- Rhode Island's insurance commissioner issued a 25-page report this week warning that a tie-up between the state's two largest health systems would result in a combined entity commanding nearly 80% of the inpatient market.
- The deal also raises alarms about the control the two would have outside of the hospital market, with significant control over physician services in the state either through existing ownership, affiliation deals or accountable care organizations.
- Given these risks, the commissioner put forth an oversight model regulators should consider before approval, including price caps and requirements that tie payment to quality of care.
The pandemic revived merger talks of Lifespan and Care New England after the two had flirted with combining the systems for years, but deals always fell through.
But the crisis had the two collaborating in ways they never had before, executives said earlier this year when announcing the deal.
A key aspect of the deal is creating an integrated health system by including Brown University's medical school. The university promised to contribute $125 million over five years to help create the system.
But the merger has raised concerns as it brings together the No. 1 and No. 2 health systems in the state of Rhode Island.
In 2019, Lifespan's network of hospitals discharged 53% of admitted Rhode Island patients. Simply, it controlled 53% of the inpatient market, followed by CNE with 23.3%.
"The proposed merger between CNE and Lifespan, the state’s two largest systems, will reshape the local health care landscape and significantly alter the market conditions faced by consumers, health insurers, and competing health care providers," the report from the office of Patrick Tigue, insurance commissioner, said.
The report notes that studies tend to show that hospital mergers result in higher prices without any improved quality, which is fueling concerns about this merger.
That is why the commissioner's office is suggesting oversight that includes price caps, reimbursement tied to quality incentives and health equity improvement requirements.
Executives from the two systems previously said they would agree to rate cap boundaries set by regulators.