WOONSOCKET and PAWTUCKET – Landmark Medical Center, which has been struggling financially and has approached Lifespan twice in the last year to discuss the possibility of joining the nonprofit health system, is now looking at the possibility of merging with Memorial Hospital of Rhode Island.
Besides the 214-bed hospital in Woonsocket, Landmark Health Systems Inc. currently operates the Rehabilitation Hospital of Rhode Island in North Smithfield – in which the for-profit RehabCare Group Inc. (NYSE: RHB) has agreed to buy an 80-percent stake, pending regulatory approvals and other conditions READ MORE – and a handful of specialized outpatient facilities.
Memorial has a small health system of its own – Southeastern Healthcare System Inc., which includes the 294-bed Pawtucket hospital; ambulatory care facilities in Pawtucket, Central Falls, Barrington and Plainville, Mass.; and a home care service – that Landmark might join.
In a memo to the Landmark staff dated March 28, CEO Gary J. Gaube noted that community hospitals in Rhode Island “have been struggling financially,” and because of Landmark’s situation in particular, “we have been aggressively exploring options to ensure the critical care we deliver to the greater Woonsocket area continues.”
Gaube described the possibility of joining Memorial’s health system as “an option which we believe holds great promise,” and he noted that while discussions are still in the “due diligence” stage, “we believe there could be tangible benefits for both hospitals if Landmark were to join their health care system.”
“The inclusion of Landmark within the Southeastern Healthcare System network,” he added, “would create a regional health care delivery system providing a broad spectrum of inpatient and outpatient care.”
Memorial’s President and CEO Francis R. Dietz has not issued a similar notice, but the word has spread, in part because both hospitals’ nurses and other clinical staff are represented by the same union, the United Nurses and Allied Health Professionals.
Contacted by a reporter, officials at both hospitals acknowledged that they are talking but stressed that the discussions are still at an early stage.
This isn’t the first such conversation between them: Dietz recalled that Memorial and Landmark had talked about a potential merger about 12 years ago, and “at that time decided that it was not in the best interest of anybody.”
Asked what might have changed now, Dietz said, “I don’t know yet. They asked if I’d consider it, so we’re in a process known as due diligence, whereby we’re looking at the clinical, programmatic and financial situation of Landmark and what it would be like combined with Memorial. … I don’t have an answer as to what the outcome would be. It’s too early.”
Like Landmark, Memorial has been losing money on operations, but while Landmark only offset $500,000 of its $6.3 million operating loss with other income last fiscal year, for a total loss of $5.8 million, Memorial offset its $1.9 million operating loss with $7.0 million in investment and other income, ending up with a $5.1 million profit.
But there are other considerations, Dietz noted, such as the extent to which the two hospitals’ services could complement one another. Geographically, it’s a good match, Dietz said, given that both already serve overlapping populations – Cumberland, Lincoln and parts of southern Massachusetts – and could form a strong regional system together.
Landmark spokesman Bill Fischer didn’t go into that level of detail in discussing that hospital’s perspective, but he did say that the Landmark leadership believes “at least potentially, this could be a good fit and a good match.”
“I think we probably have 30 to 45 days of due diligence left at this stage,” he added, “so I don’t want to pre-judge or speculate on the final outcome of these discussions.”
Asked about Landmark’s previous talks with Lifespan, Fischer replied: “All I can tell you is we’re in discussions with Memorial only.”
As for why Gaube and Landmark President Richard R. Charest, who co-signed the staff memo, had chosen to alert employees to the discussions, Fischer said they felt it was “appropriate to inform [them], because we’re exchanging information with this entity, and we have employees from both entities taking a look at the situation.”
Memorial Hospital of Rhode Island – a division of the Pawtucket-based Southeastern Healthcare System Inc. – is a community hospital serving the Blackstone Valley and southeastern Massachusetts. It is a research and teaching affiliate of Brown University’s Warren Alpert Medical School. To learn more, visit www.mhriweb.org.
Landmark Medical Center – a division of the Woonsocket-based Landmark Health Systems Inc. – is a regional hospital whose cardiac program and emergency department are affiliated with Harvard Medical Faculty Physicians at Beth Israel Deaconess Medical Center in Boston. Additional information is available at www.landmarkmedical.org.
