Federal and state regulators will sue to block Lifespan and Care New England Health System's proposed merger, which officials said Thursday would increase prices, reduce quality and stifle wages.
The two largest providers in the Rhode Island would control at least 70% of the inpatient general acute care and inpatient behavioral health markets, the Rhode Island Attorney General's Office and Federal Trade Commission said. The two regulators will file a complaint in federal court seeking a temporary restraining order and preliminary injunction to stop the deal, which the Providence-based not-for-profit systems initially proposed in September 2020.
"If this extraordinary and unprecedented level of control and consolidation were allowed to go forward, nearly all Rhode Islanders would see their healthcare costs go up for healthcare that is lower in quality and harder to access, and Rhode Island's healthcare workers would be harmed," Rhode Island Attorney General Peter Neronha wrote in a 150-page report.
While some merger and acquisition experts claim that the state boundaries are too narrow when measuring competition, the combined health system would still have dominant market shares after looping in the surrounding Massachusetts towns, according to the FTC's analysis. The merged system would still control at least 60% of the inpatient market and 50% of the inpatient behavioral health market.
Commissioner Rebecca Kelly Slaughter and Chair Lina Khan focused on the labor market impact.
"Just as consumers are worse off when mergers diminish competition for goods and services based on price, quality and innovation, workers suffer when mergers diminish competition for their labor and employers are insulated from competition driving improved wages, benefits, working conditions and other terms of employment," they wrote in a concurring statement. "We take seriously concerns about competition in labor markets and will be vigilant in probing the effects mergers may have on competition for workers' labor."
Executives from Lifespan, Care New England and Brown University—which would be an affiliate of the new system—said in statements that they were disappointed with the decision.
"We thought it was the right thing to do, but now we will need to move on to a new path forward," CNE CEO Dr. James Fanale said. "There is always a path forward, and we will explore all options to find the best possible—and acceptable to regulatory bodies—solution for access to affordable, quality, healthcare."
Care New England and Lifespan have partnered for decades but haven't been able to formalize merger talks.