Mixed reactions: Anger, relief over Lifespan-CNE merger denial

WOMEN & INFANTS HOSPITAL is in danger of getting scooped up by an out-of-state, for-profit corporation as a result of the merger between its current owner, Care New England Health Systems, and Lifespan Corp. being denied by the Federal Trade Commission and Rhode Island's attorney general, according to Lynn Blais, president of the United Nurses and Allied Professionals. / COURTESY CARE NEW ENGLAND HEALTH SYSTEMS
CARE NEW ENGLAND HEALTH SYSTEM CEO and President Dr. James E. Fanale says his company is receiving more interest beyond the recent offer from StoneBridge Healthcare LLC to acquire the Rhode Island hospital company. Above, CNE's Women & Infants Hospital in Providence. /COURTESY CARE NEW ENGLAND HEALTH SYSTEMS

PROVIDENCE – Reactions to the denial of a merger between Rhode Island’s major nonprofit hospital systems were mixed on Thursday, as stakeholders and critics debated the merits of a combined Lifespan Corp. and Care New England Health Systems: Would it provide much needed stability in the market or simply create a powerful monopoly that inflates the cost of care throughout the state?

But aside from that argument, many are wondering what’s next for Rhode Island’s hospitals, given the dire straits of Care New England’s current financial situation and the instability caused by the COVID-19 pandemic.

“Even if the Lifespan-Care New England merger does not move forward, it is clear the Rhode Island health care system is at a critical juncture, both in terms of other potential structural changes, as well as the continuing impact of the COVID-19 pandemic,” said Neil D. Steinberg, president and CEO of the Rhode Island Foundation, which last year helped create a 70-page list of recommendations on the proposed merger at the request of the hospital systems.

Steinberg told Providence Business News that it was well known that getting both the Federal Trade Commission and R.I Attorney General Peter F. Neronha on board would be “a major hurdle,” based on the massive market share the hospital organizations would have if merged. But Steinberg said the Rhode Island Foundation thought concerns about a hospital monopoly could be mitigated through the benefits of a locally controlled, integrated academic health system, with the involvement of Brown University and its commitment to invest $125 million into the merged entity.

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“We are disappointed, but not totally surprised at the two decisions rendered today,” Steinberg said.

Lynn Blais, president of the United Nurses and Allied Professionals, the union that represents more than 7,000 nurses and health professionals in the state, blasted the decision by the FTC and Neronha. Blais said the decision has “alarmingly” opened the door for CNE’s three major hospitals – Women and Infants Hospital, Kent Hospital and Butler Hospital – to be sold to out-of-state, for-profit corporations that put profits ahead of quality patient care.

“It is clear that Care New England is in dire financial straits, and in no financial condition to sustain their operations as they currently are,” Blais said. “The merger of these two groups could be our last, best chance to ensure a healthy, stable, not-for-profit healthcare system that stays under Rhode Island control.”

Blais said the merger would have ensured protections for workers and patients, and that state leaders such as Neronha have shot down proposals without putting forth any solutions, citing the 2019 withdrawal of a proposal by the not-for-profit, Boston-based Partners Healthcare to merge with CNE in 2019 at the urging of former Gov. Gina M. Raimando.

“We understand what they’re against,” Blais said. “Now it’s time for them to clarify what they’re for. Time is running out.”

Patrick J. Quinn, executive vice President of SEIU 1199 New England, which represents about 2,500 of the staff at Care New England facilities, was more tempered in his response.

“Though we think the Care New England-Lifespan merger could have been a positive development, we do not have access to all the information that Attorney General Neronha used to make his decision to best benefit Rhode Islanders,” Quinn said. “Now we must continue working to find a comprehensive solution to rebuild Rhode Island’s healthcare workforce and ensure providers can deliver the care and services we all need in a changing healthcare environment.”

R.I. House Speaker K. Joseph Shekarchi, a Democrat from Warwick, urged Lifespan and CNE to terminate their exclusivity agreement that wedded them to a proposed merger, and to “explore all options available to them in the marketplace.” House Minority Leader Blake Filippi, R-Block Island, called on Gov. Daniel J. McKee to ask Partners Healthcare, now known as Mass General Brigham, to return to the table with another proposal to buy CNE.

The proposal to reintroduce Mass General Brigham to the equation is something that may go down better with the regulators at the FTC and Neronha, said James Bailey, an economics professor at Providence College, who spoke out against the merger during a public comment hearing held earlier this month. Bailey, for his part, said he was relieved by the denial of the merger.

“My main thought is that it seems like a good step to prevent health care prices from growing even higher or faster than they already are,” Bailey said.

A merger with Mass General Brigham would not create as big of a concern over a monopoly that may drive up costs for patients, due to a greater physical distance between hospitals operated by the Boston-based not-for-profit, which include Massachusetts General Hospital, Brigham and Women’s Hospital, McLean Hospital and others.

“Partners is close enough you may have some of the same issues with a Lifespan merger, although to a lesser degree,” Bailey said. “I suspect the FTC would probably look more kindly on a merger like that. … I think there’s a much better chance the FTC would allow it.”

At the same time, aside from Filippi, most Rhode Island legislators may remain hostile to out-of-state control, Bailey said.

“That was something we heard a lot with this merger, that a lot of people like (U.S. Sen. Sheldon Whitehouse), for instance, were worried about,” said Bailey, “that because of the financial condition of Care New England, if this merger with Lifespan didn’t go through, some out-of-state entity would end up buying them up.”

While Bailey said it’s good for Rhode Islanders that the merger between Lifespan and CNE was not allowed, it’s still a difficult situation moving forward that needs to be resolved.

Bailey said he believes the denial of the merger by Neronha and the FTC will likely be the final nail in the coffin for the merger proposal. However, under the state’s Hospital Conversions Act it’s possible that the two groups could appeal the decision at the R.I. Superior Court, or Bailey said they could put together an entirely new application after CNE potentially sells one or two of its current facilities.

“Care New England is still going to need to find some way to turn things around,” Bailey said. “It seems like they’ve spent two years thinking this merger would come through. Now they’ll have to think a little more creatively about what they might have to do instead. Could they sort of change the application and try again? I don’t know.

“It seems pretty likely that this is probably the end, as far as this attempt at a merger goes,” he added. “It seems like, overall, this is a good thing for the prices that Rhode Island patients and insurance customers will be facing over the next two years. At the same time, I’m also glad not be the CEO of Care New England.”

Marc Larocque is a PBN staff writer. Contact him at Larocque@PBN.com. You may also follow him on Twitter @LaRockPBN. PBN Special Projects Editor James Bessette contributed to this report.

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  1. The big Massachusetts hospital and health care companies could not be more delighted at the merger denial. Watch how fast they move in to buy up and buy out the medical industry in Rhode Island. Worried about competition or choice? Thanks Mr. Attorney General