Public in the middle on merger dispute

Updated at 9:41 a.m., April 12

The state hasn’t even begun its formal review of the proposed merger between Care New England Health System and Boston-based Partners HealthCare, and Lifespan Corp. has already publicly labeled it as bad for the state.

The unusual public criticism from Lifespan, the state’s largest private employer, highlights the stakes for the competing health systems and the state as a whole. The dispute also leaves the public in the middle, wondering who to believe.

At the heart of the dispute is whether Rhode Island health services will be strengthened or weakened after a merger. CNE says it is the former, thanks to increased borrowing capacity that will allow it to make much-needed investments.

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Lifespan, however, fears Rhode Island patients and services would increasingly be funneled to Boston to take advantage of higher reimbursement rates for services.

An incomplete merger application filed with the state does include a question about planned investments, but CNE spokesman James Beardsworth declined to specify what information has or will be supplied.

“We’re in a proactive planning process now … and believe that improving the physical plan of the care facilities will be a priority,” Beardsworth said in an email.

Care New England CEO Dr. James E. Fanale has made it clear the plan is for eventual investment in CNE’s facilities. That includes Women & Infants, where some rooms in the 37-year-old labor, delivery and recovery ward are half the size of what they should be, he says.

Partners is aware of CNE’s monetary needs for the next 10 years, he added, but has not laid out detailed spending plans because the merger has not been approved.

“We’ve gone through every [need] in depth, and they’re committing to help us get there,” Fanale said.

But Lifespan has seized on what little information tied to the state review that has been made public, including a change-in-effective-control application filed with the health department. In it, Partners lists no expenses associated with the deal.

“They’re getting the assets for free and they don’t intend to invest a penny. … Community assets, built by Rhode Islanders, for Rhode Islanders, and they’re getting it for free,” said Dr. Timothy J. Babineau, Lifespan president and CEO.

Fanale, however, said the document doesn’t include an acquisition price because the two merging entities are nonprofits.

“The thought that there would be zero dollars put into capital in an organization they’re acquiring that requires improvements doesn’t make any sense,” he said.

An R.I. Department of Health spokesman declined to comment on the merger application or what investment details will be made public. Once the application is deemed complete, the health department and R.I. Office of the Attorney General will have 90 days to issue a decision. During that time, they will accept public input.

A previous version of this story mis-characterized Fanale’s identification of the rehabilitation needs of Women & Infants Hospital’s labor, delivery and recovery ward.

Elizabeth Graham is a PBN staff writer. Contact her at Graham@PBN.com.