Lifespan, Care New England boards vote to merge

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PROVIDENCE, R.I. (WPRI) — For the fourth time in recent decades, Rhode Island’s top two hospital groups are moving ahead with a possible merger, and executives say this time they think it will actually come to fruition.

The boards of Lifespan and Care New England voted Tuesday night “to move forward with a letter of intent to merge Lifespan and Care New England into a single entity,” the two organizations said in a joint statement on Wednesday. The announcement comes roughly three months after their CEOs announced renewed talks over a potential combination, spurred in part by the pandemic.

If it happens, such a deal would combine Rhode Island’s major medical institutions and two of its largest employers — with a combined workforce of roughly 23,500 — into one dominant entity. Lifespan owns Rhode Island, Miriam, Newport and Bradley hospitals, while Care New England owns Women & Infants, Kent and Butler.

“By working together, Lifespan, Care New England, and Brown University can create a fully integrated academic healthcare system for the people of Rhode Island,” Lifespan President and CEO Dr. Timothy J. Babineau said in a statement.

“After careful consideration, there is clear recognition of the value of a more formal relationship,” Care New England President and CEO Dr. James Fanale added. “Overall benefit, regarding the capabilities and reach of what is possible for the health care of our local communities, has been defined with a clear, high-level vision of what could be possible.”

The unanimous vote by the two boards is a further sign of a warming relationship between them since last year, when merger discussions pushed by Gov. Gina Raimondo ended acrimoniously. The governor had stepped in as Care New England was trying to consummate a deal to become part of Massachusetts-based Partners HealthCare; by that point Lifespan had already exited three-way talks that included Partners.

Among those who cheered Wednesday’s announcement was Brown University President Christina Paxson, who has spent years advocating the creation of an academic medical center in Rhode Island anchored by a single large hospital system affiliated with her institution’s medical school.

“A unified academic medical center with Brown University, Lifespan, and Care New England has always been the best solution for health care in Rhode Island,” Paxson said Wednesday. “I could not be more thrilled with this announcement.”

In a phone interview with 12 News, Babineau and Fanale expressed optimism about actually completing a merger this time, saying the coronavirus crisis shifted the thinking of many people in both organizations.

“What was different this time was that Jim and I worked very closely together during the pandemic and got to know each other, and that matters,” Babineau said.

Still, Babineau acknowledged the two sides remain in the “relatively early innings” of the process. The next step is the signing of a nonbinding letter of intent to merge, which could happen within days. A definitive agreement could be finalized by the end of the year, though Fanale acknowledged that timeline is “aggressive.” And actually closing a deal could be at least a year away.

“We want to use the momentum we have and move with alacrity,” Fanale said.

The two executives said they spent the summer discussing the overall vision for joining forces to provide care, a goal that drew strong buy-in internally in both Lifespan and Care New England. But they have yet to tackle some of the thornier issues that have upended previous negotiations: financial matters, board seats, executive appointments, or a new name for the combined entity.

“All those things, we have not yet gotten to,” Babineau acknowledged.

An even bigger challenge could be winning state and federal regulatory approval for the merger, as both men acknowledged. The Federal Trade Commission may have antitrust concerns about allowing the creation of an organization that would control such a big share of health care spending in Rhode Island, and state officials have moved slowly at times in the past.

Another topic that hasn’t been hashed out yet: jobs. Both said they foresaw little or no negative effect on bedside and other care workers, though Fanale acknowledged there “might there be some back office efficiencies” they would have to explore.

Linda McDonald, president of the United Nurses and Allied Professionals union, greeted the merger news cautiously. In a statement, she said the union was glad to discuss how combining the two organizations can improve patient care, saying its “unbending priority will be the preservation of critical health services and jobs.”

“Intent is laudable, but details are what matter,” McDonald said. “We look forward to the conversation beginning anew.”

Ted Nesi (tnesi@wpri.com) 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

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

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