Lifespan & Care N. England not merging

PROVIDENCE, R.I. (AP/WPRI) - Two major regional health care systems have called off plans to merge.

Care New England and Lifespan on Friday announced that they had withdrawn their application merger, which is still pending before the state health director and state attorney general.

The institutions say the cumbersome application process has been a distraction. They say they need to focus their attention on dealing with the state's economic woes as well as increases in uncompensated care and uncertainty about federal reimbursements.

The merger, which was publicly proposed three years ago, would have brought together nearly all of Rhode Island's hospitals.

“Since the proposed Lifespan-Care New England merger was announced in July of 2007, there has been dramatic and rapid change in the regional marketplace and in the national arena,” said George A. Vecchione, president and CEO of Lifespan.

Vecchione continued, “The deteriorating financial condition of the state, significant increases in uncompensated care, the uncertainty of federal reimbursements for health care services and the accelerating pace of regional competition require the full attention of these institutions at this crucial time.”

Attorney General Patrick Lynch issued the following statement concerning the announcement:

“Last night I was contacted by the CEO of Lifespan Corporation who informed me that the pending application to merge Lifespan Corporation and the Care New England hospital system would be withdrawn today.

“I am not privy to why this decision was made, but feel it is important to be very clear about one basic premise: the decision to apply for this merger was made by Lifespan and Care New England, and the decision to withdraw it was made by them as well.

“Whether you thought the merger was a good idea or a bad idea, it was immediately apparent to all that if the merger was approved, more than 70 percent of our state’s acute hospital beds would be controlled by the newly formed network. As I said at the time the merger proposal was announced, although supporters of the merger identified a number of positive results that might flow from a merger, my preliminary assessment was that each of those positives, such as relocating the Brown Medical School to a location nearer to the Rhode Island Hospital campus, could be achieved without a merger. One conclusion was inescapable: the merger of Lifespan and Care New England would have changed the landscape of our state’s health-care system forever.

“For this reason, my staff and the staff of the Department of Health took our obligations under the Hospital Conversions Act very seriously. I am well aware that the Hospital Conversions Act places very burdensome requirements on hospitals seeking to merge and for regulators reviewing an application, for good reason. It sets concrete deadlines that my office and DOH met every time."

"It set a definite and limited period of review, which my office and DOH proved we could meet in the St. Joseph’s and Roger Williams’ merger and which we were prepared to meet in this merger through the reallocation of staff and department assets.

“We received more than 400,000 pages of documents in support of this merger application, and we were waiting for what we anticipated would be at least several thousand more pages of information that we had identified as missing from the initial application."

“Since this application was first publicly announced in July of 2007 -- nearly three years ago -- my office and the Department of Health have devoted literally thousands of hours of taxpayer-financed staff time to review it. During that time, we received, reviewed, and for the first time approved, a merger application under the Act, when Roger Williams Hospital and St. Joseph’s Health Systems sought to affiliate and formed CharterCare."

''' Throughout the course of the review, I am proud that my office and the Department of Health met every statutory deadline imposed upon us, regardless of how burdensome these deadlines often were. We have extended every courtesy to the applicants, including agreeing to their request for a series of face-to-face meetings with Dr. Gifford and myself over the past few weeks."'

“It is important to recognize that Lifespan and Care New England remain critical components of the health-care delivery system in our state and our region. We will continue to work with both systems on numerous issues, and I have every expectation that we will continue to so in a way that protects the best interest of all Rhode Islanders.”