Paul Grimaldi

Financially troubled Landmark Medical Center yesterday sought the help of a Superior Court judge to clear the way for a potential merger with another hospital.

Superior Court Judge Michael A. Silverstein spent most of yesterday in discussions with lawyers and state officials regarding Landmark’s request that he appoint a special master to oversee the Woonsocket hospital, which Landmark officials said is on the brink of financial collapse. Silverstein ultimately designated Providence lawyer Jonathan N. Savage, with the firm Shechtman, Halperin and Savage of Pawtucket, as temporary special master.

Savage will fill the role until at least July 17 when the judge is expected to make a permanent appointment in the case.

Until then, Savage will assume control of the hospital’s assets and day-to-day operations. The 214-bed hospital is expected to operate normally while under court supervision, said Savage and others involved in yesterday’s meetings.

There’s no indication the quality of health care at Landmark has suffered, nor that the hospital’s 1,100 jobs are threatened at this point.

“It’s important to stress that normal business operations will continue,” said hospital spokesman Bill Fischer. “[People] need to understand we’re not shutting down tomorrow.”

Savage drove to the Woonsocket hospital late yesterday afternoon to talk with its managers after meeting with the judge for most of the day.

“We obviously have a very unusual situation here that needs special care and attention,” Savage said before leaving Superior Court in Providence.

Savage’s key task apparently will be to “seek and evaluate potential acquisitions, partnerships and other financial solutions,” said Richard Charest, president of Landmark.

Charest said, “Although the hospital is in a negative net asset position, based upon current operations, Landmark has sufficient cash on hand to continue operations through the first quarter of 2009.

“Landmark will continue to deliver high quality health care to the residents of northern Rhode Island.”

The chief executive officer of Landmark petitioned the court early yesterday to have a special master take charge of the financial affairs of the Woonsocket hospital.

In the petition, Gary Gaube, chief executive officer and trustee of Landmark, cited the facility’s providing of more than $8.5 million annually in uncompensated care to the uninsured and the underinsured.

In addition to threatening what Gaube asserted is the third-busiest emergency room in the state, the brief states that at risk are about 1,100 jobs at Landmark.

The medical center made a plea in the late innings of the recently ended General Assembly session for relief from state law so it could more quickly merge with the financially stronger Memorial Hospital in Pawtucket — before Landmark is forced to shut down. However, time ran out in that legislative proposal.

Attorney General Patrick C. Lynch opposed that legislative move at the time, saying it would circumvent state law governing charitable institutions and the donations that fund them as well as offering no guarantee that Landmark would maintain certain medical services, such as obstetrics, home care, pathology.

The attorney general’s office would have to review a proposed merger or acquisition under the Hospital Conversions Act. Passed in the 1990s, the law aimed to protect local community assets by requiring the health director to vet merger proposals for their effect on public health and welfare, and the attorney general to guard charitable assets — the gains from money donated over the years.

In a statement issued yesterday, Lynch said: “I appreciate the court’s grasp of the import of this matter and its quick intercession to try to preserve Landmark as a community asset.”

Governor Carcieri said much the same in a statement.

“At this stage, we believe that court oversight represents our best opportunity to preserve these important health-care services for the people of northern Rhode Island.”

Landmark officials repeatedly emphasized that preserving Landmark is their goal.

“Today’s action is the first step under a court-supervised process to maintain Landmark’s operations,” Charest said in a statement released late yesterday.

The head of the state Department of Health, Dr. David Gifford, said his agency has been working with Landmark to ensure its operations continue and that the Department of Health and the Executive Office of Health and Human Services “fully support Landmark actions as well as the court’s appointment of Jonathan Savage, Esq., as special master.”

It was unclear yesterday when Health Department staff last reviewed Landmark’s operations in person.

“We haven’t had issues with quality of care up there,” said department spokeswoman Helen Drew.

Department staff would inspect the hospital in response to a patient complaint, she said.

“We do not have a hospital review staff standing by,” she said.

Landmark has been hemorrhaging money for years, and its net worth started falling into the negative numbers in 2005. For the fiscal year ended Sept. 30, 2007, Landmark’s debts exceeded its assets by $7.2 million.

Although most hospitals in Rhode Island are struggling, Landmark is the only one with a negative net worth. Unlike other hospitals, it has little endowment — just $450,000 in restricted funds that cannot be used for day-to-day operations. Landmark also has a high proportion of poor and elderly patients who rely on government programs that pay low rates. Last year, the hospital spent $8.5 million on uncompensated care.

Landmark has been negotiating with Memorial Hospital of Rhode Island in Pawtucket to buy or merge operations but state law would require any such merger plan to undergo months of scrutiny.

With yesterday’s request in Superior Court, Landmark officials signaled they remain focused on some sort of buyout.

“The end-game here is to get an acquisition accomplished,” said Fischer, the hospital spokesman.

pgrimald@projo.com