Updated 11:34 a.m. and 2:30 p.m.
PROVIDENCE – Care New England Health System said Wednesday it will join Partners HealthCare of Massachusetts, and that it has selected Prime Healthcare Foundation to pursue an acquisition of Memorial Hospital in Pawtucket.
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CNE said it has signed a letter of intent to join Boston-based Partners, an integrated nonprofit health system founded by Brigham and Women’s Hospital and Massachusetts General Hospital. It said it also has agreed to negotiate exclusively with Partners.
“This is a tremendous opportunity for both organizations to further advance their commitment to high-quality health care, access to leading-edge clinical treatment, world-class academics, and most importantly, enhanced opportunities for patients. I believe both organizations are uniquely aligned in our commitments to the community and together we will proceed with focus and collaboration,” CNE President and CEO Dennis Keefe said in a statement.
The news comes less than a week after Lifespan, Rhode Island’s largest health system, said it was proposing to merge with CNE, the state’s second-largest system. Lifespan’s CEO, Dr. Timothy Babineau, said in a statement that Partners is a Massachusetts-based health system, and “we continue to believe that keeping health care local will result in better patient care, keeping jobs in Rhode Island and will help to contain the rising costs of health care.” Babineau said he could not comment further as he has not seen details of the proposal.
According to a news release from Care New England, its Board of Directors selected Partners after an expedited review of more than 12 state, regional and national health care organizations.
“Today’s announcement represents the positive results of an extremely careful and deliberate process intended to ensure the best clinical, financial and strategic direction forward for CNE,” Board Chair Charles R. Reppucci said in prepared remarks.
CNE has had a working relationship with Partners for the past eight years thanks to a clinical affiliation with Brigham and Women’s Hospital in Boston in cardiology, and vascular, thoracic and colorectal surgery. CNE’s Butler Hospital also has collaborated with another Partners hospital, McLean, a psychiatric hospital in Belmont, Mass., “to provide high-quality behavioral health care and innovative research locally within the Rhode Island community,” the release said.
Negotiations between the two entities are underway to make CNE part of Partners. After a definitive agreement is signed, a process expected to take between two and three months, the organizations will move forward with state and federal regulatory approvals, Keefe said.
Founded in 1996, CNE, with $1.2 billion in operating revenue and approximately 8,500 employees, also includes Kent and Women & Infants hospitals, as well as Care New England Wellness Center and VNA of Care New England. The organization reported a $68.3 million operating loss in 2016, which includes $55.2 million in one-time items – $20.3 million for debt refinancing, $29.5 million in restructuring charges; and a $5.4 million write-off on Memorial’s intangible assets.
CNE said it also plans to continue its research relationship with Brown University once it joins Partners.
Brown spokesman Brian E. Clark said the university has had a long and productive relationship with CNE, and that it looks forward to discussions with both Partners HealthCare and Prime Healthcare Foundation “about future relationships and ways that we can work together to improve patient care, education and research in Rhode Island and the region.”
Dr. David Torchiana, Partners HealthCare president and CEO, said as health care reform evolves, providers are developing more regional strategies, calling the affiliation between Partners and CNE “a natural step in that evolution.” Torchiana said the affiliation will better meet the needs of the region’s patients.
Patrick J. Quinn, executive vice president of SEIU District 1199NE, which represents approximately 2,300 CNE employees, released the following statement about CNE’s intent to merge with Partners:
“It is important that any proposed hospital merger ensures the continued provision of quality care for Rhode Islanders, safe staffing levels in our hospitals and good jobs for health care workers. We will evaluate this proposal fully as more details become available, and our members will be fully engaged in the regulatory review process outlined in Hospital Conversion Act in order to continue advocating for the hospitals that our communities deserve,” Quinn said.
United Nurses and Allied Professionals President Linda McDonald said the “proposed merger has the ability to impact thousands of jobs and the quality of care in Rhode Island and should be thoroughly scrutinized. Like most Rhode Islanders, we only recently learned of this proposal but expect Care New England and Partners HealthCare to be transparent in their process and begin a conversation with our union about the effect any deal would have on our members and our patients.”
McDonald said preserving Memorial’s status as a fully-functioning community hospital will be among the union’s top priorities as the process continues to unfold. UNAP represents nearly 1,400 registered nurses, CNAs, emergency room technicians, surgical technicians, orderlies, endo techs, environmental employees and ancillary staff at Kent and Memorial hospitals.
In a conference call with reporters, CNE representatives said the merger will result in improved care. Asked about how employees will be affected, Keefe said it remains to be seen how support areas will be affected, and that there shouldn’t be an effect on direct patient care, other than an opportunity for growth.
In addition to its two academic medical centers, the Partners system includes community and specialty hospitals, community health centers, a physician network, a managed care organization, home health and long-term care services, and other health-related entities. Partners is a principal teaching affiliate of Harvard Medical School. Partners had approximately $12 billion in revenue last fiscal year, and also has 68,000 employees.
Memorial, a 294-bed hospital, has been plagued by operating shortfalls. CNE stopped delivering babies at Memorial in August. Memorial had a $32.8 million operating loss in 2016, and is running at a 50-bed capacity, according to CNE Chief Financial Officer Joseph Iannoni.
He said it was determined that selling Memorial would be the best option for CNE, which talked to more than 88 potential bidders, from health care systems to private equity firms. Prime made the best proposal, he said.
“Volume has dropped to the point where it wasn’t feasible for CNE to invest capital into that plant. That’s why we needed to move on,” he said, adding Prime specializes in acquiring distressed hospitals and understands how to turn them around.
CNE said its board voted unanimously to sign a letter of intent allowing the nonprofit Prime Healthcare Foundation to acquire Memorial. An agreement needs to be developed, and state and federal regulatory approvals are needed. Once the transaction concludes, Prime will take over operations of the hospital and provide significant investments in Memorial, the release said.
Said Reppucci, “Not only does this proposal ensure the continuity of acute care services for this community, but it also maintains a local hospital board, commitment to existing services, the medical residency program and continued opportunity for the staff of Memorial Hospital.”
Keefe noted the “significant financial challenges” at Memorial, but said “it has been clear there is an important obligation to maintain the care and services offered to those in and around Pawtucket.”
“The only way for this to continue is through the partnership we announce today with Prime Healthcare Foundation. It represents an extremely positive outcome with tremendous opportunity ahead,” Keefe said.
Prime Healthcare Foundation’s 14 hospitals are affiliated with Prime Healthcare, which is based in Ontario, Calif., with 44 hospitals in 14 states.
Prime also operates Landmark Medical Center and The Rehabilitation Hospital of Rhode Island, in Woonsocket and North Smithfield, respectively.
Lori Stabile is the PBN Web Editor.
