“I think Memorial’s decision demonstrates that we’re in a regional marketplace,” said Edward Quinlan, president of the Hospital Association of Rhode Island. “Competition is a fact of life that the entire industry must be prepared to participate in.”
Ownership changes and transfers of money are not part of the five-year alliance forged between Memorial of Pawtucket and Partners HealthCare System in late April. But the two entities will cooperate in recruiting new patients from Massachusetts communities near Rhode Island, and developing specialty programs in areas such as cancer care and orthopedics, according to Memorial president Francis R. Dietz.
Memorial has set a goal of gaining up to 25,000 new patients from Massachusetts, according to Dietz. That’s a 30 percent increase over the 80,000 people now cared for by the hospital’s doctors.
Specifically, Dietz said the hospital plans to draw on communities within a 15 mile radius of Pawtucket, such as the Attleboros, Foxboro and Plainville. That is an area where Partners presence has been weak, he said.
In exchange, Partners expects to siphon Memorial patients who would otherwise go to a Providence hospital for high-level care, Dietz said.
Partners’ major hospitals are the Harvard-University affiliated Massachusetts General and Brigham and Women’s hospitals. The system also has a joint venture with the independent Dana-Farber Cancer Institute.
Memorial Hospital has served Pawtucket, Central Falls and bedroom communities in the Blackstone Valley since 1910. Today it is the main teaching facility for Brown University medical school for the training of primary care medicine.
The Memorial/Partners arrangement – in which both organizations remain independent – exempts Memorial from the scrutiny of state regulators who have quashed proposed cross-state affiliations in the past. However, Dietz said side stepping the legal requirements of a merger was never a goal.
”This has not been done to get around the Hospital Conversion Act,” he said, referring to the 1997 landmark legislation that gave the state’s attorney general and the Department of Health broad discretion in approving or disallowing buyouts and shifts in control where one or more of that state’s not-for-profit hospitals are concerned.
Memorial flirted with the idea of merging with Boston-based CareGroup or Providence-based Care New England in the past. Each time the board concluded that remaining independent is “the best way to see that the people in the Blackstone Valley receive the care that they need,” Dietz said.
At the same, Memorial was determined to stay ahead of the curve, he said, adding “we’ve got to grow.” Hence, the alliance with Partners.
Unlike Partners, which lost more than $12 million last year, and this state’s Lifespan network, which lost about $50 million, Memorial was in a position to mull its options over a long period of time, Dietz said.
The hospital’s not-for-profit parent company, Southeastern Healthcare Systems, ended 1998 with a small operating surplus of about $87,000. And its debt is low, at about $9 million, according to Dietz.
“Fortunately, we are in a position that we don’t have to merge because we need new capital,” he said.
Quinlan said the alliance is a logical move for Memorial, and one that will keep the boards of trustees at other hospitals “constantly evaluating what ownership structure is best for their community.”
”I think Memorial, given its geographical location opted to take a different route than some others,” he said.
Alliances are not problem-free, Dietz noted. For example, mergers create a “control mechanism to make decisions,” whereas an alliance “requires both parties saying yes.”
”But I happen to believe those small negatives are outweighed by the positives,” he said. “The proof in the pudding is I’ll tell you five years from now if it works.”
