Lifespan and Care New England’s merger application was just deemed ‘complete.’ Here’s how the R.I. hospital systems got to this point - The Boston Globe
PROVIDENCE — For decades, Rhode Island's two largest health care systems have attempted to join forces. But each time, the efforts have failed.
Rhode Island Attorney General Peter Neronha and the state health department announced Tuesday that Lifespan and Care New England's merger application was marked "complete."
To understand the importance of this proposed merger, here are some of the key points:
October 1998: For the first time, Lifespan and Care New England announce their intent to merge.
September 2000: Lifespan and CNE drop their plans to merge after protests by unions and criticism by elected officials and business groups, which claim the merger would lead to higher prices, cause layoffs, and ultimately create a monopoly.
July 2007: Lifespan and CNE announce for a second time they plan to merge.
December 2007: The Federal Trade Commission gives the systems the green light for their proposed merger deal.
June 2008: Despite federal regulators giving the two systems the OK, the state rejects their application and says it's "incomplete."
September 2009: Lifespan and CNE file another 110,000-page merger application with the Rhode Island Department of Health and attorney general's office.
February 2010: Lifespan and CNE drop their plans to merge for a third time.
August 2012: Dr. Timothy Babineau is appointed Lifespan's CEO and president after George A. Vecchione retires.
March 2013: Lifespan goes on a hiring freeze and Babineau releases a memo to employees, attributing a budget shortfall to lower reimbursement rates, an increase in charity care, longer patient stays, and the state's struggling economy.
November 2015: Southcoast Health System, a New Bedford-based community hospital chain, briefly explored the possibility of combining with Care New England. They went as far as entering exclusive merger talks.
April 2017: Lifespan proposes another merger with CNE. But just five days later, Massachusetts-based Partners HealthCare and CNE announce their intent to merge.
January 2018: Dr. James E. Fanale is appointed interim CEO and president of CNE after Dennis D. Keefe retired. During this month, CNE also closed financially troubled Memorial Hospital in Pawtucket. Shortly after, Brown University and Los Angeles-based Prospect Medical Holdings, which owns Roger Williams Medical Center and Our Lady of Fatima Hospital, announced a bid to acquire CNE, which countered Partners' acquisition.
February 2018: Lifespan was added to Partners and CNE's partnership talks. But Lifespan pulled out in October when terms couldn't be agreed on.
May 2018: Prospect's and Brown's proposal was shot down when CNE and Partners signed a definitive agreement to merge.
August 2018: CNE, Partners, and Brown sign a memorandum for post-merger collaboration.
November 2018: CNE reports a $26.9 million loss in fiscal 2018, which was an improvement on its fiscal 2017 operating loss of $47.1 million.
April 2019: Lifespan launches an opposition campaign to the proposed Partners-CNE merger. They cited concerns related to higher health care costs and the danger of jobs being sent away from Rhode Island and to Boston.
June 2019: Former Governor Gina M. Raimondo, who is now the US Commerce Secretary, asks for an "in-state solution" between the systems, which she hoped included Brown University. Shortly after that, Partners withdrew its merger application.
July 2019: CNE pulls out of any potential merger talks with Lifespan and Brown.
August 2019: The Globe obtains a letter Fanale wrote to Babineau that accused Lifespan of abruptly ending its partnership with the Integra Community Care Network, an accountable care organization run by Care New England that is designed primarily to manage the heath care needs of Medicare beneficiaries. Lifespan was not a full-fledged member of Integra, but Fanale wrote that it allowed a case manager from the organization to assist Rhode Island Hospital patients with their "long-term post-discharge care." Four days later, Babineau wrote a letter to Fanale calling Care New England's accusation "as offensive as it is absurd."
September 2019: Lifespan's Babineau and board chairman Larry Aubin offer to step aside in order to advance the negotiations with CNE.
March 2020: After nearly a year of the two systems trucking along on their own, without another vision to merge, the COVID-19 pandemic hits the US. It shakes the hospital systems and Lifespan announced layoffs and early retirements that account for a 5 percent reduction in its corporate workforce.
April 2020: Babineau, who earned about $2.8 million in 2018, announced he would stop taking a salary. Lifespan loses $75.7 million. The system predicts losing another $100 million by May.
June 2020: Fitch Ratings downgrades CNE's bond rating to BB-. And therefore, after working in partnership with one another for the last few months during the pandemic, Fanale and Babineau announce they will take an additional 90 days to explore a potential merger.
September 2020: After the 90-day period is complete, the boards of both systems announce they signed a letter of intent to merge.
February. 2021: Lifespan, CNE sign a definitive agreement to create an integrated health system with Brown University. Brown President Christina Paxson said the university is committed to providing a minimum of $125 million over five years in support of the development of the new system.
March 2021: The chief executive of South County Health, the only independently-owned hospital in the state, said the organization has concerns about the proposed Lifespan-Care New England merger. Union leaders say any merger layoffs will be met with "full force."
April 2021: The systems file their initial application with state regulators and the FTC. The Rhode Island Foundation also said it would lead an "independent effort to gather and share community input of the proposed merger. At the same time, Coastal Medical, one of Rhode Island's largest primary care providers, finalized plans to officially become part of Lifespan.
June 2021: In a newly published 25-page working paper by the state's Office of the Health Insurance Commissioner, Commissioner Patrick Tigue outlined how the proposed deal, with affiliated partner Brown University, could present significant risks that could result in higher health care costs — unless heavily regulated.
July 2021: In an exclusive interview with the Globe, the systems' executives say they are racing to complete merger filings for a September deadline. Fanale also says if the proposed merger is not approved, then he will be worried about Women & Infants Hospital's financial status.
October 2021: Lifespan and CNE are forced to revise their merger application with state regulators. According to Attorney General Peter Neronha, the questions his office was seeking answers to included: "What is this new entity, if approved, from their perspective, going to look like? Where would it be? Where would it operate? What kinds of services in those places? Would they not provide services in other places?" During this same month, House Minority Leader Blake A. Filippi, who is considering a run for governor in 2022, told the Globe the state should "kill" the proposed merger. Governor Dan McKee provided little details on his thoughts about the merger.
Nov. 2021: Neronha and the state health department announced that Lifespan and CNE's Hospital Conversion Act application has been deemed complete. State regulators now have 120 days to either approve, deny, or approve the proposed merger with conditions.
Alexa Gagosz can be reached at alexa.gagosz@globe.com. Follow her on Twitter @alexagagosz.
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