savage

PROVIDENCE — The lawyer in charge of Landmark Medical Center said yesterday he envisions creating a medical “campus” on the grounds of the Woonsocket hospital.

“We contemplate a state-of-the-art health-care campus; we need to be a little creative as to how we get there,” Jonathan Savage, of Shechtman, Halperin Savage, in Pawtucket, told members of a Health Services Council subcommittee. The council is an advisory board to the director of the state Department of Health.

Savage made his remarks yesterday during a hearing on a long-standing application by a Landmark subsidiary to sell a majority stake in its rehabilitation unit.

On June 26, a Superior Court judge named Savage to oversee Landmark Medical Center’s operation after the hospital petitioned Superior Court to clear the way for a potential merger with another hospital. In his role as overseer, Savage is functioning as the hospital’s president, chief executive officer and chairman of the board, ruling on all expenditures, hiring and other decisions.

This week, Judge Michael A. Silverstein also formally appointed Savage as overseer of the Landmark subsidiary that runs Rehabilitation Hospital of Rhode Island, in North Smithfield.

Landmark and its parent, Landmark Health Systems Inc., reached an agreement in September 2007 with RehabCare Group Inc. (RHB:NYSE) to jointly own and operate Rehabilitation Hospital.

Under the agreement, RehabCare will own 81 percent of a new entity, RHRI, LLC, and provide management services for the hospital. Landmark would own the remaining 19 percent.

RehabCare will pay $1.8 million to Landmark for the share of the rehabilitation unit.

The RHRI joint venture will contract with Landmark for clinical, ancillary and support services. Hospital staff will be employed by the joint venture.

It is the first foray for RehabCare into the Rhode Island market.

Headquartered in St. Louis, Mo., RehabCare provides physical rehabilitation services in conjunction with nearly 1,200 hospitals and skilled nursing facilities in 43 states, the District of Columbia and Puerto Rico. The company also owns and/or operates 10 freestanding rehabilitation and long-term acute-care hospitals.

The Woonsocket transaction is subject to approval by the state director of health, the state attorney general, and now, Judge Silverstein.

The Health Services Council subcommittee expects to take up the application again at its Dec. 4 meeting, with the intention of moving the matter to a full hearing later that month.

RehabCare says it hopes to complete the deal by Dec. 31.

While the proposed sale of the rehabilitation unit has been in the works for more than a year, Savage’s comments yesterday indicate a more-expansive vision for Landmark — one that goes beyond simply saving the troubled medical center. Landmark has been losing money for many years and at the end of the last fiscal year was $7.2 million in the hole.

RehabCare wants to move the 81-bed rehabilitation unit from North Smithfield to a new building it would erect on land leased from Landmark on the medical center’s 16-acre Cass Avenue property. The rehabilitation unit joint-venture would join another company, 21st Century Oncology Co., in operating a unit on the Landmark property.

“It’s certainly one piece of a fabric of change whereby we’re stabilizing what appears to be a tough financial frontier,” Savage said.

Savage said he is in discussions with a third medical company about operating on the Cass Avenue property.

pgrimald@projo.com