Hospital officials hoping for a kinder, gentler attorney general when it comes to regulating their industry could be disappointed in 1999.
Democratic Attorney General-elect Sheldon Whitehouse appears as determined as his Republican predecessor to maintain local control of the state’s numerous health care facilities and make full use of the relatively new powers granted his office by the legislature.
In the past two years, Atty. Gen. Jeffrey B. Pine has carried out those duties vigorously under the Hospital Conversions Act. The department always has had a role in safeguarding the charitable assets of nonprofit organizations. But the law passed more than a year ago covers all types of transactions, including those between for-profit hospitals.
Pine stunned the industry in September when he put the kibosh on the proposed merger of Care New England — a network of Kent County Memorial, Women & Infants and Butler Hospitals — with CareGroup of Boston. A month later, Care New England and Lifespan — whose flagship facility is Rhode Island Hospital — said they wanted an in-state merger that would create an eight-hospital network with more than 63 percent market share.
The controversial request will be a top priority for Whitehouse, even as he dives into the long-awaited corruption case against former Gov. Edward D. DiPrete and his son Dennis L. DiPrete. The trial, delayed for more than four years, is scheduled to begin Jan. 4, the day before Whitehouse takes office.
Whitehouse said he is holding fast to campaign-trail plans to create a new office of “health advocate” to tackle the massive job. An assistant attorney general would lead the office and work with the unit Pine established to review mergers, he said.
“The staff over there, I think, has done a pretty good job already,” Whitehouse said. “I’ve also proposed one additional post to the office. I’ll have to see how that fares legislatively.”
Despite Whitehouse’s wait-and-see stance on the proposed merger, he had some initial thoughts.
“The positives are that the proposal does not carry the concerns of our own charitable assets being removed to support out-of-state hospitals and does not carry the concern of loss of local control over our hospitals,” Whitehouse said. “I think there’s also a positive in the close affiliation that would result between Rhode Island Hospital, Women & Infants Hospital and Hasbro (Children’s Hospital)” all on the same campus in South Providence.
“There is extraordinary potential to be a world leader” in health care, he said. “The joint management thing would be a plus in that direction.”
But there is a potential economic downside, Whitehouse said.
“Assuming that you view the market as the state of Rhode Island, you’ve put a very large, dominant creature into that market,” he said, adding “it seems to be 60 to 70 percent of the beds in that institution.
“The more you move toward monopoly, the more the various economic dangers arise.”
The arrangement could also limit choices for the state’s few remaining independent hospitals, Whitehouse said. “I don’t know yet whether the remaining market share is sufficient to make them attractive to outside buyers,” he said, adding all will face that decision eventually. The result could be an all-Lifespan state and “the effective end to the Hospital Conversions Act,” he said.
George A. Vecchione, the newly appointed president and chief executive officer of Lifespan, is taking a wait-and-see approach in response to the uncertainties. Vecchione said he hasn’t spoken with Whitehouse but has heard that “he’s committed to a fair and open process. And that’s all we can ask.”
Regarding Whitehouse’s concerns, Vecchione said his organization is “taking the position that we are pro-competition.” And he noted the double safeguards in place for a level playing field.
“Not only do we need to get state approval on this application, but also approval from the federal government,” he said. The latter will examine anti-trust issues and “hopefully we can gain comfort from that review.”
“Our purpose really is to make sure that going forward we have the full resources available to residents of Rhode Island,” Vecchione said.
Whitehouse was somewhat reluctant to comment on Pine’s denial of the merger between Care New England and CareGroup, saying “I don’t have as much information as (Pine) does and I’m reluctant to be a Monday morning quarterback. With that said, it appears to me that he made the right decision.
“I think the dangers of out-of-state control and the potential for diversion of assets to institutions in other places was a real one,” he said.
Should the Care New England/Lifespan deal also fall through, Care New England has the legal option to file anew for a merger with Boston-based CareGroup. John J. Hynes, president of Care New England and chief executive officer of Kent County Hospital, did not respond to requests for comment.
