Boston-based Partners HealthCare has obediently bowed out of its planned merger with Care New England after Rhode Island's governor signaled her strong desire that the Providence health system retain local control.
Partners' decision puts a cap on what had been a tumultuous, years-long process of trying to acquire CNE, a deal that was still under regulatory review in Rhode Island.
In a statement, Partners' Interim CEO, Dr. Anne Klibanski, hinted at the potential for a future union.
"We look forward to reengaging at the appropriate time—especially with a fully integrated local system," she said. "We greatly value our relationship in Rhode Island and want to do what's best for the state and its citizens."
Partners' decision came in response to Gov. Gina Raimondo's request that CNE, Lifespan and Brown University resume their own merger talks, which have been on an off over the years. In a statement, Raimondo touted the appeal of a locally-run academic medical center.
"While I have little control over private hospital systems, I do have the ability to bring these parties together and ask them to reconvene negotiations on a crucial decision that will impact all Rhode Islanders for decades," said Raimondo, whose office did not respond to an interview request. "Whether or not Rhode Island affiliates with a larger system at some point, I believe creating a more integrated, locally-run, academic structure first is what's in the best interest of Rhode Islanders now and in the long run."
It's possible Partners was quick to comply with Raimondo's request because the health system had already faced scrutiny by officials in Massachusetts, said Nancy Kane, a management professor in Harvard T.H. Chan School of Public Health's health policy and management department.
"They got their hands slapped so many times in Massachusetts that they probably don't want to deal with that in Rhode Island," she said. "They don't want to push their luck and get kicked out."
Jay Gerzog, a partner with Sheppard Mullin, agreed Partners probably saw the writing on the wall that Rhode Island officials would have blocked the deal anyway.
"If the governor isn't aligned, then it's a battle they're likely not going to win and one they don't necessarily want to fight," he said.
It's unclear why previous attempts to unite CNE, Lifespan and Brown didn't pan out. None of the health systems involved agreed to comment for this article.
One reason may have been the fear that services would be consolidated across the three systems' facilities in Rhode Island, Kane said. That's still a strong possibility—more so than under a Partners-CNE deal—because there would likely be cardiology or pediatric units, for example, in close proximity to one another, Kane said.
"The trouble when you're in the same market: the possibility to consolidate services is high," she said. "Whereas with a Partners merger, then you've got someone in another state maybe 90 miles away, so it's less likely they're going to close down and consolidate."
But a deal between Partners and CNE, which at times included Lifespan and Brown, would have likely meant Rhode Island losing jobs to Massachusetts, especially given Partners would have been the controlling entity, Gerzog said.
"There is a feeling that there are jobs that are being lost to Massachusetts and that you have a Massachusetts entity making decisions at the corporate executive level that impact Rhode Island residents," he said.
In a statement, Lifespan leaders said they are excited to get the effort underway and confident the parties can achieve the vision of a unified academic healthcare system. Similarly, CNE CEO Dr. James Fanale and Brown President Christina Paxson said in statements they respected the governor's wishes and would work to reach a deal.
Raimondo is calling for the parties to work quickly to identify a way forward over the summer. The Rhode Island Foundation and The Partnership for Rhode Island will provide financial support for consulting work, according to Raimondo's office.
It's not uncommon for governors, health commissioners and state attorneys general to get involved in deals involving healthcare providers, Gerzog said. In this case, it makes sense for the governor to proactively facilitate a deal that would benefit the people of her state, he said.
"If hospital systems fail or healthcare is deteriorating or access to healthcare isn't what the public desires, it's going to fall in the governor's lap," Gerzog said.
Partners, a major healthcare player that generated $131 million in operating income in the quarter that ended March 31 and owns world renowned Massachusetts General Hospital and Brigham and Women's Hospital, now faces stiff competition from the newly formed Beth Israel Lahey Health, whose leaders argued their merger was necessary to keep Partners in check.
