Should R.I. regulate private equity in health care after crisis at safety-net hospitals?

“I think it signals a positive swing,” Anna Matos-Mournighan, a lecturer and the graduate program director for healthcare administration at Salve Regina University, said on the Rhode Island Report podcast. “We don’t have any other private equity-backed hospitals in Rhode Island.”

Anna Matos-Mournighan, a lecturer and the graduate program director for healthcare administration at Salve Regina University.Handout

But Matos-Mournighan, who is also board president of a Newport senior center, noted private equity is still involved in some of the state’s nursing homes.

And going forward, Rhode Island should consider legislation to regulate private equity in health care, she said, citing steps taken by Massachusetts, Maine, and Oregon to protect patients.

“When we’re talking about patient health and safety, we need to think a little more about how we can ensure that patients aren’t harmed,” Matos-Mournighan said. “I know that there are many individuals that think that regulations are a bad thing, but I think when it comes to the health and welfare of human beings, that that really needs to be at the fore.”

Last year, Oregon passed legislation to block private-equity firms from controlling health care practices. “They actually have the strictest legislation,” Matos-Mournighan said of Oregon.

In January, Massachusetts Governor Maura Healey signed a law touted as a first-in-the-nation effort to monitor and rein in private equity in the hospital industry, and to prevent the sort of profiteering that critics say contributed to the financial collapse of Steward Health Care, the loss of hospitals in Dorchester and Ayer, and at least 15 patient deaths.

And in February, state Senator Linda L. Ujifusa and state Representative Kathleen A. Fogarty introduced bills aimed at protecting Rhode Island’s health care system from the abuses they see in private equity ownership and the corporate practice of medicine.

In Rhode Island, the two safety net hospitals had been owned by Prospect Medical Holdings, which was backed by the Leonard Green & Partners private equity group.

“What happens with private equity is that the strategy is to go in, make a quick profit, but you have to cut corners somewhere,” Matos-Mournighan said. “Something has to be cut, whether that be on the operations, the facilities, staff.”

The threat to the future of Our Lady of Fatima Hospital and Roger Williams Medical Center was significant because, as safety-net hospitals, they serve some of the state’s poorest residents, who rely on Medicaid or have no health insurance, she said. And if those hospitals had closed, that would have resulted in an influx of patients at other hospitals in Rhode Island, she said.

But on Feb. 10, the Rhode Island House and Senate approved providing an $18 million state loan guarantee to help The Centurion Foundation buy the hospitals.

“It served as a signal to the investors that the state was as invested as Centurion,” Matos-Mournigham said. “But it’s also to help reserve funds so that if a failure were to happen again, we wouldn’t have this catastrophic loss and no other recourse but to close a hospital down.”

The Centurion Foundation is a Georgia-based nonprofit that has no endowment, that has never run hospitals before, and that struggled to raise money to buy the two hospitals.

“It is not going to be a walk in the park in the sense that they have to undo years of neglect in terms of the facilities and the upkeep of equipment and capital infrastructure,” Matos-Mournighan said.

But through the Hospital Conversions Act, state officials tried to ensure the new owners met conditions and provided monetary commitments, she said. “I think that provides good guardrails for a situation like this to not happen again,” she said.

While The Centurion Foundation is based out of state, “their whole focus is to convert for-profits into nonprofit organizations,” she said. “So I think that in and of itself speaks to the type of organization that they are.”

Matos-Mournighan also talked about the growing number of older Rhode Islanders, and she discussed a shared housing model used in other states where older live together to reduce costs, increase companionship, and access support.

Organizations help pair older adults who might want to share a home, she said, comparing it to the systems used to match up college roommates.

“When we think of the Golden Girls, that’s that kind of model,” Matos-Mournighan said. “I think it’s a wonderful model.”

The Rhode Island Report podcast is produced by The Boston Globe Rhode Island with support from Salve Regina University. To get the latest episode each week, follow the Rhode Island Report podcast on Apple Podcasts, Spotify, and other podcasting platforms, or listen in the player above.

Edward Fitzpatrick can be reached at [email protected]. Follow him @FitzProv.