- Care New England and Partners Healthcare on Thursday agreed to enter into a definitive agreement to merge following a 10-month due diligence process.
- That process resulted in a plan for CNE "to regain solid financial footing in the coming years." The system, Rhode Island's second largest, confirmed it lost about $115 million in operations in the past two fiscal years.
- The two systems still need to draw up and sign the definitive agreement, which they hope to develop as soon as possible. Financial terms were not disclosed.
Another day, another merger deal announced in the healthcare industry.
With the agreement, Partners, the largest health system in Massachusetts, gains an entrance into neighboring Rhode Island, increasing its regional market share.
The industry has seen a wave of vertical integration deals of late, notably the CVS-Aetna proposed merger. Last week, a group of health systems, including Intermountain Health and Ascension, announced it would form its own nonprofit generic drug company.
CNE and Partners touted the systems' affiliation in cardiology and vascular, thoracic and colorectal surgery through Brigham and Women's Hospital.
For some organizations, the news may not be welcomed. CNE's rival health system Lifespan and its CEO Dr. Timothy Babineau has repeatedly called for a Lifespan-CNE merger.
A Partners-CNE merger could weaken market share for Lifespan, the largest health system in Rhode Island, through numbers, resources and branding.
Two weeks ago, Brown University, along with Prospect Medical Holdings, proposed an alternative merger proposal while Care New England and Partners were still in a period of negotiation exclusivity. Brown University and CNE have a medical research affiliation.
"I feel strongly that letting this acquisition go forward would be wrong for Rhode Island and for Brown," Brown University President Christina Paxson wrote. "Doing so is likely to lead to specialty healthcare shifting to Massachusetts, impeding access to healthcare for Rhode Islanders and especially for members of the state’s underserved communities."
Paxson also expressed concern that the acquisition could affect healthcare costs in the state.
CNE President and CEO Dr. James Fanale seemed to acknowledge and attempt to mitigate such fears in a prepared statement.
“We look forward to the opportunity this now affords and what it means for the delivery of high-quality health care for our patients, the community we serve, and our vital academic partnerships," he wrote. "We will continue to focus our efforts on the remaining work while doing so with perseverance that reflects the needs of our patients and the ever-changing healthcare landscape.”
There may be cause for concern. Rising healthcare costs have been associated with system mergers and horizontal market consolidation.
CNE, as part of its financial shoring up, closed its Memorial Hospital emergency department. In exchange for approving the closure, the state of Rhode Island required CNE to open a walk-in clinic in Pawtucket, where Memorial Hospital was located.