NORTH PROVIDENCE — The president of St. Joseph Health Services of Rhode Island questioned UnitedHealthcare of New England’s profit motives yesterday as he pledged to fight “with every means available to us” what he called United’s “ill-conceived decision” to drop Our Lady of Fatima and St. Joseph hospitals from its provider network.

United’s application for state approval to drop the two hospitals was made public Monday after several months of negotiations over reimbursement rates reached an impasse, and the contract expired late Sunday night.

Dr. A. Robert Buonanno, chairman of surgery at St. Joseph Health Services, speaks at a news conference yesterday at Our Lady of Fatima Hospital in North Providence.

THE PROVIDENCE JOURNAL / Steve Szydlowski

Negotiations resumed yesterday as both sides exchanged proposals, but as of last night the two sides had not come to terms, said Michael F. Trainor, spokesman for St. Joseph.

Meanwhile, both sides took shots at each other, with St. Joseph accusing UnitedHealthcare of putting profits over patients and United accusing St. Joseph of trying to inflame the dialogue by intimating that there was “anti-Catholic bias” on United’s part.

“At the end of the day, I think it is about corporate greed,” said H. John Keimig, president and CEO of St. Joseph Health Services — the state’s only Catholic hospital, which runs the Providence and North Providence units. “In essence, we’re subsidizing their corporate profits.”

At a news conference at Our Lady of Fatima, Keimig said, “This is the same company that earned over $5 billion in profits nationally last year. It is the same company that paid its CEO the staggering total of $124 million in compensation last year — an amount that is approximately 150 percent of the total annual payroll for all of the 2,000 employees here at St. Joseph Health Services …”

He added, “It is the same company that is distorting our current rate request by not telling the whole story of how, for many years prior to 2005, this hospital received a zero-percent increase or a very small single-digit increase. “All we’re asking is for some fair and equitable reimbursement rates” that cover costs and are comparable to what other commercial insurers pay St. Joseph.

UnitedHealthcare CEO Stephen J. Farrell fired back at Keimig through a letter released yesterday afternoon. In it, Farrell accused St. Joseph of “intimating that there was anti-Catholic bias in our actions.”

Farrell wrote, “Your PR representative’s glib religious smear is offensive to all of us at UnitedHealthcare — Catholics and all faiths — and has no place in this state, let alone in a very public health-care dialogue regarding our mutual constituents.”

Farrell also wrote that United remains “very sensitive to the financial position of St. Joseph’s,” and agreed two years ago “to help you with, what was then, an unprecedented increase in reimbursement rates. We are deeply concerned that the situation has not improved since then.”

If health insurance premiums “were to rise anywhere near the 58 percent compounded increase you are requesting, the result would be more employers dropping health insurance, leaving more Rhode Islanders, including many who use St. Joseph’s services, without any coverage at all,” Farrell wrote. “I believe this is an outcome we all want to avoid.”

United covers 58,000 state employees, retirees and family members and about 3,000 employees and family members of the Roman Catholic Diocese of Providence, according to United spokeswoman Debora M. Spano.

Although the contract expired Sunday, United is obligated to continue paying for care at St. Joseph’s two hospitals until the state Health Department reaches a decision on United’s application to drop the hospitals, according to a statement United issued Monday.

Each side blames the other for the impasse.

United said it had no choice but to petition the state Health Department to drop the hospitals from its network, because St. Joseph had notified United that it was going to terminate its contract. St. Joseph officials contend that they had not terminated the contract, that it had expired after three months of negotiations and that they had filed an offer late Sunday night in an attempt to break the stalemate.

On Monday, United released a statement that said, “Despite their letter of termination, we continue with negotiations. We are trying to find common ground that will prevent higher costs for consumers and Rhode Island employers while providing access to the healthcare services needed.”

The news conference at Our Lady of Fatima drew at least 100 physicians, administrators and other staff.

Keimig noted that United’s move to drop the state’s only Catholic hospital came after United announced plans last month to shift $38 million dollars of profits it earned to its corporate parent in Minnesota. (United has since withdrawn its proposal to do so.)

Also speaking were Dr. A. Robert Buonanno, chairman of the department of surgery at Our Lady of Fatima and vice president of the board of trustees, and Monsignor Paul Theroux, vicar general for the Roman Catholic Diocese of Providence and vice chair of the health services’ board of trustees.

Buonanno spoke on behalf of the 300 physicians who treat and care for patients at both hospitals, whom he described as “dismayed, disappointed and very worried for our patients.”

Monsignor Theroux read a statement from Bishop Thomas Tobin that expressed disappointment at United’s actions “to begin the formal process to exclude the only Catholic hospitals in Rhode Island from the United network.”

The bishop also said the combination of care and spiritual support offered by St. Joseph “is what makes this hospital so special, not only for the Catholics of Rhode Island, but for all those for whom we care. This is what we seek to protect today and in the future.”

Afterward, Keimig reluctantly answered the question of what happens if the two sides cannot come to terms.

“United has the ability to severely cripple this organization,” Keimig said. “Could they close us? No. They’re only 12 to 15 percent of our business.” But Keimig said doctors would no longer be able to admit United-insured patients to St. Joseph, and eventually, “we would have to start shedding services.”

kziner@projo.com