PROVIDENCE, R.I. (WPRI) — Lifespan and Care New England have ended their merger talks little more than a month after the governor forced them to the negotiating table, injecting new uncertainty into the outlook for Rhode Island’s hospital industry.
Care New England CEO Dr. James Fanale announced Tuesday in an email to staff that his board had voted to withdraw from the talks, exactly six weeks after the negotiations were first announced. Democratic Gov. Gina Raimondo had been spotted visiting CNE’s headquarters on Monday. Brown University was also a party to the discussions.
“CNE was an active and willing participant, meeting in good faith, as requested by Governor Raimondo,” Fanale wrote.
He said the concerns that motivated CNE’s decision included “capital requirements and financial stability of the combined system, community need, anti-trust considerations, organizational stability, and implementation risks.”
Lawrence Aubin, Lifespan’s board chairman, said: “While we respect the decision of Care New England’s board of directors, we are extremely disappointed that they are no longer willing to participate in creating a compelling vision for the future of health care in Rhode Island.”
The talks collapsing is a blow to Raimondo, who pushed Care New England to abandon its proposed takeover by Boston-based Partners HealthCare and instead make a third attempt to join forces with Lifespan. She was bowing in part to pressure from other Rhode Island leaders who wanted a locally based academic medical center.
In a statement, Raimondo said she was “disappointed that the parties were not able to come to an agreement.”
“I continue to believe that a locally run, academic medical center is what’s in the best interest of Rhode Island,” she said. “I have encouraged the parties to keep an open mind, remain open to future discussions, and to continue to pursue expanded collaboration that could pave the way to further integration down the road.”
The reaction from Brown President Christina Paxson, whose medical school has a close affiliation with both hospital groups, was similar. “It is disappointing that Care New England decided not to move forward with plans for an integrated system of health care, medical education and biomedical discovery in Rhode Island,” she said.
Paxson said Brown’s leaders “continue to believe that merging Lifespan and Care New England, in close partnership with Brown, would deliver enormous benefits to our community.” She also said they would discuss with Lifespan and CNE in the coming weeks “whether there are areas of possible collaboration that would benefit our community.”
This marks the third time Lifespan and Care New England have made a failed attempt at combining. Previous proposed mergers were abandoned in the late 1990s and again in the late 2000s.
The talks ending spur new questions about the future of Care New England, owner of Women & Infants, Kent and Butler hospitals and the state’s No. 2 private employer, second only to Lifespan. Its executives have been spurred to seek a merger partner by ongoing financial challenges, which already led them to shutter Pawtucket’s Memorial Hospital in 2017.
It remains unclear whether Partners, which withdrew its application to acquire Care New England after Raimondo intervened in favor of the Lifespan talks, will now re-enter the picture. Partners spokesperson Rich Copp said only, “We value our longstanding clinical affiliation with CNE and we remain committed to the health of patients in Rhode Island.”
Fanale indicated that for now Care New England plans to remain independent, saying the company “has implemented a remarkable turnaround with significant improvements.” CNE recorded an operating loss of $5 million for the six months ended March 31, which officials attributed to lower use of the neonatal intensive care unit at Women & Infants.
“The board, leadership, and dedicated staff of CNE are fully prepared for and look forward to the opportunities ahead for our system,” he wrote. “We have exciting growth plans, clinical development opportunities, and plans for capital improvements.”
Ted Nesi (firstname.lastname@example.org) is WPRI 12’s politics and business editor and a Target 12 investigative reporter. He is a weekly panelist on Newsmakers and hosts Executive Suite. Follow him on Twitter and Facebook