Delivery of Care

When journalists serve as historians, keepers of the public record

How much credit should Richard Charest, Gov. McKee’s nominee to head R.I. BHDDH, get for Landmark’s turnaround?

Photo by Richard Asinof

The signage for Landmark Medical Center in Woonsocket, from a file photo.

By Richard Asinof
Posted 5/31/21
The nomination of Richard Charest to serve as the next director of R.I. BHDDH was touted by the McKee Administration in part because of his experience serving as president and CEO of Landmark Medical Center during its five-year receivership. The question remains: What role did Charest play in the turnaround of Landmark?
Is Rhode Island considering privatizing Eleanor Slater Hospital as a solution to the predicament around Medicaid spending and delivery of care? What are the qualities that Richard Charest would bring to the other predominant areas of health care delivery at the agency – including mental health and behavioral health services and developmental disabilities? Given that Charest is prepared to come out of retirement to take this job, should he viewed as serving as a potential interim director? When will the R.I. General Assembly conduct a thorough audit of Medicaid spending in Rhode Island?
It was front-page news in the Charleston Gazette-Mail in South Carolina, with the sensational headline above the fold seeming to scream: ‘Let them move to heroin.’ The quote came from an email written by a McKesson Corp. employee cheering the trends that showed Appalachians were shifting away from opioid pills to illicit drugs in 2012.
The email was released Friday, May 28, during the federal trial pitting three West Virginia counties against three drug distributors, including the McKesson Corp.
The quoted email, from Tracy Jonas, director of regulatory processes at McKesson, was part of email exchange between Jonas and Dave Gustin, director of regulatory affairs at McKesson, in response to a February 2012 story that showed that DEA was seeing a sharp drop in ocycodone sales in Florida and in other states where “addicts were moving to meth and heroin.”
Jonas had responded: “Good…let them move to heroin and meth …we don’t have to monitor that.”
Gustin had replied: “I was thinking that but didn’t want to verbalize it.”

PROVIDENCE – As news releases go, the announcement last week that Gov. Dan McKee had chosen Richard Charest to serve as the next director of the R.I. Department of Behavioral Healthcare, Developmental Disabilities, and Hospitals [BHDDH} was not as egregious as, say, the news release put out by the Minneapolis Police Department about George Floyd’s murder.

Under the headline, “Man dies after medical incident during police interaction,” the Minneapolis Police bulletin had claimed that George Floyd “appeared to be under the influence,” following Floyd’s death. Instead, thanks to a bystander’s video recording of the event, the truth about what happened emerged, resulting in the recent conviction of a police officer for the killing of Floyd.

In regard to touting Charest, the fourth paragraph in the news release from McKee's office said: “Charest has over 30 years experience in the health care arena. He also has extensive turn-around experience… Charest previously served as president and CEO of Landmark Medical Center where he successfully led hospital operations and finances through receivership, reassured the community and engaged employees to ensure uninterrupted high-quality.”

To quote WPRO’s Steve Klamkin, “Really?”

Journalists as historians
As a reporter for the Providence Business News and then ConvergenceRI who had covered much of the long-running soap opera of Landmark Medical Center’s attempt to find a buyer to move it out of financial receivership, the act of praising Charest’s navigation skills and his “extensive turn-around experience” during the tumultuous five-year saga did not fit well within my recollection of events and how they transpired.

Many times during the years-long coverage, I found myself sitting in the courtroom of Superior Court Judge Michael Silverstein, often along side Providence Journal reporter Felice Freyer and Rhode Island Public Radio [now The Public’s Radio] reporter Megan Hall, attempting to distill what was occurring into understandable prose. It was not an easy task.

If there were any heroics, they were performed by Judge Silverstein, not Charest, in ConvergenceRI’s opinion.

[ConvergenceRI did reach out to both Freyer, now a reporter with the Boston Globe, and Hall, now working as a consultant, to ask them how they remembered the events and whether they would concur with the opinion voiced in the news release that had characterized Charest’s involvement as having “successfully led” the Landmark turnaround. If and when they respond, I will include their responses in an editor’s note.]

It would be nice to imagine that reporters, once fierce competitors, would be able to talk and converse and share stories about the coverage of one of the “landmark” stories [pun intended] in the sale and consolidation of Rhode Island’s acute care community hospitals. Such a scenario is unlikely to happen. The downside of that is that Freyer, Hall, and I are the keepers of the historical record of what actually happened – if we managed to keep out notes and our memories intact.

