EXCLUSIVE: Care New England Turned Down $400M+ Offer in 2015 — Would Have Saved Jobs and Memorial
Tuesday, January 23, 2018
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:
- Losing more than $120 million in the last two-plus fiscal years
- Entering into merger negotiations with Southcoast Hospital — which failed in part due to CNE’s deteriorating financial condition
- Implementing staff reductions in April of 2017, eliminating positions, and putting a hold on other jobs
- Seeing downgraded bonds by Moody’s - “The negative outlook reflects uncertainties related to CNE's ability to achieve its financial targets for fiscal 2018 and close Memorial in a timely and cost-effective manner, along with its continued challenge formalizing a strategic partnership with another health care provider. Our outlook currently covers a period of one year,” wrote S&P.
- Closing Memorial Hospital and the loss of hundreds of jobs
- Reductions of staff across CNE
- Departure of nearly all of the senior leadership
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.
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.
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.
“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
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.
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.
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.
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
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.
Care New England is already healthier
It was announced on Wednesday that the Ontario, California-based Prime Healthcare Foundation has signed a letter of intent to acquire Pawtucket’s Memorial Hospital from Care New England.
Prime Healthcare owns 14 hospitals in the U.S.
Memorial has been a big, but not the only factor, in the demise of Care New England’s financial condition.
"It is certainly no secret that we have had significant financial challenges here (Memorial Hospital),” said Care New England President and CEO Dennis Keefe. "But at the same time it has been clear there is an important obligation to maintain the care and services offered to those in and around Pawtucket. The only way for this to continue is through the partnership we announce today with Prime Healthcare Foundation."
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?
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?
- 7 Implications and Unintended Consequences of a Care New England and Partners Merger
- Brown Opposes Care New England Sale to Partners, Teaming with Prospect
- Care New England’s Board Votes to Close Memorial Hospital, Prime Deal Collapses
- Care New England President Keefe Announces Retirement
- RI Healthcare Industry Moving Towards Chaos - Partners Acquisition of Care New England in Doubt
- Care New England Faces More Changes - Already Cut Work Force from 8,500 to 6,500
- Care New England Takes Another Hit, S&P Downgrades Bonds
- NEW: Memorial Hospital of Rhode Island Joins Care New England
- UNAP Calls Care New England’s Effort to Close Memorial Hospital Intensive Care “Irreponsible”
- Care New England, Partners HealthCare Extend Letter of Intent Through Jan. 2018
- Health Care Union Files Lawsuit Against Care New England Over Memorial Hospital Closure
- Care New England, UNAP Reach Agreement to Keep up to 200 Healthcare Jobs at Memorial
- Care New England Claims They Will Continue in Pawtucket Area, But Refuse to Give Details