Lifespan: We can block Partners deal as Women & Infants landlord

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PROVIDENCE, R.I. (WPRI) — Lifespan is playing hardball in its attempt to unravel the Partners-Care New England deal, claiming it can block the transaction because it owns the land that Women & Infants Hospital sits on.

The state’s top hospital group made the legal claim, strongly contested by Women & Infants owner Care New England, in a March 20 letter to the Department of Health. The department is reviewing Boston-based Partners HealthCare’s proposed acquisition of CNE — a deal Lifespan strongly opposes.

Women & Infants built its current facility on land owned by its next-door neighbor, Lifespan-owned Rhode Island Hospital, after signing a long-term lease in 1983. Then and later, many thought the two hospitals would eventually come under common ownership. But multiple merger attempts have failed, and now Care New England is seeking to join up with Partners, the powerful owner of Brigham & Women’s and Mass. General.

In the initial letter last month, Lifespan lawyer Patricia Rocha said “clear and unambiguous language” in the 1983 lease requires Care New England to “obtain prior written consent” from Lifespan in order to transfer ownership of Women & Infants. The unspoken subtext: such consent won’t be easy to obtain in light of Lifespan’s opposition to the Partners deal.

Lifespan’s claim has concerned regulators at the Department of Health and the attorney general’s office who are reviewing whether to let the hospitals change hands.

“These letters make clear that there are significant unresolved issues as they relate to the terms of the November 1983 ground lease agreement between WIH and RIH,” the Health Department’s Michael Dexter and Special Assistant Attorney General Jessica Rider wrote Wednesday in a letter to the two parties, using acronyms for Women & Infants and Rhode Island Hospital.

Lifespan had asked the state to stop its review of Partners’ application for Care New England in light of the lease issue. “Unless and until W&I can demonstrate legally binding evidence of site control, continuation of the review process would waste the time and resources of the Department, the Health Services Council and the involved parties,” Rocha, Lifespan’s lawyer, wrote in an April 11 follow-up letter.

Dexter and Rider said in their letter this week they will not stop the review, but wrote, “We urge CNE and Lifespan to resolve the question of site control forthwith.”

The current lease agreement runs for another 66 years, through 2085, a copy filed with the Department of Health shows.

Spokespersons for Lifespan and Care New England declined to comment on the letters. In his response to the original Lifespan letter, Care New England lawyer Gerald Petros disputed Lifespan’s interpretation of the lease, and argued that either way it should not affect whether state regulators continue their review of the Partners deal.

Lifespan President and CEO Dr. Timothy Babineau hinted at the land dispute in an interview earlier this week, during a media blitz aimed at stoking public opposition to Partners’ proposed takeover of CNE.

Asked by WPRI 12 whether Lifespan could kick Women & Infants out of its current location as punishment for joining up with Partners, Babineau demurred. “What we’re interested in right now is just making sure that folks understand the implications of the transaction that’s on the table,” he said. “I wouldn’t speculate on what might happen.”

The stakes are high on all sides. Lifespan and Partners are each the largest hospital group and biggest private employer in Rhode Island and Massachusetts, respectively, and the outcome of the jockeying over Care New England could reshape the state’s health care system for decades.

The next step in the Partners-CNE transaction is for state regulators to deem their application complete, at which point they will have 90 days to give the deal a fast-track review. Appearing April 19 on WPRI 12’s Newsmakers, Attorney General Peter Neronha declined to offer a timeline for when that could take place.

“The ball is in their court to answer the questions we posed,” Neronha said. “And when we have all the answers, we will then go into the review process along with the Department of Health. Once you trigger that 90 days, you’ve got to get that done, so if we don’t have everything we can’t make the right decision for the people of this state.”

Ted Nesi (tnesi@wpri.com) covers politics and the economy for WPRI.com. He is a weekly panelist on Newsmakers and hosts Executive Suite. Follow him on Twitter and Facebook

Copyright 2019 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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