House Finance committee hears $18M contingency to shore up sale of two safety‑net hospitals

House Finance Committee members spent the evening focused on House Bill 7-408, an administration-backed measure that would place up to $18 million from the state’s supplemental rainy‑day account into a debt service reserve to support the sale of Roger Williams Medical Center and Our Lady of Fatima Hospital.

Sharon, House fiscal staff, summarized the bill’s mechanics: the money would be deposited with the bond trustee as a supplemental reserve for roughly $87 million in revenue bonds Rybeck will issue on behalf of the buyer. The bill explicitly limits the state’s role to the current approved transaction, makes the support contingent on the bonds closing by a specified deadline, and caps the state’s maximum exposure at $18 million.

Why it matters: state officials and hospital leaders said the two hospitals together provide critical services the rest of the system cannot easily absorb. Dr. Jerome Larkin, director of the Department of Health, told the committee the facilities together provide roughly 500 inpatient beds and about 57,000 emergency‑room visits each year and house unique behavioral‑health and detox capacity that would be difficult to replace. “These hospitals need to stay open for the patients they serve and for the healthcare system in Rhode Island overall,” Larkin said.

Administration testimony framed the measure as a targeted credit enhancement to close a financing gap created by current market conditions. Joe Cadiga, state budget officer, explained that the bonds are special obligations payable from hospital revenues and do not carry the state’s full faith and credit; the $18 million is a credit enhancement intended to improve the bonds’ marketability. Cadiga noted the state would not be legally obligated to replenish the reserve if the trustee draws on it, and that interest earned while the funds are held by the trustee would revert to the state.

State Secretary Richard Charis (Executive Office of Health and Human Services) urged support, saying the requested assistance is “fundamentally about securing stability for patients, workers, and the communities that rely on these hospitals every day.” He and Dr. Larkin told lawmakers that without a closing of this sale, the hospitals risked closure, a receivership or other costly emergency responses.

Representatives of the buyer, Centurion Foundation and the new CharterCare Health Rhode Island, described the turnaround plan they say will stabilize operations. Ben Mingle, Centurion/CharterCare chairman, said the transaction would leave the health system with more than $100 million in cash and reserves at closing, and that Centurion will invest $2 million in subordinated capital. The buyer plans an immediate conversion to nonprofit status at closing and said the attorney general and Department of Health conditioned the approval on oversight measures, a chief restructuring officer and other governance requirements.

Committee members pressed buyers and administration officials on risk and timeline: bond pricing and market appetite (presentation cited private placement rates near the mid‑single to high‑single digits), how soon the state could recover the funds, whether $18 million was sufficient and what plan‑B options exist if the bond sale fails. Rybeck and the administration said there are reporting requirements and trustee controls, that the bonded transaction includes an existing bond‑funded reserve and that the state reserve would provide additional near‑term coverage intended to reassure investors.

Labor leaders, clinicians and hospital staff testified in favor of the transaction. United Nurses and Allied Professionals representatives and multiple physicians described the hospitals as safety‑net institutions, emphasized the number of jobs and training programs at stake, and said Centurion had agreed to assume collective bargaining agreements.

What’s next: the committee recorded a procedural motion at the start of the evening to hold H 7408 for further study; that motion passed by voice vote. Committee members continued questioning and heard public testimony; any final committee recommendation or vote on the bill will follow further staff work and updated financing information.

The legislation’s supporters said the measure is time‑limited and narrowly tailored to the current sale; critics and some lawmakers asked for clearer written commitments from the buyer and more detail on monitoring and exit mechanics before final approval.