RI hospital groups Lifespan, CNE sign merger deal; Brown U. commits $125M

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PROVIDENCE, R.I. (WPRI) — The three most powerful institutions in Rhode Island medicine announced Tuesday they have signed a landmark agreement to create an academic health system, taking a step that could transform the state’s health care industry.

Rhode Island’s two major hospital groups, Lifespan and Care New England, said they have signed a definitive agreement to merge into a single organization following months of negotiations. They also signed a companion agreement with Brown University, which operates the state’s only medical school, to make Brown part of the new health system’s governing board.

Brown’s active participation distinguishes Tuesday’s announcement from previous efforts to merge Lifespan and Care New England, not least because the Ivy League school is putting its money where its mouth is, with a commitment to spend at least $125 million on the new effort over the next five years. Brown is already linked to both hospital groups through its Warren Alpert Medical School.

The three not-for-profit organizations are launching a campaign to win public support for the deal, including a website called HealthierRI.com. They will need to get government sign-off from the R.I. Department of Health and Attorney General Peter Neronha, as well as the U.S. Federal Trade Commission. The paperwork is expected to be filed with regulators in the coming weeks.

“What I am most excited about is the ability of our new, locally based, academic health system to compete at a national level, innovate, attract top talent, develop new scientific knowledge, improve the care we deliver and serve as an economic engine for Providence and the state,” Lifespan President and CEO Dr. Timothy Babineau said in a statement.

Lifespan is owner of Rhode Island, Miriam, Newport and Bradley hospitals, while Care New England owns Women & Infants, Kent and Butler. Together they are two of the state’s largest employers, with roughly 23,000 workers, and take in billions of dollars in revenue a year.

Leaders from Lifespan, Care New England and Brown University at Tuesday’s signing of an agreement to create a new academic health system in Rhode Island. (photo credit: Lifespan/CNE/Brown)

In an interview with 12 News, the leaders of the three organizations said they hope to close the merger by the end of the year — an ambitious timeline considering the scale of the combination and the drawn-out duration of previous hospital transaction efforts in Rhode Island.

“It’s our very strong desire and hope that we will get this done in calendar year 2021,” Babineau said, though he emphasized that executives are “very cognizant not to get ahead of the regulators.”

Brown President Christina Paxson added that there will still be “plenty of time to get community input” about how the new entity should operate. “We’re not going to try to rush it,” she said.

Babineau added, “This is an exciting moment in time — we cannot let it slip through our grasp yet again.”

That phrase — “yet again” — hints at why Rhode Islanders may be skeptical about the latest announcement.

The two hospital groups already have significant ties despite being separate organizations; Care New England even leases the land that Women & Infants sits on from Lifespan. But three previous merger attempts dating back to the 1990s have failed, due to a mix of personalities and politics.

However, Lifespan and CNE renewed merger talks last year, after the pandemic led to closer collaboration between the two organizations. And it’s possible their tortured history may help spur completion of a transaction this time.

A few years ago, Care New England was on the cusp of becoming a subsidiary of Boston-based Partners HealthCare, owner of Mass. General and Brigham & Women’s. But Gov. Gina Raimondo stepped in late in the process and urged a renewed effort to merge Lifespan and Care New England, derailing the Partners deal.

Raimondo had expressed concern about the loss of local control over some of the state’s most important health care facilities — a worry echoed by others including Paxson, U.S. Sen. Sheldon Whitehouse and Rhode Island Foundation CEO Neil Steinberg. Trends in the medical industry suggest Rhode Island’s hospitals could wind up as outposts of larger out-of-state health systems amid broader consolidation and a need for cash.

“Individually, Lifespan and Care New England are smaller than major academic medical centers,” the groups noted in materials released Tuesday. “The proposed merger will combine the complementary strengths of the two systems and create much-needed scale as we work to strengthen population health initiatives and move into risk-based payment systems.”

“The danger if they do not merge is the likelihood that, eventually, one or both health care systems would be compelled to merge with national, for-profit hospital systems or other regional systems from the north or south,” they continued. “This could have the damaging effect of moving high-quality, specialty care out of the state, further distancing it from our local communities.”

