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Lifespan, CNE approached top lawmakers about special OK for hospital merger

Business News

PROVIDENCE, R.I. (WPRI) — Rhode Island’s top hospital groups approached State House leaders about a way to potentially get around antitrust reviews of their proposed megamerger, Target 12 has confirmed.

House Speaker Joe Shekarchi and Senate President Dominick Ruggerio confirmed they’ve had “discussions” about granting a “certificate of public advantage,” or COPA, for Lifespan and Care New England. But the two legislative leaders and the hospital groups said there are no plans to pursue one at this time.

“We are monitoring the situation closely,” Shekarchi, D-Warwick, and Ruggerio, D-North Providence, told Target 12 in a joint statement. “Our primary concern is that the quality of patient care is preserved and that jobs are maintained. We remain accessible and available as this process moves forward.”

Jane Bruno, a spokesperson for Lifespan, downplayed the likelihood that the hospital networks would formally ask for a COPA.

“While a COPA has been discussed, we are not pursuing that route at present,” she said in an email.

Lifespan and Care New England unveiled their blockbuster merger deal in February, arguing that by combining forces into an academic medical center affiliated with Brown University they can improve outcomes for patients and promote economic development in Rhode Island.

Lifespan owns Rhode Island, Miriam, Newport and Bradley hospitals, while Care New England owns Women & Infants, Kent and Butler. The two organizations employ more than 22,000 combined.

Two previous efforts to merge Lifespan and CNE since the 1990s fell apart, and the health systems are facing skepticism from regulators and some lawmakers because of how dominant a merged system would be across Rhode Island health care.

The Federal Trade Commission, R.I. Attorney General Peter Neronha and the R.I. Department of Health all need to sign off on the merger. State officials have not yet deemed the two systems’ merger application complete, meaning the actual review of the proposal has yet to begin.

A report released Tuesday by the Rhode Island health insurance commissioner’s office found a combined Lifespan-CNE system would control nearly 80% of hospital inpatient discharges locally, and cautioned regulators about the potential downsides of the transaction.

Those factors likely help explain why Lifespan and CNE leaders may have looked at pursuing a COPA in the first place.

“A COPA can allow the state to permit a hospital merger that otherwise might be viewed as anticompetitive from a federal standpoint,” Dr. Thomas Tsai, a Harvard University professor who studies hospital market concentration, told Target 12 in an email. “This creates a state supervision of the merged hospitals and provides oversight on prices and hospital quality of the merged entity.”

However, Tsai said COPAs “have been rarely used, and the results are quite mixed,” with their success or failure depending on the specific situation in an individual hospital market as well as whether the oversight regime has teeth.

“More importantly, it’s important for the state to determine what a successful outcome of a merger — and therefore of a potential COPA — would look like,” Tsai said. “More often than not, there’s a search for an outcome or benefit to justify a merger, as opposed to a merger that is designed to improve an outcome for a community.”

Kristy dosReis, a spokesperson for Neronha, said the attorney general’s office couldn’t comment on the specifics of a COPA for the Lifespan-CNE deal without seeing specific legislation.

“That being said, if our recent review of the Prospect transaction taught us anything, it’s the importance of having a thorough, robust review process by this office run its course so that we fully understand the transaction and what its impact would be on Rhode Islanders,” she said, referring to Neronha’s tough stance on another hospital deal.

Bruno, the Lifespan spokesperson, said: “We are currently working diligently with state and federal regulators to provide the information they require to approve the merger. We remain optimistic regarding a positive outcome from the regulatory review process.”

Ted Nesi (tnesi@wpri.com) is a Target 12 investigative reporter and 12 News politics/business editor. He co-hosts Newsmakers and writes Nesi’s Notes on Saturdays. Connect with him on Twitter, Facebook, LinkedIn and Instagram

Copyright 2021 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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