RI Healthcare Industry Moving Towards Chaos - Partners Acquisition of Care New England in Doubt
Thursday, August 24, 2017
Now, just four months later the system is spiraling and Partners, the $12 billion giant has announced it is cooling to the deal. The Chief Financial Officer of Partners on Tuesday told Boston Business Journal that his company was concerned about the financial situation at Care New England. Partners' annual budget is approximately 25 percent larger than the state of Rhode Island's annual budget.
“The devil is in the details in the assumptions, but we’d like to see them showing us pretty near-term break even, and getting to a 1 to 2 percent margin within three years or so,” said Partners CFO Peter Markell.
Despite shedding Memorial, Care New England continues to have significant financial issues. But, they continue to run at a loss and its bonds were recently downgraded.
For Care New England — which owns Kent Hospital, Women & Infants, and Butler Hospital, the merger could not happen soon enough. As a condition of the deal, Care New England shed Memorial Hospital to California-based Prime Healthcare.
Prime, however, is in the midst of growing financial turmoil and is facing an investigation by the U.S. Department of Justice and its bond rating was recently downgraded.
Prime also operates Landmark Hospital in Woonsocket.
Memorial Hospital has been losing millions, and Care New England lost more than $53 million last year.
Previously, Care New England was working towards a merger with South Coast Hospital group, but that unraveled due to Care New England’s weak financial conditions.
Care New England has cut the number of funded positions over the past three years by more than 2,000.
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?
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- Robert Whitcomb: Care New England and Partners; Fragile Freedom; Urban Shadows
- 7 Implications and Unintended Consequences of a Care New England and Partners Merger
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