Lifespan looks to add 500 employees with Coastal Medical deal

Business News
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PROVIDENCE, R.I. (WPRI) – The state’s largest private employer could be getting a lot bigger.

Lifespan, the state’s largest hospital network, has taken the first step toward expanding to include Coastal Medical, one of the state’s largest independent primary care groups. The deal – which the nonprofits hope to complete before the end of the year – would bring Coastal and its 125 providers and 500 employees under the umbrella of Lifespan. (A spokesperson said it was “premature” to call the deal an “acquisition.”)

The Providence-based hospital group is already the state’s largest private employer with more than 15,000 employees, according to a press release.

“This is really exciting for us and it’s exciting for our patients,” said Dr. Timothy Babineau, Lifespan president and CEO.

In addition to its employees, the deal would give Lifespan inroads with Coastal’s more than 120,000 patients served between 20 medical offices across the state. Lifespan operates some of the state’s largest hospitals, including Rhode Island Hospital and Hasbro Children’s Hospital, along with The Miriam, Bradley and Newport.

Executives at the two organizations said they started discussing the idea of joining forces last April, which stemmed from their shared values of doing what’s best for their patients and communities.

But the agreement also comes amid a broader surge of mergers and acquisitions in the health care industry seen across the country, fueled largely by nonprofits during 2019, according to a report released last month by the health care consulting firm Kauffman Hall.

Locally, Babineau said more acquisitions of provider groups could be on the horizon, adding that Brown Physicians and Lifespan Physicians Group have been in conversations to become a single physician group affiliated with both Brown and Lifespan.

The deal-making raises one of the biggest questions that typically comes up among patients when health care groups decide to merge: will this raise quality of care while keeping costs down?

Dr. Alan Kurose, Coastal president and CEO, was bullish both could be accomplished with the Lifespan-Coastal deal.

“We have a real opportunity to improve performance in quality and cost,” Kurose said, adding his group has aimed to lower costs, provide alternative payment models and implement incentives to provide more quality.

“This partnership gives us the opportunity,” he said.

Whether that’s happening more broadly, however, is a point of contention. The U.S. Centers for Medicare and Medicaid Services projects health care spending will continue to grow at an average rate of 5.5% each year in the United States between 2018 and 2027, outpacing the broader economy.

The New England Journal of Medicine, meanwhile, released new research from a group of researchers at Harvard University and Boston-area hospitals last month suggesting quality of care did not improve at nearly 250 health care systems acquired in deals between 2009 and 2013.

The newly announced merger locally comes amid the backdrop of an ongoing battle between Lifespan and Care New England, the state’s second largest hospital network, which have flirted with the idea of merging for years. Those discussions are currently at a stalemate.

When asked about what it will take to get the Lifespan-Coastal deal done, both Babineau and Kurose declined to comment on the specific details, but maintained there’s a clear path toward completing it because the two organizations shared common values and had mutual respect.

“Those are deal breakers if they don’t exist,” Babineau said.

Kurose was also adamant layoffs were not part of the plan.

“The vision here is for growth,” he said. “We’re not anticipating eliminating positions. We might need more than we already have as we drive toward expanding this model, which is working quite well.”

Eli Sherman (esherman@wpri.com) is a Target 12 investigative reporter for WPRI 12. Follow him on Twitter and on Facebook.

Copyright 2020 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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