A Partners Healthcare Merger with Harvard Pilgrim Could Devastate Blue Cross Blue Shield of RI and Neighborhood Health Plan

Partners is in the midst of two major deals that, if completed, would dramatically change RI's economy and local control over healthcare and diminish local control.

First, is if Partners completes the acquisition of Care New England deal.

Second, is if they, in fact, do strike a  deal to acquire/merge with Harvard Pilgrim -- the health insurer -- what happens.

Partners would enter the market not only controlling the second largest hospital group, but also in partnership with one of New England's largest insurers.  

A potentially devastating impact on local insurers like Blue Cross and Neighborhood.

"As the healthcare environment changes and insurers and providers increasingly share financial risk, traditional relationships are shifting," says Partners spokesman Rich Copp. "Partners is constantly exploring new partnerships and relationships with other providers and insurers with the goal of improving the health care delivery system for our patients both locally and around the world."

Too Many Beds

Dr. Michael Fine, the former RI Director of Health, has long advocated for reducing the number of hospital beds. The now-closed Memorial Hospital was averaging less than 20% occupancy when it was shuttered. 

Some of that was also due to the lack of investment in the facility by the financially mismanaged Care New England and the lack of marketing support by CNE

Fundamentally, the economics are wrong in Rhode Island.

Changing Players

Last week, Lifespan -- the largest hospital group in the state -- was negotiating with Care New England and Partner Healthcare. This week, it looks like it may have fallen out of that deal.

Last week, Brown University was teamed with CharterCare and this week it is negotiating with Partners.

Lifespan in previous times has twice tried to by Care New England and multiple times has merged or partnered with Boston hospital groups.

Federal Healthcare Policy

The demise of Obamacare has already begun to wreak havoc on the economics of healthcare in the states. Most days there is another announcement of cuts to federally funded healthcare program. Under Trump, this disruption is not likely to slow. 

According to CNN last week, "the White House is seeking to cut funding from the Children's Health Insurance Program, known as CHIP, as part of its larger request for cuts to the federal budget in a rescissions package sent to Congress this week."

"The latest budget request from Trump's administration includes a $7 billion cut to the popular program, part of $15 billion in overall cuts. Some $2 billion would come from a contingency fund that was created to prevent states from running out of money, with the rest coming from funding that Congress has authorized for the program but states haven't spent."
 

RI's Budget 

Rhode Island's short-term budget gap is still slated for a $120 million shortfall. The long-term stability of Rhode Island's budget is in flux. 

This is never a good thing for the hospital industry.

With the loss of federal dollars under the Trump administration's budgeting, Rhode Island is likely to pass along cuts to RI's hospitals.

Rhode Island is one of the oldest states in America -- older Americans utilize healthcare at a much higher rate. 

Failed Hospital Conversation Act

The largest pension fund collapse in Rhode Island's history is directly tied to the failure of Rhode Island regulators to properly review the acquisition of St. Joseph Hospital just four years ago.

Care New England's acquisition of Memorial Hospital is not looking much better.

Where was the RI Attorney General on these matters?

Does the statute need an overhaul?