Lifespan and Care New England reach final merger agreement, Brown to provide $125M

Updated at 12:46 p.m. on Feb. 23, 2021.

IN A VIDEO STATEMENT released Tuesday, the leaders of Lifespan, Care New England and Brown University expressed their support for an integrated, academic health care system for Rhode Island. / COURTESY LIFESPAN CORP.

PROVIDENCE Lifespan Corp. and Care New England Health System announced Tuesday they have signed a definitive agreement to merge into an integrated academic health system with Brown University.

The merger would be fed by $125 million in support from Brown over a five-year period. The agreement and merger will require regulatory approval, including through the R.I. Department of Health and the R.I. Office of the Attorney General, as well as the Federal Trade Commission.

It has been an on-again, off-again marriage sought by the entities over more than two decades.

As part of the new entity, Brown will participate on the governing board of the new system, and through the university’s medical school and school of public health play a key role in integrating academic research into clinical practice.

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In a mutual statement, leaders of the health care organizations and university said the planned integration into a single system will strengthen health care in Rhode Island, including through expanded access to primary care and increased capacity for specialty diagnostic and treatment services, including for cancer, psychiatric care and in women’s health.

An integrated system will encourage more biomedical research and create jobs, the executives said, describing in a video message a future in which the Jewelry District of Providence is filled with companies spun off from the research activities of the hospitals and university.

The news of a signed agreement will again raise concerns that a combined entity carries its own risks. Observers of the two systems have worried that job cuts will almost certainly follow a merged operation. The two systems, the largest health care systems in Rhode Island, now employ more than 23,600 people at eight hospitals.

Labor leaders have raised questions about diminished care and competition. And some national research has found that increased prices for patients have often resulted from consolidations. An analysis in 2018 for the New York Times by the University of California Berkeley found prices increased for hospitalizations in 25 metro areas, in the years following a merger.

In a video statement released on Tuesday, Lifespan CEO and President Dr. Timothy Babineau, a former surgeon, said the merger will create a better health care system for patients. Health care in Rhode Island has been “fragmented for decades,” he said.

When patients “bounce between systems,” the quality of care goes down, he said. People should not have to leave the state to seek treatment, he said, which is something that happens in Rhode Island.

“Health care is such a fundamental right. It is the bedrock on which a community and a society builds itself. Without good health care, it’s hard to do many of the other things,” he said.

The COVID-19 pandemic in early 2020 forced the two entities together, just a year after their latest talks on a merger had collapsed and after years of on-and-off discussions. Until the early summer of 2019, Care New England had been a proposed acquisition for Massachusetts-based Partners Healthcare.

That deal collapsed after Gov. Gina M. Raimondo publicly said she wanted Care New England, Lifespan and Brown to try again to reach an agreement on a unified health care system.

The two health care systems, which are among Rhode Island’s largest private employers, announced plans to merge for the first time in October 1998.

In his statement Tuesday, Babineau said the pandemic in early 2020 changed the working relationship among the systems.

It taught them they operate better when they work together. The pandemic inspired collaboration among the hospitals operated by the two systems and patients received better results, he said.

“The community was better served. This is a moment in time we cannot let slip through our grasp. Rhode Island is one of the only states in the country that does not have a single, integrated health care system,” he added. “Massachusetts has four or five. Rhode Island has none.”

Dr. James E. Fanale, CEO and President of Care New England, said the board chairs of the two organizations have worked tirelessly over the past year to bring the organizations to this point.

“We’ve got a lot of work to do. We’ve got a lot of work to bring the organizations together. But we’re holding right in front of us, the vision of what this is going to create,” he said.

Brown President Christina H. Paxson said the university shares the same goals, for high-quality, local and affordable care.

She specifically mentioned cancer research and care.

More than half of the doctors who have graduated from Brown’s Warren Alpert Medical School, or who had residencies in Rhode Island’s hospitals have remained here, she said, and that will only improve with more research capability.

“Brown is going to make a major investment in this new integrated health care system,” she said. The financial contribution of $125 million, over five years, signifies how important the university thinks the combined system is, she added.

The money will support cancer research and treatment. “We want to be a leader in cancer care. We don’t want people to have to go to Boston or New York if god forbid, they have cancer. We can develop a world-class cancer center that conducts research, that lets us treat patients better and that provides Rhode Islanders with an alternative of going elsewhere,” she said.

Dr. Jack A. Elias, dean of medicine and biological sciences at Brown, said primary care needs to be strengthened, so people can access the system. But the state also needs improved specialty care.

“You want to make sure you have access to the latest therapies that are in place,” he said. The opportunity for a world-class academic engine, in Rhode Island, would generate innovation and intellectual property, spinning off companies.

“I have a dream that future deans will look outside the window I’m looking out right now and they will see the Jewelry District, filled with biotech companies that spin off of the intellectual discoveries that take place at Brown, that take place at Lifespan, that take place at Care New England,” Elias said.

The merger agreement has not yet been filed with the regulatory agencies, but in an interview following the announcement, Drs. Babineau and Fanale said they expected that it would happen within a few weeks.

Assuming it is approved, they would operate the two systems for a period of time independently while the integration takes place, retaining their roles and titles as CEOs.

“Literally, the ink is just drying on the agreement,” Babineau said.

Between now up and until the closing of the merger, the two entities will be complementary organizations. When asked whether a new name had been selected, Babineau explained: “Post-closing, they will still be independent entities. It is only post-closing that we will begin the work to integrate the two into a single company. The Lifespan name and the Care New England name will be around for a while.”

On jobs, in the short-term, there will not be changes made for the foreseeable future. “Post-close, obviously, as with most mergers we will be looking for efficiencies,” Babineau said. “But in our opinion, this is really a job growth story.”

Academic health care centers are job creators around the nation, he noted.

Fanale said the long-term prospects are of jobs being created by a stronger system. “The long-term vision is this is really going to be an economic engine, an innovation engine,” Fanale said.

Paxson, who is an economist, said the future of cities with integrated, academic health systems are of growth. She cited Pittsburgh, a small city like Providence that had a basis in manufacturing, which has been transformed into an innovation center. “The way this will work is we will do joint strategic planning, which we have never done before. Where do we want to strengthen? Is it cancer care? Is it women’s health? Is it reducing health care disparities?”

An academic health system integrates the health research and clinical practice throughout the system, from cradle to grave, said Elias. It will improve access to care and quality, he said. “This is going to be an integrated process. What you have now are individual relationships but not integrated relationships. We’re going to have a system and a structure.”

The funds pledged by the university are a minimum, she noted.

In a series of emailed messages, state leaders reacted with optimism.

Gov. Gina M. Raimondo was unequivocal about the benefits of a consolidated system. “There is no question that a local, integrated health care system is in the best interest of Rhode Islanders,” she said. “Today’s announcement will benefit patients by ensuring they have access to the highest quality of care and will spur economic growth by helping us attract top talent and solidify our position as a hub of innovation and scientific development.”

House Speaker K. Joseph Shekarchi and Senate President Dominick J. Ruggerio, in a joint statement, were more circumspect, saying they were excited to see the long-anticipated merger advance but would want to see more details about patient care and job retention.

“We have seen in other regions the tremendous advantages that stem from a strong academic health system as an anchor tenant in a capital city. The legislature will be reviewing the details to ensure that patient care and the health care jobs are not adversely impacted by the merger,” the General Assembly leaders said.

Mary MacDonald is a staff writer for PBN. Contact her at macdonald@pbn.com.

Updated to include comments from state leaders and Lifespan, CNE and Brown officials.

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