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RI regulators kick off 120-day review of Lifespan-CNE hospital megamerger

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PROVIDENCE, R.I. (WPRI) — State regulators announced Tuesday the merger application of hospital groups Lifespan and Care New England has been “deemed complete,” a formal step that will now kick off a 120-day review of the blockbuster deal.

Attorney General Peter Neronha and the R.I. Department of Health — the two state agencies tasked with either approving or denying the transaction under the Hospital Conversions Act — announced the start of the merger review Tuesday. They also have the option of approving it with conditions.

“As a regulator with the immense responsibility of evaluating hospital transactions in our state, our goal is clear,” Neronha said in a statement. “We need to determine whether the transaction is legal and understand how, if approved, it will impact cost, quality and access to care for the people of Rhode Island.”

State regulators will review the material provided by the hospital groups for confidentiality concerns through Dec. 30, then make their application public. Public hearings will be scheduled by the end of February. A final decision on the merger must be made by March 16.

Lifespan and Care New England unveiled their merger deal in February, arguing that by combining forces into an academic medical center affiliated with Brown University they can improve outcomes for patients and promote economic development in Rhode Island.

Lifespan owns Rhode Island, Miriam, Newport and Bradley hospitals; Care New England owns Women & Infants, Kent and Butler. They employ more than 22,000 workers combined. Brown has agreed to contribute $125 million toward the new entity.

The state-level regulators are not the only ones with a say. The two not-for-profit corporations are also seeking approval from the Federal Trade Commission, which is reviewing the transaction for antitrust problems since the two organizations would dominate the Rhode Island health sector if they join forces.

FTC officials have requested more information from the parties, suggesting some concerns in Washington about the size of the deal.

Earlier this year executives at Lifespan and CNE also had discussions with legislative leaders about securing a “certificate of public advantage,” or COPA, for the transaction from the General Assembly. A COPA would potentially allow the organizations to get around federal antitrust concerns.

Two earlier efforts to merge Lifespan and CNE since the 1990s fell apart, and the health systems are again facing skepticism from regulators and some lawmakers this time because of how powerful a merged system would be.

Lifespan executives told bondholders in September that they hoped the merger would be approved by late this year or early in 2022.

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. Connect with him on Twitter, Facebook, LinkedIn and Instagram

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