The merger plans of Rhode Island's two largest healthcare systems became an open book last week when the state attorney general made their application for regulatory approval a public document.
The attorney general's office even published the document and is selling copies for $30 to residents who want to pore over hundreds of pages about the proposed merger between six-hospital Lifespan Corp. and three-hospital Care New England.
Dealing with one of the nation's strictest state laws on hospital conversions is only half the challenge awaiting the two Providence-based systems, which combined have eight hospitals in Rhode Island, representing more than half the acute-care beds in the state.
The Federal Trade Commission has issued a second request for information about the merger, signaling a full-fledged federal investigation of antitrust implications.
The FTC also has arranged to share data on the merger with the state attorney general's office, said Lifespan spokeswoman Linda Shelton.
Lifespan and Care New England will be emphasizing slightly different aspects of the business climate to justify the merger.
For the federal investigators, the two systems are making a case that Rhode Island is a regional market, with a net influx of patients from outside the state, Shelton said.
She added that Lifespan expected the FTC's broader scrutiny, which began March 9. "It would have been unusual for a merger of this size not to make a second request."
The prospective partners control not only most of the state's 14 hospitals, but also the biggest and most indispensable facilities for Rhode Island residents.
They include Lifespan's 216-bed Miriam Hospital and 677-bed Rhode Island Hospital, and Care New England's 197-bed Women and Infants Hospital of Rhode Island, all in Providence. The hospitals are major teaching affiliates of Providence-based Brown University School of Medicine.
Despite that advantage, the merger makes sense because of escalating financial pressures that threaten facility operations and the systems' teaching missions, Shelton said.
In a climate that subsidizes graduate medical education through Medicare funding, Rhode Island has a Medicare managed-care penetration of 29.4%, double the nation's average.
Overall, hospital officials said Medicare cutbacks contributed to an operating loss of $50.2 million on revenues of $994 million for Lifespan in fiscal 1998 ended Sept. 30. And Rhode Island Hospital and Miriam Hospital lost $8.6 million in the first quarter of fiscal 1999.
The state attorney general's office scheduled a public hearing for May 20. The application was published to give residents ample time to become familiar with the merger plans before the hearing, said Jim Martin, spokesman for Attorney General Sheldon Whitehouse.