Partners HealthCare is delaying its purchase of Care New England. The two sides plan to meet in September or October to see whether the deal can still happen, WPRI reported.
Partners CFO Peter Markell told Boston Business Journal that Partners would like Care New England to show them the Rhode Island group can break even soon and get to a 1-2% margin within three years.
With the Partners’ purchase stalled, Lifespan, which is Rhode Island’s biggest hospital group, said it’s open to discussing a deal involving Care New England. The two systems have attempted mergers in the past.
Partners, the biggest health system in Massachusetts, was looking to expand into Rhode Island and buy the state’s second largest hospital group. In hopes of speeding up the process, the Rhode Island General Assembly even introduced legislation this year to fast-track the state regulatory review process of the sale.
However, the deal is now stalled with Partners wanting Care New England to show a turnaround plan that can transform the system from one that is losing money to one that can start gaining a profit soon. Care New England recently saw its bond rating downgraded after reportedly losing $46 million during this fiscal year.
Earlier this year, the Rhode Island system sold Memorial Hospital in Pawtucket, R.I., in what was considered a step in Partners’ acquisition process of Care New England.
Last year, Care New England discussed a merger plan with Southcoast Health System, but the two sides wound up agreeing to terminate the agreement.
While the Partners/Care New England deal has stalled, there is still plenty of other merger and acquisition activity in Partners’ backyard. For-profit health system Steward Health Care, which is also based in Boston, is looking to expand to a system with 36 hospitals across 10 states with revenues of nearly $8 billion in 2018. Steward made its first out-of-Massachusetts acquisition earlier this year when it bought eight hospitals in Ohio, Pennsylvania and Florida. Now, it’s looking to add IASIS Healthcare in a $2 billion deal.
Also, in the Boston area, Beth Israel Deaconess Memorial Center and Lahey Health recently signed a merger agreement that additionally included New England Baptist Hospital, Anna Jacques Hospital and Mount Auburn Hospital. The deal would create a 13-hospital system, the second-largest in Massachusetts.
A recent report by Kaufman, Hall & Associates, LLC found that hospital and health systems mergers and acquisitions increased 15% in 2Q. Large health systems like Partners and Steward have been especially active. There were six transactions of health systems with nearly $1 billion or more in revenues announced in the first half of 2017. There were only four in all of 2016.