Lifespan, Rhode Island's biggest health network, last week removed obstacles to a governance reorganization imposed six months ago by the state's attorney general under a law regulating changes in hospital ownership.
With court approval, Providence-based Lifespan agreed to reserve a majority of seats on its board of directors for Rhode Island representatives. It also agreed to limit the number of representatives from Boston-based New England Medical Center to less than 20%.
The agreement lifted a restraining order sought by then-Attorney General Jeffrey Pine in June 1998 after he ruled that some governance changes made by Lifespan fell afoul of 1997's Hospital Conversions Act.
Considered one of the strictest laws in the nation governing hospital transactions, the act was spurred by public opposition to Columbia/HCA Healthcare Corp.'s proposed conversion of Roger Williams Medical Center in Providence to for-profit status. The deal was aborted, but the law has haunted not-for-profit mergers involving facilities in other states.
Pine interpreted the law as allowing him to step in if Rhode Island residents were in danger of losing control of a hospital's charitable assets to an out-of-state organization (See related story, p. 36).
Lifespan acquired 349-bed New England Medical Center in 1997 after reducing its maximum funding pledge to the Boston teaching hospital to satisfy Pine (Oct. 27, 1997, p. 17).
But after the merger went through, the attorney general's office continued to dog Lifespan, objecting to a subsequent bylaws change that eliminated guaranteed representation for some Lifespan affiliates in Rhode Island while increasing the influence of New England Medical.
Pine, who did not run for re-election and left office Jan. 5, approved revisions in Lifespan's governance bylaws hours before his successor, Sheldon Whitehouse, took over.
The agreement "will protect the interests of the people of Rhode Island while preserving the flexibility needed by Lifespan to add new partners to the system," said Bruce Selya, Lifespan's board chairman.