The Rhode Island Department of Health has granted an expedited review of the proposed merger between Partners HealthCare and Care New England.
A speedy review is needed because Care New England "operates one or more distressed Rhode Island hospitals," the state's health director, wrote in a letter last week.
The quicker review allows for less documentation, doesn't require a public hearing and must be done in 90 days rather than 120 days.
The expedited review is good news for the merger. The approval process should wrap up at the end of this year or the beginning of 2019.
Care New England is the second largest system in Rhode Island. It lost about $115 million in operations over the past two years. So unlike Summa Health, which recently announced it is looking for partnership or merger opportunities, Care New England's position is not one of strength.
Finances have improved this year though. In its third-quarter earnings, which ended in June, Care New England said its income from operations grew from a $6.5 million loss last year to a $4.6 million on the plus side this year. The system credited growth initiatives and cost management for the turnaround, including revenue cycle improvements and daily productivity monitoring.
Care New England and Partners HealthCare released a joint statement about the news: "We appreciate the decision by the Rhode Island Department of Health to approve the request for expeditious review. We look forward to submitting the required filings in the near future."
The deal could stabilize Care New England and help it as it competes against Lifespan, which is the largest health system in Rhode Island. For Partners, the merger expands its footprint beyond Massachusetts for the first time. Partners, which is the largest health system in Massachusetts and runs Massachusetts General Hospital and Brigham and Women's Hospital, is also seeking a move north to New Hampshire.
Plus, closer to home, Partners faces a potential merger involving rivals Beth Israel Deaconess Medical Center and Lahey Health.
M&A continues to heat up in healthcare. PricewaterhouseCoopers said the second quarter of the year was the 15th consecutive quarter with more than 200 healthcare M&A deals. As health systems turn more to consolidation, Deloitte predicted that, if the trend continues, only half of the current health systems will remain in the next decade. That could give providers more market power over payers.
The Commonwealth Fund recently reported that providers are consolidating faster than payers. M&A can lead to cost savings for health systems, but larger systems with more influence over insurance company payments can also result in higher costs through larger reimbursements.