On Tuesday, Care New England President and CEO Dr. James Fanale argued the Lifespan-CNE-Brown deal could be transformative for Rhode Island.

“The uniting of health care with medical education and research serves to advance biomedical discovery, educate future physicians, nurses and health practitioners in medicine and health care, and create a vibrant economic nexus in the region based on the health care industry,” he said.

Babineau added, “By bringing these together, we intend to compete on the national level. We will be up there among the brand names in medicine, not only in New England but across the country. … I’ve been dreaming of this day since I came to the state 13 years ago.”

Raimondo hailed the “historic agreement” in a statement Tuesday.

“There is no question that a local, integrated health care system is in the best interest of Rhode Islanders,” the governor said. “Today’s announcement will benefit patients by ensuring they have access to the highest quality of care and will spur economic growth by helping us attract top talent and solidify our position as a hub of innovation and scientific development.”

Lt. Gov. Dan McKee, who is expected to succeed Raimondo as governor next week, said the proposal “has the potential to significantly improve the range of and access to health care services for Rhode Islanders.”

“I encourage regulators to ensure that we maximize all health care and economic opportunities while also protecting patients and preserving our community hospitals and the crucial role they play in delivering quality care to Rhode Islanders,” he said.

Whitehouse echoed Raimondo and McKee, calling the announcement “exciting news.”

“There is opportunity here to assure that governance of the new organization incorporates the Rhode Island community broadly and includes key stakeholders, and to drive delivery system reform of our health care system so that patients come first, outcomes improve, and costs come down,” the senator said in a statement.

Officials at the organizations argue the new health system will provide better care, promote economic development, and reduce health disparities. Lifespan Chairman Larry Aubin said it will “serve as an economic engine for the state.”

As an example of how the merger could rationalize care in Rhode Island, Paxson pointed to the fact that the facility where most Rhode Island babies are born — Women & Infants — is owned by Care New England, while the facility where pediatric care is provided — Rhode Island Hospital’s Hasbro Children’s division — is owned by Lifespan.

Even though the two buildings are across the street from each other, yet they “could be in another universe,” Paxson said. She cited a similar division between child psychiatric services, provided at Lifespan-owned Bradley, and adult psychiatric care, provided at CNE-owned Butler.

“It doesn’t make sense,” she said. “If you sat down with a blank piece of paper, you would never set it up this way.”

Still, there is bound to be concern about the way a new Lifespan-CNE-Brown entity would dominate Rhode Island health care. About 77% of all patients served by a hospital in Rhode Island went to either a Lifespan or Care New England facility in 2020, with nearly half going to a Lifespan hospital, according to data published by CNE.

The CEOs downplayed the possibility a merger could lead to job losses among administrative staff. Babineau said that while the two organizations would need to be “as efficient as possible” in their operations, over time academic health systems serve as economic anchors that spur net job gains.

Lynn Blais, president of the United Nurses and Allied Professionals union, said the deal “must be painstakingly scrutinized to ensure that it is in the best interest of patients and frontline health workers,” though she said employees are open to “a thoughtful and productive dialogue.”

“While we see the potential in this proposed new entity, we remain skeptical without the assurance of a formal agreement on services and jobs,” Blais said.

Patrick Quinn, executive vice president of SEIU 1199 NE, said his members have “many questions” about the proposal. “A transaction of this magnitude between the first and third largest private sector employer in the state would change the entire economy of Rhode Island,” he said.

“The corporate leaders of the two largest hospital systems have the burden to demonstrate how all Rhode Islanders will benefit and how in particular we can do better by communities of color by improving access to high-quality health care, growing good jobs, improving health outcomes and being good neighbors,” he said.

Executives offered no details Tuesday about what the new entity would be named or who would be its top executive and board chair. Babineau and Fanale said they will continue leading their respective organizations as the transaction goes through regulatory review, and won’t begin integration until after the deal closes.

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. Follow him on Twitter, Facebook and Instagram

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

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