Lifespan, Care New England Quietly Revive Merger Talks

Oct 19, 2015

Lifespan and Care New England, Rhode Island’s two largest hospital systems, have quietly revived merger talks, Lifespan ceo and president, Dr. Timothy Babineau, said today.

In a brief interview, Babineau said the talks ``are in very early stages’’ and are in response to Care New England’s request for partnership proposals that was released last spring.

The two large hospital chains, which control roughly 70 percent of the state’s health care market, have been down this road twice before, only to see the efforts crash amid a series of state regulatory and financial challenges.

The most recent attempt at merging the two systems came to a halt in 2010 after more than two years of negotiations and legal research. That foray came to an end after wrangling with state regulators, who must approve any combination. Top brass at  both chains grew frustrated after submitting tens of thousands of pages of documents to state health department officials and then-Attorney General Patrick Lynch. Under Rhode Island law, the attorney general’s office must approve any hospital merger.

At that time, the unions representing thousands of hospital employees were wary of a merger. And Lynch was a candidate for the Democratic nomination for governor in a primary where the health care employee unions are strong forces. Lynch eventually aborted his race for the nomination and went into private law practice.

The two organizations also sought regulatory approval to combine in 1998, but withdrew that application in 2000.

At the time of the 2010 decision to close the effort, both sides cited such issues as the difficult economic climate, the rapid pace of changes in the medical care landscape, both locally and nationally, and the tough competition from Boston hospitals and Massachusetts-based medical care providers.

Some of those factors are in play, but the recent evolution of medical care in southern New England may augur in favor of such a combination now. Obamacare and the expansion of the federal Medicaid program have given hospitals more revenue. Yet, the competition from Massachusetts is, if anything, stronger than ever, with Bay State health providers moving relentlessly to poach patients, particularly those with private health insurance, from Rhode Island.

A merger would make sense on many levels, especially in building a stronger Rhode Island-based medical provider network. Many medical observers have long wondered why Women & Infants Hospital, which shares a campus with Rhode Island Hospital, is in Care New England, while Rhode is part of Lifespan.

What also is new is the leadership of the respective organizations. In 2010, the Care New England president was John Hynes and George Vecchione led Lifespan. Now Babineau is leading Lifespan and Dennis Keefe is ceo at Care New England.

In a statement, Care New England acknowledged that it is in negotiations with prospective partners, but declined comment on which medical providers its executives are talking with.

State Human Services Director Elizabeth Roberts declined substantive comment when queried recently. She said through spokesman Mike Raia that state health officials do not want to ``weigh in at this time.’’

``We will continue to explore possible affiliation and partnership options for the future of Care New England,’’ the statement released by May Kernan, the organization’s spokeswoman. ``We have no specific comment on particular entities with whom we are in confidential negotiations, but should any of these discussions result in a closer partnership or affiliation, we would continue our practice of making a public announcement at the appropriate time.’’

Said Babineau, ``It’s a process, we’ll see where it ends up.’’