EXCLUSIVE: Care New England Turned Down $400M+ Offer in 2015 —  Would Have Saved Jobs and Memorial

Tuesday, January 23, 2018

 

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CNE turned down an offer that combined was worth nearly $500M

According to documents secured by GoLocalProv, Care New England's (CNE) board turned down an offer to be purchased in 2015 that would have provided the struggling healthcare group with $170 million in cash and $250 million for capital improvements. The deal also gave CNE a 20 percent share of ownership — in total, the deal was worth an estimated value of nearly $500 million. 

The proposal was made by Prospect of California, the for-profit hospital group which owns CharterCARE in Rhode Island. The offer was made in April 2015, just when CNE was beginning to financially falter. Some CNE officials regret that the offer was not pursued in hindsight it would have stabilized RI's healthcare industry and saved jobs.

As GoLocal first reported in April of 2017, the financially failing CNE has entered into an agreement with Boston-based Partners HealthCare to be acquired.

Since entering the Rhode Island market in 2014 with the purchase of CharterCARE (Fatima and Roger Williams Hospitals), Prospect states that they have invested more than $70 million in capital improvements and new construction projects at the two hospitals. Prospect promised to keep Memorial Hospital open and sustain the jobs. CNE is now closing Memorial.  According to the closure documents submitted to the RI Department of Health by CNE, "As of October 16, 2017, MHRI maintains a staff of 590 employees comprising 520.4 FTEs."

Prospect officials in California could not be reached for comment.

Since the rejection of the Prospect offer in 2015, CNE has been hit by a series of financial and business failures, including the following:

 

Care New England refused to respond to questions about the 2015 decision to reject Prospect’s offer.

“I would not be able to comment on anything related to a confidential process,” said Jim Beardsworth, spokesman for CNE. Prospect officials also refused to comment on the documents.

Partners Deal

Presently, CNE is in a period of exclusive negotiations with the mega-healthcare giant Partners HealthCare — a business that now employs more than 70,000 and has a reported income last fiscal year in excess of $13.5 billion -- which is a nearly 50 percent higher than Rhode Island’s annual state budget. The now depleted has significantly less value after the past two years of financial chaos. 

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Brown President Paxson focused on blocking Partner's effort to purchase CNE

Brown Blast Impact of Partners on RI’s Economy.

In a letter to the Brown University community last week, Brown President Christina Paxson took the unusual step opposing the effort by Partners HealthCare of Boston to purchase CNE. 

“I feel strongly that letting this acquisition go forward would be wrong for Rhode Island and for Brown. 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. It also would likely increase the cost of care and reduce the ability of Rhode Islanders — consumers, businesses, healthcare workers and policy-makers — to have a voice in how our healthcare system works,” wrote Paxson.

“If the focal point of Rhode Island healthcare shifts to Boston, excellent physicians (many of them Brown-trained) could be less likely to choose Rhode Island as a place to practice. In addition, the full economic benefits of a strong local academic health system — one that brings in federal grants, generates spin-off companies and creates new jobs in Rhode Island— would be lost, perhaps forever,” continued Paxson.

Now, Prospect has teamed with Brown University in what has been dubbed, “The Rhode Island Solution.” Combined, the two are working to purchase the now financially depleted CNE.

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Former CNE Board member is now running for U.S. Senate

Former CNE board member and now GOP candidate for United State Senate Robert Flanders declined to comment on Monday. 

“I am not going to comment on CNE’s cash flow as I am no longer on the board there and such questions should be put to CNE to obtain accurate up to date information," said Flanders. 

"Nor do I have any comment to make about the board’s previous decision to accept the Partners’ offer, rather than the one Prospect made in 2015 beyond the obvious that the Board considered the former to be the better one for all the reasons that CNE publicly stated at that time,” said Flanders.

 

Related Slideshow: 7 Implications and Unintended Consequences of a Care New England and Partners Merger

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Providence does not usually do well in mergers

Remember Providence Gas, Fleet Bank, and Narragansett Electric?

