An impasse in negotiations has imperiled plans for managed-care company Healthsource to acquire Health New England, a 63,000-enrollee managed healthcare company serving western Massachusetts.
The companies signed a merger agreement last October calling for Health New England to exchange its shares for $59.2 million in Healthsource stock. The closing was subject to Healthsource reaching long-term provider agreements with Health New England's three hospital shareholders: Baystate Medical Center, Springfield, Mass.; Holyoke (Mass.) Hospital; and Noble Hospital, Westfield, Mass.
Health New England said last week that contract discussions were terminated between Hooksett, N.H.-based Healthsource and Baycare Health Partners, a physician-hospital organization whose membership includes Baystate Health Systems, the parent corporation of Baystate Medical Center, and Greater Springfield IPA, an independent physician association.
"Because of certain conditions of the merger agreement between Healthsource and HNE and the significant overlap between the membership of Baycare Health Partners and HNE shareholders, the failure to reach agreement may have a major impact on the HNE merger process," said Richard F. Belloff, Health New England's president and chief executive officer.
In a written statement, Healthsource said that "due to termination of negotiations with the largest hospital, it is highly likely that the transaction will not close."
Healthsource, which owns managed-care companies in New England, the Midwest and the Southeast, was trying to expand into western and central Massachusetts through two acquisitions. It did close an agreement April 11 to purchase Central Massachusetts Health Care, an 84,000-enrollee HMO based in Worcester, for $62.5 million. That transaction is subject to regulatory approvals and other closing conditions.