart for-profit operator of a chain of regional Massachusetts hospitals, is suing the largest health insurer in Rhode Island over a hospital acquisition deal gone bad.

In its complaint, filed in state Superior Court in Providence, R.I., Steward alleges Blue Cross & Blue Shield of Rhode Island blocked its bid to acquire struggling Landmark Medical Center in Woonsocket, R.I., by failing to negotiate reasonable health care payments, the Boston Globe reports.

Rhode Island lawmakers supported Steward’s expansion in Rhode Island, passing a change in law that loosened restrictions on acquisitions by for-profit hospital operators, Modern Healthcare reported last June. But after Landmark and Steward signed a merger agreement, Blue Cross Rhode Island and Landmark could not agree on a contract for health care payments.

The deal also involves a Landmark subsidiary, the Rehabilitation Hospital of Rhode Island. The Rhode Island Department of Health announced it had approved both mergers last May.

Landmark has been in state receivership for five years, according to the Providence Journal. Steward had committed to investing $71.6 million to $76.6 million in capital improvements, debt forgiveness, and other payments, the Globe reports, citing a bid summary – plus $7.5 million in working capital and forgiveness of a $2 million loan from Caritas Christi.

Blue Cross Rhode Island issued a statement, according to the Globe: “At a time when Rhode Island is focused on assuring access to quality health care for all residents, lowering costs and increasing collaboration in the provider community, Blue Cross & Blue Shield of Rhode Island is disappointed with Steward’s decision to file a lawsuit,” Michele Lederberg, the insurer’s general counsel and chief administrative officer, wrote.

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Retrieved From:
May 3rd, 2013