News & Media

May, 2008

ROGER WILLIAMS MEDICAL CENTER and ST. JOSEPH HEALTH SERVICES FORMALLY AGREE TO EXPLORE AFFILIATION

(May 13, 2008) -- Trustees of St. Joseph Health Services of Rhode Island (SJHSRI) and Roger Williams Medical Center (RWMC) have signed a Memorandum of Understanding (MOU) that describes a framework to affiliate the organizations and create a parent holding company.

If the affiliation is finalized, the resulting holding company would operate a total of 579 licensed hospital beds, employ approximately 3650 employees and have annual operating revenues of approximately $350 million.

Execution of the MOU follows several months of discussions between trustee, administration and physician leadership of SJHSRI and RWMC. The two organizations have a history of evaluating a possible affiliation, having held similar discussions several times over the past 10 years.

The MOU, which is a non-binding document, sets the stage for the next phase of the affiliation contemplation, which will focus first on negotiation of a definitive agreement that would serve as the legal basis for the affiliation and creation of the parent holding company. At that point, joint applications would be made, separately, to the Rhode Island Attorney General and the Health Department who, under State law, are required to review Hospital affiliations. A review by the Federal Trade Commission may be warranted upon further review.

Officials at the two organizations cite several benefits of an affiliation:

	•	The overlap between SJHSRI-RWMC market areas (the hospitals are 2.5 miles apart) will create a strong platform for the integration, consolidation and strengthening of clinical services.
	•	The SJHSRI & RWMC combined market share (20% in Greater Providence and approximately 15% of entire State) creates the size and scale required by hospital providers to compete in today's heath care economy.
	•	The proposed affiliation will strengthen the finances of both organizations, allowing them to continue fulfilling their missions of providing care to those in need. Additionally, the affiliation of the two organizations will enhance both the community-based and academic medical strengths that the combined system will offer. RWMC is an affiliate of the Boston University School of Medicine.
	•	The affiliation will create opportunities to develop centers of excellence in several clinical service areas.
	•	The proposed affiliation will create significant operating efficiencies in administrative and other overhead costs given the hospitals' close proximity.

Under the MOU, both SJHSRI and RWMC propose to maintain separate hospital licenses and governing boards which will be overseen by a 15 member holding company board with oversight of system finances and strategic planning. No name for the holding company has been selected.

RWMC will continue its status as a secular, academic organization, while SJHSRI will continue to operate under the sponsorship of the Roman Catholic Diocese of Providence. The affiliation will be structured so as to meet the requirements of Church canonical law governing affiliations of Catholic hospitals with secular hospitals.

The medical staffs of the two hospitals will remain separate but will actively collaborate on clinical service line leadership, quality management and new service development.

Bishop Thomas J. Tobin, Chairman of the SJHSRI Board of Trustees stated "The proposed affiliation is an opportunity for our organization to join forces with our neighbor hospital while at the same time maintaining our Catholicity and our unique mission to the community, including the underserved. Our local health care system has evolved to a point where maintaining a separate faith-based hospital is supported by an affiliation such as this, and I am pleased we have been able to reach this preliminary agreement."

"This is an important step as our two organizations consider an affiliation that improves service, and increases access to care for the community," said Edwin J. Santos, Chairman of the RWMC Board of Trustees. "Our continued discussions will focus on how to best build an integrated healthcare system that is beneficial to the community, our employees, and the two institutions."

St. Joseph Health Services operates Our Lady of Fatima Hospital in North Providence, St. Joseph Hospital for Specialty Care in Providence and the St. Joseph Living Center in Federal Hill. The organization has an annual operating budget in excess of $180 million with more than 1,900 employees.

Roger Williams Medical Center, a comprehensive health care teaching institution offering a broad range of adult health services including Elmhurst Extended Care and Home Care, has an annual operating budget in excess of $168 million with 1,750 employees.