PROVIDENCE, R.I. (WPRI) — When Dr. Timothy Babineau moved to Rhode Island 14 years ago to lead the state’s biggest hospital, he did so expecting he would soon be part of a much larger organization.
At the time, Rhode Island Hospital parent Lifespan was seeking state approval for a merger with Women & Infants owner Care New England. But the proposal — their second attempt to merge since the 1990s — fell apart amid concerns about the dominant position the new organization would have in local health care.
Today Babineau, 61, is president and CEO of the entire Lifespan system — and history has repeated itself. Last month, a new attempt to merge Lifespan and CNE collapsed after Attorney General Peter Neronha and the Federal Trade Commission rejected the proposal as anticompetitive.
Babineau has been making the case for the Lifespan-CNE merger for years, arguing that Rhode Island would benefit from the creation of a large academic health system. For now, however, even he is abandoning the concept.
“A full-asset merger is probably dead,” Babineau told 12 News, referring to a transaction that would combine all of the current facilities controlled by Lifespan and Care New England. And he noted that his counterpart at CNE, Dr. James Fanale, has ruled out divesting any hospitals to create a smaller merger proposal that might more palatable to regulators.
“I’ve always believed in the vision,” Babineau said. “I still believe in the vision. I still believe it’s the right thing for the state and the communities we serve. We were deeply disappointed by the FTC and the AG’s decision … We thought we made a very compelling case, and we think the case is still compelling.”
Neronha disagreed. He used a one-hour news conference last month to lay out his objections to the creation of such a large health system, offering a point-by-point rebuttal of the arguments made by Lifespan and CNE, labeling the deal bad for patients and the state. He also criticized the hospital groups’ executives and lawyers for what he characterized as their failure to flesh out the details.
“I must say, I was caught a little bit off guard — I think a lot of people were caught off guard,” Babineau said, insisting he didn’t realize the proposal was in trouble until the attorney general and the FTC informed him about their decisions.
“It wasn’t until we got the official word that we went, ‘Oh, no,'” he said.
“The application was deemed complete, so we took that as a signal we did in fact provide the information the attorney general needed,” he said. “Clearly he didn’t feel that way.”
Babineau also acknowledged he was “taken aback” by Neronha’s extended public denunciation of the deal, while at the same time emphasizing his “enormous respect” for the attorney general and his staff.
“He’s the attorney general, and that’s his call,” Babineau said.
“However,” he said, “what’s the old saying — when you run through a brick wall, find a way to go over it and go around it? So look, we’re still going to work with our colleagues at Care New England to see if there are things we can do together that don’t require regulatory approval that could perhaps achieve part of our vision.”
It’s still unclear what that would look like. Babineau said he had “a very good meeting” on Tuesday night with both Fanale and Brown University President Christina Paxson, another strong supporter of the merger. Brown had pledged $125 million in financial support for the new health system as part of an affiliation agreement. (Neronha argued Brown’s exact role was never clearly spelled out.)
“We’re trying to figure out, are there programmatic things we can do together?” Babineau said. “Are there ways we can collaborate in certain areas, whether it be mental health or women’s health, that don’t require a merger?” He also said the relationship between Lifespan, CNE and Brown remains strong, which “hasn’t always been the case.”
‘A job for anyone who wants one’
With a merger off the table, Lifespan and Care New England are now facing different paths forward.
CNE has been facing financial challenges for years, and the failed merger with Lifespan was just the latest in a series of unsuccessful transactions its executives have tried to finalize over the last decade in an effort to strengthen the system, which owns Kent and Butler in addition to Women & Infants.
In an interview last week with 12 News, Fanale said CNE still needs to find a new merger partner at some point, arguing the system is too small to continue operating independently in the current health care environment.
An out-of-state company has already made an unsolicited offer for CNE, and Fanale said he expects to talk to multiple other potential partners. That includes Mass General Brigham, which was attempting to take over CNE in 2019 when then-Gov. Gina Raimondo stepped in and urged another round of talks with Lifespan instead.
Babineau had been publicly critical of the CNE takeover proposal from Mass General Brigham — then known as Partners — warning it could lead to medical services being shifted north to Boston. But now he says he is resolved to the fact that CNE will need to seek merger partners other than Lifespan.
“Dr. Fanale’s been very transparent,” Babineau said. “He needs to explore different options. I completely respect that — Dr. Fanale’s a very fine leader. If I was in his shoes, I’d probably be doing the exact same thing.” He also praised the quality of the services and staff at CNE.
In Babineau’s view, Lifespan is in a different situation financially thanks to its bigger size and “very, very strong balance sheet.” Lifespan has $2.8 billion in annual revenue, compared with $1.25 billion for CNE, and roughly twice as many employees, making it Rhode Island’s biggest employer. In addition to Rhode Island Hospital, Lifespan owns Miriam, Newport and Bradley.
The system has also benefited from government support: Lifespan reported getting a total of $267 million in federal relief funding tied to the pandemic from March 2020 through September 2021, with about two-thirds provided by the U.S. Department of Health and Human Services and the rest from the state’s federally funded Hospital Assistance Partnership Program. Federal loans were also provided.
Babineau said Lifespan’s leaders are “feeling pretty confident about our ability to remain independent for the next couple of years,” though he acknowledged “the landscape changes so rapidly, and what’s true today may not be true a year from now.”
Lifespan has experienced some of the same challenges as other health systems in recent months as the omicron wave forced measures like the cancellation of elective surgeries. At its peak, Lifespan had roughly 270 COVID-19 patients in its hospitals, but that number was down to fewer than 15 as of this week.
Babineau said Lifespan’s operations lost nearly $20 million during the three months ended Dec. 31, and said January and February were also “challenging,” but said “March is looking better.”
With the merger off the table, Babineau said his own focus is shifting to Lifespan’s workforce. “I think it’s fair to say that my focus for the last year may have been a bit more external — it’s going to be primarily internal for the next year,” he said.
Lifespan is facing the same staffing crisis as other health care organizations in the wake of the pandemic, with roughly 2,400 job openings currently across the entire system.
“It’s across the board,” Babineau said. “If you’ve got a high school education, if you’ve got a college education, if you’ve got a nursing degree, if you’ve got a pharmacy degree — we’ve got job openings everywhere. … There’s virtually a job for anyone who wants one.”
He also said he wants to ensure that employees who stayed at Lifespan during the pandemic feel valued. “I’m intensely focused on what I think is our biggest challenge and our biggest opportunity — rebuilding our workforce,” he said. “Our workforce went through things that just nobody can comprehend.”
As part of that effort, Lifespan this week launched a new advertising campaign that will continue for the next six months. The broadcast, print and digital commercials will feature 27 employees discussing why they work for the organization and urging others to apply.
“We are really doubling down on recognizing the people who stuck with us during the pandemic, and getting a message out there that health care’s still a great profession [and] Lifespan’s still a great place to work,” he said.
As for Babineau, who will mark his 10th anniversary as Lifespan’s chief executive in August, he described his position as “the best job in Rhode Island,” and said he’s in no hurry to step aside.
“As long as the board will keep me around for a few more years, I’m happy to be here,” he said.
Ted Nesi (email@example.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 and Facebook