For the rest of the news media [and elected officials in the R.I. General Assembly], they are more than likely to swallow the remade history in the news release hook, line, and sinker. Alas, when it comes to court cases and court hearings, there are no bystanders recording the events on their phones.

The whole truth?
The story of Landmark’s financial demise began with an audacious plan by then Landmark Medical Center’s president and CEO, Gary Gaube, to open up an open-heart surgery division for northern Rhode Island and the nearby Massachusetts communities served by the hospital.

The effort met stiff resistance from Lifespan, the parent company of Rhode Island Hospital, where almost all of the open-heart surgeries in Rhode Island were being conducted. The threat of competition promised to undermine the share of the finite number of heart patients seeking care at Rhode Island Hospital. [The other underlying issue, of course, was whether Rhode Island could realistically compete with Boston’s expertise.]

At the same time, Blue Cross and Blue Shield of Rhode Island had also opposed the effort by Landmark to set up an open-heart surgery unit. Rates of reimbursement by the health insurer were a bone of contention, according to Landmark spokespeople at the time.

In 2008, Landmark Medical Center in Woonsocket [which also owned the Rehabilitation Hospital of Rhode Island in North Smithfield] sought bankruptcy protection under Rhode Island law in Superior Court.

The underlying financial problem with Landmark was that its payer mix, which was heavily slanted toward Medicaid and Medicaid insurance plans and away from commercial payers, appeared to make the hospital’s future financial position untenable.

Many suitors walked away
The primary suitor to buy Landmark was Steward Health Care, which had been created by a private equity fund, Cerberus, which in turn operated out of New York City.

Among the many obstacles that Steward had to overcome was the need to tweak Rhode Island law under the Hospital Conversions Act to allow further purchases of hospitals by a for-profit parent company. The R.I. General Assembly obliged.

Another key participant in the legal battle was UNAP, the United Nurses & Allied Professionals union representing workers at Landmark. and the rehabilitation hospital.The union had taken out a memorable full-page ad in The Providence Journal warning about “sharks in the water,” to coincide with one of the Judge Silverstein’s hearings in April of 2011 when potential buyers testified. UNAP said they were concerned by reports of anti-labor practices at Prime’s hospitals in California.

Fast forward. After negotiations appeared to stall, Steward then launched a major public relations campaign attacking Blue Cross & Blue Shield of Rhode Island, blaming the insurer as the major impediment to the transaction for Steward to buy Landmark. The dispute led to a shouting match in the courtroom involving Jonathan Savage, special master, and opposing counsel.

Then, at the last moment, Steward decided to renege on the deal, walking away from the altar of its proposed marriage with Landmark.

Priming the pump
It was then that Prime Healthcare, a for-profit health care system based in Ontario, California, re-emerged as the primary suitor for Landmark.

Prime Healthcare’s initial interest in owning a hospital in Rhode Island had been about diversifying it portfolio of hospitals geographically. In testimony on April 21, 2011, during a hearing before Judge Silverstein, Dr. Prem Reddy the owner of Prime Healthcare, explained that his interest in purchasing Rhode Island’s Landmark Medical Center had been prompted because his board of directors had suggested that the company needed to diversify its portfolio beyond the California market.

[At that time, Prime Healthcare was one of three for-profit bidders, including Transition Healthcare of Franklin, Tenn., and RegionalCare Hospital Partners of Nashville, Tenn.]

Finally, in December of 2013, the purchase of Landmark Medical Center and the Rehabilitation Hospital of Rhode Island by Prime Healthcare was approved – but there remained one final plot twist to the story.

The high cost of doing business
In October of 2017, the R.I. Department of Health fined Prime Healthcare $1 million for violating a state law requiring the company to obtain regulatory approval for the conversion of its two hospitals in Rhode Island to nonprofit companies. It turned out that Prime, despite telling regulators that it had not completed the transactions with the two hospitals, and repeatedly assuring regulators that the deal had not been finalized, had not been telling the truth. Financial records showed that the transactions had been completed in December of 2016.

