UPDATE: Sept. 10, 2020: Lifespan and Care New England are taking the next step toward a formal affiliation and said they had signed a letter of intent to merge. This week, the boards of the two organizations voted to move forward to form one entity.
- Lifespan and Care New England said the outbreak of the novel coronavirus has caused them to work together in unprecedented ways over the past few months, which has led the two systems to enter into a process to evaluate what a formal collaboration would look like moving into the future.
- The two cautioned in a statement released this week that the process will take months to unfold and that for a period of time "it will remain premature to speculate on the outcome of these discussions."
- They did not release any sort of timeline for when they will arrive at a final decision. "We will provide periodic updates as the situation requires," the two said in a joint statement.
For years, Lifespan and Care New England have flirted with the idea of combining their two organizations, but discussions always seemed to unravel without a deal.
The latest attempt fell through last summer after a series of deals were considered among the three, including a partnership with Partners HealthCare based in Boston.
In part, the idea of collaboration seems to make sense as the two have close ties to Brown University. Lifespan's network includes Rhode Island Hospital, the principal teaching hospital of Brown University's Warren Alpert Medical School, while Care New England has a teaching and research affiliation with the medical school.
In an interview with the Providence Journal, the two system leaders said the thornier issues that have stymied previous deals — like who will lead the combined entity — are going to be put aside for now. The focus will be on what the two can accomplish together that they couldn't achieve as separate entities.
Lifespan is Rhode Island's largest health system with five hospitals, including one psychiatric facility, and generates annual operating revenue of $2.4 billion.
Care New England operates three hospitals, home care and hospice and a behavioral health center and generates annual revenue of $1.1 billion.
So far this year, hospital mergers and acquisitions are on pace with historical trends, at least for the first quarter. However, consultant group Kaufman Hall warned that is bound to change for the second quarter as hospital performance has been upended by the pandemic.
Many health system operators reported dismal results for the first quarter of 2020 as they started to observe the effects of the pandemic during the tail end of the quarter when cities and states instituted shelter-in-place orders, substantially curbing patient volumes.
The second quarter is expected to be even worse, particularly in the month of April, as operators realize the full brunt of the virus, according to Fitch analysts.