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Brilliant business strategy, bad healthcare solution? 

That’s the headline in an analysis of hospital mergers by the national group, Drugwatcher. And it’s certainly the question of the day after the announcement by Attorney General Peter Nerohna that he has denied the application to merge the state’s largest healthcare network, Lifespan, with its second largest, Care New England.

Newport Hospital is within the Lifespan network that also includes Rhode Island, The Miriam, Hasbro Children’s, and Bradley Hospitals; Gateway Healthcare, a behavioral health provider; Lifespan Physicians’ Group, with some 840 providers; and Coastal Medical, with nearly 20 locations, and the state’s largest primary care physicians’ group

Care New England includes Kent, Butler and Women & Infants Hospitals; the Care New England Wellness Center; The Providence Center, a behavioral health facility; and the VNA of Care New England.

“Put simply, and among other reasons articulated in the decision, if this extraordinary and unprecedented level of control and consolidation were allowed to go forward, nearly all Rhode Islanders would see their health-care costs go up, for health care that is lower in quality and harder to access, and Rhode Island’s health-care workers would be harmed,” the ruling said. 

Additionally, the ruling said the merger would eliminate “competition between Lifespan and Care New England.”

The Federal Trade Commission has also weighed in, saying it plans to file a lawsuit to block the merger.

Predictably, Lifepsan and Brown University (also to be a partner in the merger), expressed disappointment at the decision. While Care New England President and CEO Dr. James Fanale expressed disappointment, he said that CNE “will need to move on to a new path forward,” according to published reports.

CNE had been on a different path, after talks between the two healthcare networks hadn’t produced any agreement. CNE was in very serious conversation with Boston’s Brigham and Women’s, a network that includes Brigham and Women’s Hospital, Dana Farber, Massachusetts Eye and Ear and other world-renowned institutions. 

Those talks ended, when Gov Gina Raimondo called a halt to the negotiations and directed Lifespan, CNE and Brown to resume talks, with the goal of creating an in-state healthcare network. 

Coincidentally, according to Board of Elections records, Raimondo and other leading politicians were the recipients of thousands of dollars in contributions from executives at Lifespan and CNE. No accusations here, but just an observation that when groups of individuals from organizations donate to a compaign, it’s likely they have the ear of the recipient.

“Hospitals are merging,” says BMC Health Services Research, “to become more cost-effective…The main argument for merging hospitals has been to increase efficiency through economy of scale effects. However, the actual outcome of mergers is disputed.”

BMC noted that a study of 57 Norwegian hospitals, involving 20 mergers over eight years, found hidden merger costs, particularly on long-term sickness among hospital employees. “The uncertainty and involuntary nature of many change processes often results in employees feeling a loss of control.”

Lifespan, CNE and Brown, have all argued that a merger would lower costs and improve care, but again some studies show differently.

“A number of studies have shown that hospital mergers and acquisitions led to higher prices, and did not improve patient care, or reduce costs,” Drugwatcher says…” Health economists … argue that when smaller hospitals merge into larger health systems, they acquire a larger share of the consumer health market. That means they are in a position to ask health insurance companies to pay more for medical care and procedures. Therefore, economists argue, that merger and acquisition deals drive health care costs through the roof and place more financial burden to patients.”

Another argument from proponents of the local merger was that if the merger talks failed, it was possible, maybe likely, that some of the local hospitals would be bought by for-profit organizations, more beholden to shareholders than patients.

While that certainly is possible, I always wonder how we define a non-profit. How do we consider an organization with several top administrators earning millions a non-profit? Someone is profiting.

All that aside, I wonder if Brigham and Women’s resurfaces to resume negotiations with Care New England. There are already partnerships. Brigham’s cardiologists have an affiliation with Kent. Would such an affiliation drain docs from Rhode Island, forcing Rhode Islanders to travel out of state for quality treatment? Or would it open new and exciting possibilities and affiliations in Rhode Island.

I’m hopeful that all involved in these negotiations have gained insight, and now, as Dr. Fanale says, will look to the future and find ways to improve upon the healthcare system we have in Rhode Island, become more efficient without sacrificing patient care.

Frank Prosnitz

Frank Prosnitz brings to WhatsUpNewp several years in journalism, including 10 as editor of the Providence (RI) Business News and 14 years as a reporter and bureau manager at the Providence (RI) Journal. Prosnitz began his journalism career as a sportswriter at the Asbury Park (NJ) Press, moving to The News Tribune (Woodbridge, NJ), before joining the Providence Journal. Prosnitz hosts the Morning Show on WLBQ radio (Westerly), 7 a.m. to 9 a.m. Monday through Friday, and It’s Your Business, also on WBLQ, Monday and Tuesday, 9 a.m. to 10 a.m.

Prosnitz has twice won Best in Business Awards from the national Society of American Business Editors and Writers (SABEW), twice was named Media Advocate of the Year by the Small Business Administration, won an investigative reporter’s award from the New England Press Association, and newswriting award from the Rhode Island Press Association.