Care New England has entered exclusive talks with Southcoast Health System, a southeastern Massachusetts chain of community hospitals, about a possible affiliation. If state and federal regulators approve the partnership, the combined organization would become one of the largest in New England.
Care New England is Rhode Island’s second largest health system, operating Women and Infants, Kent, Butler, and Memorial Hospitals as well as The Providence Center. President and CEO Dennis Keefe says his organization has been trying to expand its portfolio of services for several years. But the Affordable Care Act is driving even more change in the way health care systems get paid and care for patients.
“If you want to really be stronger and more broadly serve the population, and you need more geographic coverage and scale, that’s when the next phase is really looking to other organizations," said Keefe.
That's where Southcoast enters the picture.
Keefe says several other potential partners submitted responses to the request for proposals, among them Lifespan and CharterCare Health Partners.
Keefe says if the deal is approved, Southcoast and Care New England would form a new nonprofit to oversee both organizations, with 50-50 participation from both boards of directors.
Positive reactions to a possible deal, mostly
Elizabeth Roberts, Secretary of Rhode Island's Executive Office of Health and Human Services (OHHS), which will be involved in reviewing the deal, said in a statement that she supports any deal that improves care and lowers costs for patients.
"I am excited to talk with Dennis and others to learn more about this proposal as it moves forward. OHHS and the Rhode Island Department of Health will review the proposal closely to ensure that it supports our goals to build healthier communities and a more vibrant economy," said Roberts.
Gov. Gina Raimondo also weighed in with a statement, commending Care New England's CEO for his work on her "Reinvent Medicaid" task force:
“One of my top priorities is making sure every Rhode Islander has access to quality, affordable care – we can’t build a healthy economy without healthy families. Care New England has been a great partner in this mission, and CEO Dennis Keefe continues to provide invaluable support to our state. His leadership in the Working Group to Reinvent Medicaid helped set Rhode Island on a path toward better care, lower costs, and more predictability by beginning to shift the system from a volume-based structure to one that pays for outcomes. I look forward to learning more about this proposed opportunity and its potential to foster innovation and strengthen communities across the region," said Raimondo.
Lifespan's President and CEO Timothy Babineau said in a statement that his organization will continue to pursue a partnership of its own. Theirs was one of three offers Care New England was considering.
"At the direction of our board, we have been involved in a number of ongoing strategic conversations over the last several months, including some with CNE, that seek to strengthen our mission of Delivering Health with Care. Lifespan will continue to explore other opportunities and potential partnerships that will continue to advance our system as the preeminent academic health care system in our region," said Babineau.
A long road from "exclusive talks" to sealing the deal
CNE head Dennis Keefe says the two health care systems have signed a Letter of Intent, "to engage in exclusive discussions and to work toward the goal of forming a new not-for-profit parent organization that would oversee both systems." Now the two systems will continue talks and conduct due diligence, in hopes of arriving at a "definitive agreement."
Following that agreement, if reached, the two organizations would pursue state and federal regulatory approvals. That would involve filing paperwork in Rhode Island and Massachusetts. The Federal Trade Commission would also need to weigh in, to determine whether the proposed affiliation violates anti-trust rules.
Keefe tells Rhode Island Public Radio that anti-trust violations were among the considerations when choosing a partner, violations which seem less likely, he said, partnering with an out-of-state organization.
Who is Southcoast?
Southcoast Health System operates several community hospitals along Interstate 195 in southeastern Massachusetts, including Charlton Memorial Hospital in Fall River, St. Luke's Hospital in New Bedford, and Tobey Hospital in Wareham; and Southcoast Behavioral Health in Dartmouth, a joint venture with for-profit Acadia Healthcare, which provides addiction and psychiatric treatment.