If passed, Rhode Island’s new legislation to allow acquisitions would be a credit positive for small community hospitals in the state, Moody’s Investors Service said in a report.

Earlier this month, the Rhode Island Senate passed legislation to eliminate current restrictions on for-profit health care companies’ ability to purchase hospitals in the state.

The legislation would eliminate a provision in the state’s Hospital Conversion Act that requires a three-year waiting period between acquisitions of nonprofit hospitals by for-profit hospital companies.

“Acquisition by for-profit companies provides weak, low-rated not-for-profit hospitals opportunities to lower costs, gain efficiencies, fund immediate capital needs and address growing pension liabilities,” Moody’s said in the report.

For larger nonprofit providers in the state, the legislation would be a credit negative, analysts said.

The new legislation will go to the House and the governor, and a final decision is expected in May.

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