Lifespan and Care New England Say They May Try Another Merger
Sunday, March 19, 2023
In February of 2022, the Federal Trade Commission (FTC) shot down a proposed merger between Rhode Island's two largest hospital groups — Lifespan and Care New England.
Since the failed merger, the two hospital groups changed out their CEOs, but not their boards, and the hospital groups are talking merger again.
Beyond the FTC, Rhode Island Attorney General Peter Neronha also opposed the merger of the previous plan that included Brown University.
GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLASTThe regulators cited that the proposed merger created a non-competitive monopolistic market.
If allowed to come together, this new hospital system would control an unprecedented amount of healthcare in Rhode Island, taking the state’s healthcare market from one in which there is healthy competition to a virtual monopoly, said Neronha.
Attorney General Peter Neronha announcing the rejection of the Lifespan and Care New England merger PHOTO: GoLocal
Control 75% of all inpatient acute care hospital beds in Rhode Island
Control 80% of the Rhode Island market for inpatient hospital care
Control 79% of the Rhode Island market for inpatient psychiatric care
Control 60% or more of the Rhode Island market for many outpatient surgery specialties
Account for 50% of commercial healthcare spending on patients whose primary care physician is part of the merged system’s Accountable Care Organizations
Employ 67% of Rhode Island’s full-time registered nurses working at a hospital
Now, Becker’s Hospital Review, a national trade magazine, writes that both Lifespan and Care New England are discussing a merger again.
Lifespan and Care New England "You Can Always Try Again"
In an article published on Friday, Becker writes that hospitals announced ‘you can always try again.”
"But now it might be a sense of never say never. New leadership at both health systems may be encouraging fresh thinking as to a possible merged entity. 'We have to accept the decision they made,' Lifespan CFO Peter Markell told an investor call on March 16. 'There is still room for dialog and discussion, and you can always try again.'" wrote Beckers.
"The focus for now will be on improving Lifespan's operating numbers with a particular concentration on workforce management. Lifespan has had to close a number of operating rooms as well as bed capacity because of a shortage of staff," wrote Beckers.
Research the Beginning
In November, Brown, Lifespan and Care New England a joint research agreement.
Neronha's office told GoLocal at the time, "Based on the limited information before us, it is premature to say whether the type of aligned research collaboration agreement between Brown, Lifespan and CNE would trigger any regulatory review."
"In general terms, review by the Attorney General under the Hospital Conversions Act is triggered when 20% or more of a hospital’s assets are transferred. At this juncture, this proposal does not appear to involve such a transfer or consolidation. As the parties themselves recognize, any agreement among them must also comply with federal and state law and regulations, including federal or state antitrust laws, and we will ensure such compliance," added Neronha's office.
"We are looking to find some efficiencies to make research easier for our scientists so they can find more time to do that," Lifespan John Fernandez said, according to Beckers. "If we are working together on a particular disease, we could be working better than we already have."
In comments made on March 15 by Michael Wagner, MD, CEO of Care New England, "There is new leadership (at Lifespan) and it is better to see how we can collaborate. Our job at Care New England is to create a platform of profitability and then we can work out strategic steps from there."
Care New England's Financial Trauma
In February, GoLocal reported that Care New England had just 45 days of cash on hand, according to the most recent quarterly report of the company.
A year earlier, Care New England had 57 days of cash on hand, and two years earlier, it had 72 days.
Care New England owns Kent, Women & Infants, and Butler Hospitals, as well as Visiting Nurses of Rhode Island.
For the quarter which ended December 31, CNE lost $13 million.
The company has had a nearly endless string of losses over the past decade.
"Net Patient Service Revenue was $2.0 million or 0.76% lower than forecast for this quarter and $4.9 million or 1.9% higher than the first quarter of the previous year. Net patient service revenue finished below forecast," stated the report.
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