Two years later, in August of 2018, Prime Healthcare and its CEO, Prem Reddy, agreed to pay the U.S. Department of Justice $65 million to settle allegations that 14 Prime-owned hospitals in California had knowingly submitted false claims to Medicare by admitting patients who required less costly, out-patient care, and by billing for more expensive patient diagnoses than the patients had [what is known as “up-coding”].

One question to ask moving forward: Are there similar practices to be found at Landmark Medical Center and the Rehabilitation Hospital of Rhode Island? Who would be responsible for identifying and pursuing such problems? The R.I. Attorney General?

On the merits
Which gets us back to the original premise of this story: Is it correct for Gov. McKee to tout the leadership of Richard Charest, nominated to serve as the next director of R.I. BHDDH, with the credit for the successful turnaround of Landmark Medical Center after five years in receivership?

Indeed, there may be other attributes about Charest’s long career in health care delivery to make him an ideal candidate to come out of retirement and take the helm of the government agency now embroiled in controversy over Medicaid spending and care delivery at the Eleanor Slater Hospital. [Charest currently serves as a consultant with R.I. EOHHS analyzing care delivery at Eleanor Slater Hospital.]

The question is: What part of the Landmark Medical Center “successful” saga can be attributed and documented as a direct result of Charest’s leadership?

In reviewing the content of more than a dozen stories written about Landmark, ConvergenceRI found this cogent bit of reporting from a story published in October of 2013 worth sharing:

• “For more than five years, Landmark has been run by Special Master Jonathan Savage, who was appointed by Superior Court Judge Michael A. Silverstein. There are years of financial reports detailing how Savage and his law firm spent millions of dollars to keep Landmark open. Rhode Island taxpayers deserve a thorough accounting of how the money was spent, and not just as an analysis delivered by Bill Fischer, who serves as Savage’s public relations consultant at about $9,000 a month, or $108,000 a year, according to the reports.” Question: Was it Savage or Charest who was responsible for running the hospital?

• “The twists and turns of Landmark’s attempts to find a suitor – often resulting in the hospital being jilted at the last moment – would make compelling reading in any report, should the state – or the R.I. General Assembly – commission someone to write it. Why Steward Health Care decided to pull the plug at the last moment is still unknown – and worthy of examination.”
Question: What made Landmark an attractive property to be acquired by Prime Healthcare?

• “As a reporter who covered the Landmark story for about four years, what stays with me most when I recall the numerous hearings and courtroom proceedings is the sound of powerful men chuckling, a condescending kind of laughter that Jon Stewart captures so well when he [performed] his impression of former President George W. Bush on ‘The Daily Show.’” Heh heh heh.

I heard it when I tried to question two of Rhode Island’s top lobbyists, Joseph Walsh and Robert D. Goldberg, at a hearing in early 2012 at the State House, when I asked them about their lobbying efforts on behalf of Steward Health Care to push through legislation that would change the three-year waiting period required for for-profit hospitals to acquire additional nonprofit hospitals in Rhode Island.”

“Both Walsh and Goldberg declined to answer my questions, referring me to Steward spokesman Christopher Murphy, who, in turn, said he couldn’t answer any questions, because he was ‘unaware’ of Walsh’s and Goldberg’s lobbying activities. They all joined in.
Heh, heh, heh.

I heard it again more recently when Dr. Prem Reddy, chairman, president and CEO of Prime Healthcare Services of Ontario, Calif., offered the first detailed public overview of his hospital network’s plans for Landmark Medical Center in Woonsocket at a public hearing held on July 9, 2013, by the Health Services Council of the R.I. Department of Health.

In an interview after the meeting with reporters, Reddy talked in a very animated manner, repeatedly poking his finger within an inch of Providence Journal reporter Felice Freyer’s face, while he launched a verbal attack on Blue Cross & Blue Shield of Rhode Island.

“If you’re a Blue Cross member, you’re already paying through your nose,” he said, punctuating his comment with a heh heh heh, poking his finger again. “Where is that premium going that you are paying? It’s going into big buildings, into huge millions for salaries.”

One final note
A source sent to me a link regarding a lawsuit involving Richard Charest apparently regarding his termination agreement from Rehabilitation Hospital of Rhode Island, with R.I. EOHHS listed as an intervening party in the case. The source suggested that the R.I. Senate might want to look into his “resignation” from Landmark/Prime Healthcare, [See link below.]


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