Rhode Island AG denies bid for merger of state’s two largest health care groups
Attorney General Peter Neronha said the merged company would be in violation of state and federal antitrust laws.
The proposed merger of Rhode Island’s two largest health care organizations was denied Thursday by the state attorney general’s office, which concluded that it would likely lessen competition and increase health care costs while compromising quality and access.
Attorney General Peter Neronha in denying the application for the merger of Lifespan and Care New England said the merged company would have so much market power that it would be in violation of state and federal antitrust laws.
“Put simply, if this extraordinary and unprecedented level of control and consolidation were allowed to go forward, nearly all Rhode Islanders would see their health care costs go up, for health care that is lower in quality and harder to access,” Neronha said.
A merged company would control 75% of all inpatient acute care hospital beds in Rhode Island. He compared those numbers to the largest heath care organizations in neighboring states. In Massachusetts, Mass General Brigham has 20% of the state’s acute care hospital beds. In Connecticut, Yale New Haven has 31% of those beds, he said.
He also said that the systems failed to demonstrate the financial feasibility of a merger.
“Lifespan and Care New England are each currently in tenuous financial condition,” the decision said.
“Faced with an ongoing pandemic, and despite cash infusions from federal relief funds, the parties’ own financial projections raise a substantial concern of a combined Lifespan/CNE becoming financially unstable within a few years,” the decision said.
The state attorney general’s office will also join the Federal Trade Commission’s lawsuit to block the transaction, he said.
“This proposed merger is a bad deal for patients who are likely to see higher hospital bills, lower quality of care, and fewer cutting-edge medical services,” FTC Bureau of Competition Director Holly Vedova said in a statement.
Management at Lifespan and Care New England expressed disappoinment with developments.
“We are extremely disappointed by the decision of the FTC, as we know that the status quo will not well serve the health care needs of the people of Rhode Island,” Lawrence Aubin Sr., chair of Lifespan’s board of directors, said in a statement.
A merger was “the right thing to do,” Care New England President and CEO Dr. James Fanale said.
“There is always a path forward, and we will explore all options to find the best possible — and acceptable to regulatory bodies — solution for access to affordable, quality health care,” he said.
Lynn Blais, president of the 7,000-member United Nurses and Allied Professionals union, said the union “strongly disagrees” with the attorney general’s decision, which opens the door for an out-of-state, for-profit company to take over Care New England.
“It is clear that Care New England is in dire financial straits, and in no financial condition to sustain their operations as they currently are,” she said in a statement. “The merger of these two groups could be our last, best chance to ensure a healthy, stable, not-for-profit health care system that stays under Rhode Island control.”
State Rep. Blake Filippi, the House Minority Leader, praised the attorney general’s decision.
The New Shoreham Republican on Twitter called the proposed a merger a “prescription for disaster — a merger we would live and die with for generations.”
The hospital organizations last February announced they had signed a merger agreement that included a collaboration with Brown University’s medical school to create what they called an integrated statewide health care system that would improve patient access and care, address racial and ethnic disparities in care, foster research and innovation, and help drive the state economy.
There had been previous discussions about a merger dating to the 1990s, but the latest effort was spurred by increased cooperation between the organizations during the coronavirus pandemic.
Lifespan, the larger of the systems, operates Rhode Island, the Miriam, Hasbro Children’s, Newport and Bradley hospitals. Care New England runs Women & Infants, Kent and Butler hospitals.
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