Big employers, deep community involvement, and significant charitable donors — all were consumed and in each case, the number of employees left in Rhode Island by the succeeding company is a fraction of the once independent venture.

To the victor goes the spoils.

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As if the Boston economy isn't good enough, and the Providence economy couldn't be more stagnant

The cityscape of Boston is littered with cranes. Boston Business Journal maps the construction projects utilizing cranes in Boston (see image) and the number of projects is staggering. 

In Providence, there few construction projects and not a crane to be seen. The last thing Providence needs is for another one of its largest employers to be merged into a Boston mega-organization. The likelihood is that jobs will be lost or consolidated to Boston - basic functions like purchasing, accounting, etc. will be lost. 

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Harvard beats Brown in Ivy League match-up

Harvard Medical School is ranked as the #1 research-based institution in America by U.S. News and World Report.

Partners Healthcare’s academic partner is Harvard.

In contrast, Care New England’s academic affiliation is with the Warren Alpert Medical School of Brown University. Brown’s best ranking is 21st for primary care - and is ranked for research way back at #31.

One of the biggest losers in the merger could be Brown's medical school.

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Care New England is RI’s 2nd largest employer, so what will It be in 2 Years?

According to the RI Department of Labor and Training, Care New England is Rhode Island’s second largest employer.

Lifespan is the largest: 12,050

Care New England: 8,500

CVS: 7,800

Cities like "Meds and Eds" (the medical and educational business segments), but Providence and all of Rhode Island is likely to lose high paid, highly educated jobs as a result of this deal.

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Care New England Continues to Struggle

Despite hopes that closing Memorial Hospital would solve the financially beleaguered Care New England's economic woes, new financial documents unveil that CNE continues to struggle.

Additionally, the pursuer - Partners HealthCare - is also making cuts. The Boston Globe unveiled the Partners is cutting about 100 of the company’s tech workers that their jobs were being outsourced to India to cut costs.

“Many of the employees have worked for Partners for several years, or even decades, and are struggling with the company’s decision. Almost all are coders — people who scour patients’ medical records to pinpoint billable services — and earn upward of $40 an hour. Coders in India earn a fraction of that amount, making overseas coding an attractive way for hospitals to cut costs,” wrote the Boston Globe.

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Can the unions battle?

Within hours of GoLocal breaking the news of the merger, the United Nurses and Allied Professionals (UNAP) President Linda McDonald, RN, released the following statement today:

"This proposed merger has the ability to impact thousands of jobs and the quality of care in Rhode Island and should be thoroughly scrutinized. Like most Rhode Islanders, we only recently learned of this proposal but expect Care New England and Partners HealthCare to be transparent in their process and begin a conversation with our union about the effect any deal would have on our members and our patients.  

Memorial Hospital provides critical care to scores of Blackstone Valley residents every year and preserving its status as a fully-functioning community hospital will be among our top priorities as this process continues to unfold. 
The onus is now on Care New England, Partners HealthCare and Prime Healthcare Services to make the details of this proposal public and to do it quickly so that workers, patients and state regulators may begin asking the appropriate questions."

The nurses represents nearly 1,400 registered nurses, CNAs, ER techs, surgical techs, orderlies, endo techs, environmental employees and ancillary staff at Kent and Memorial hospitals.  But, will they have any impact on the decisions?
 

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Speaking of Lifespan - will they be forced to merge with a Boston partner?

Lifespan is having its financial challenges too. While Care New England lost $53 million last year, Lifespan's losses were $40 million. The Lifespan losses were smaller proportionately to the healthcare group's overall budget and it does not have the cash crunch that Care New England was battling.

In February, Lifespan announced it had has entered into another Boston Hospital agreement. This agreement with Dana-Farber Cancer Institute is a long term agreement with the goal of advancing cancer treatment and research. Lifespan previously entered into an agreement with New England Medical Center and that deal led to years of protracted litigation to unwind. Lifespan also ran into a legal battle with Tufts Medical Center.

Will Partners' potential arrival in the market force Lifespan to affiliate?

 
 

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