EXCLUSIVE: Raimondo Re-evaluating Partners HealthCare and Care New England Merger

Thursday, May 16, 2019

GoLocalProv News Team

 

View Larger +

Governor Gina Raimondo

GoLocal has learned from multiple sources that Governor Gina Raimondo is reconsidering her support for the proposed acquisition of Care New England (CNE) by Partners HealthCare — a deal strongly opposed by both hospital groups Lifespan and CharterCare.

Raimondo’s pivot is just the latest development in the dynamic healthcare industry in Rhode Island. 

According to sources, Raimondo and surrogates have met with top hospital executives and have been repeatedly told that if the merger is approved, it will result in key market-making surgeries being moved from Rhode Island hospitals to Boston, making it more difficult to attract and retain physicians in Rhode Island, and will financially weaken hospitals in Rhode Island.

GET THE LATEST BREAKING NEWS HERE -- SIGN UP FOR GOLOCAL FREE DAILY EBLAST

Rhode Island is ranked 49th for physicians according to one study -- ahead of only District of Columbia and New York, who rank 50th and 51st overall.

Lifespan President and CEO Tim Babineau claims, “It is essential that Rhode Island have a locally controlled academic medical center that can attract top specialists and primary care physicians working for the people of Rhode Island. The proposed acquisition places that at great risk.”

Partners HealthCare has an annual budget of $14 billion -- 50 percent larger than the state of Rhode Island's budget. The corporation employs more than 70,000 -- more than all the healthcare jobs in Rhode Island.

Rhode Island has lost jobs for five consecutive months.

Government -- and Healthcare

Initially, the Raimondo administration had voiced concerns about the entrance of Partners HealthCare into the market. 

In January of 2018, the Raimondo administration warned that Partners' entrance in the market could do significant damage to the healthcare sector — Rhode Island's second largest industry.

“This [Partners acquisition of CNE] is of concern. That doesn’t mean it won’t ultimately resolve in a way that’s good for Rhode Island, but we need to track it closely," said RI Commerce Secretary Stefan Pryor on LIVE. "My departments are not the regulators per se. There could be an element that ultimately comes before us. But still we have to be cautious as the state and the Governor’s administration ultimately needs to approve."

“That being said, thousands of jobs are at issue, important healthcare jobs. And the healthcare access of Rhode Islanders is at issue. Rhode Islanders shouldn’t have to go north to get their healthcare.  They shouldn’t have to find their way to specialty care,” said Pryor.

Raimondo on GoLocal LIVE in January of 2018 issued the same warning about the adverse impact Partners could have on the Rhode Island economy.

“Jobs stay local, care stays local and the healthcare costs don’t go up. No one wants to drive to Boston to go to your doctor,” said Raimondo.

By June 2018, however, Raimondo had softened her stance -- read more here. 

View Larger +

Partners' Dr. David Torchiana has left as CEO

Nine Months Later, Expedited Application for Merger Still Not Complete

Now, questions are emerging about Partners HealthCare commitment to the deal as months drag on.

GoLocal first reported the effort by Partners HealthCare to acquire Care New England in April of 2017.

The Partners HealthCare-CNE deal was granted an expedited review under Rhode Island’s Hospital Conversion Act in August of 2018. Since then, Partners HealthCare has changed the deal twice, recorded mixed financial performance the first two quarters of the year and has suffered a major leadership change.

Partners HealthCare experienced a first-quarter loss of $463 million, including a non-operating loss of $601 million, according to its Q1 earnings report.

This was a significant contrast to Partners' Q1 2018 earnings report, when the system recorded an overall gain of $322 million. 

Partners reported an overall gain of $623 million in the 2019 second quarter.

Changing Deal

Two elements of the Partners HealthCare-CNE deal have changed and more will be learned if the application is finalized.

First, Partners HealthCare is no longer the acquiring corporate entity, but now it is Partners' subsidiary Brigham and Women’s. Second, it was reported that Partners HealthCare was going to fund millions in operational shortfalls, long differed capital investments, and the proper funding the hospital’s pension fund.

Last February it was unexpectedly announced that Dr. David Torchiana, a cardiologist who since 2015 has been CEO of Partners HealthCare would step down. He left the company in April. Anne Klibanski, MD, was named interim President and Chief Executive Officer.

View Larger +

Lifespan CEO Tim Babineau says Partners deal is a job killer for RI

Care New England Hit With Millions More in Losses

CNE disclosed Wednesday another financial twist as the corporation announced that it had lost $5.8 million for the quarter.

It was expected that CNE’s fragile financial position would stabilize after it closed Memorial Hospital in Pawtucket.

CNE over the past three years has lost more than $130 million.

“Our focus remains firmly on operational improvement plans including quality, access, and financial performance,” said James E. Fanale, MD, president and CEO, CNE on Wednesday. “Health care is a volatile industry but we continue to aggressively assess, implement, and amend our turnaround plans to meet these demands head-on. We believe with this sharp focus and the commitment of all those here at CNE, we will see further improvement and achieve our overall budget.”

Women & Infants' financial performance drove most of the losses. The hospital conducted the vast majority of births in Rhode Island, but the number of births is declining. According to the CDC, Rhode Island was one of the few states in the country that had a decline from 2018 of 10,506 from 10,638 in 2017.

According to financial documents by CNE for fiscal year 2015, the hospital group conducted nearly 11,000 in that year alone.

Review Process

In Rhode Island, there are now two separate, parallel reviews of Partners HealthCare’s acquisition – a Change in Effective Control review by the RI Department of Health (conducted by RIDOH), and a Hospital Conversion Act review (by RIDOH and Attorney General Peter Neronha). The different reviews have different criteria.

"A Change in Effective Control review happens when 50% or more of the assets or ownership of a healthcare facility such as a hospital are changing hands. The Director of the Rhode Island Department of Health will make a decision on the Change in Effective Control application after getting a recommendation from the state’s Health Services Council. The transacting parties will present before the Health Services Council roughly 30 days after the application is deemed complete," said Joseph Wendelken of the RI Department of Health.

"Unlike a Change in Effective Control application, a Hospital Conversion Act application needs the approval of both the Rhode Island Department of Health and the Attorney General. A Hospital Conversion Act review is required when 20% or more of the assets or ownership of a hospital are changing hands. Although Hospital Conversion Act applications are not put before the Health Services Council, public meetings will be scheduled to gather community input. The state does not yet have a complete Hospital Conversion Act application (just like the Change in Effective Control application is not yet complete). They will be deemed complete when we have all the documents we need to do our review," added Wendelken.

Both decisions (Change in Effective Control and Hospital Conversion Act) are due within 90 days of the date when the applications have been deemed complete.

 

Related Articles

 

Enjoy this post? Share it with others.

 
 

Sign Up for the Daily Eblast

I want to follow on Twitter

I want to Like on Facebook