What’s next for Care New England, one of Rhode Island’s two largest hospital groups, following the recent rejection by the FTC and Attorney General Peter Neronha of a proposed merger with Lifespan? That’s the topic of this Q&A with Dr. James Fanale, president and CEO of Care New England, which includes Kent Hospital in Warwick and Butler Hospital and Women & Infants Hospital, both in Providence. The interview was edited for length.
Ian Donnis: In rejecting the merger of Lifespan and Care New England, Attorney General Neronha said the combined entity would be anti-competitive and that it would reduce the quality of care while raising costs. How do you respond?
Dr. James Fanale: From an anti-trust point of view, the FTC and the attorney general have concluded that the consolidation numbers, in terms of market share, is too high to allow the merger to conclude. So I think from an anti-trust perspective, the way that the analysis plays out, where the numbers play out, then it’s a presumed anti-competitive and it can’t be allowed to go forward. So I get that — understood. And that’s factual. There’s always been this discussion about mergers coming forward, that it will reduce quality and increase cost. We believed and still believe strongly that quality would not suffer. And I’m a physician, and I’ve been taking care of patients for a long time and still do. And I frankly, wouldn’t want to work for an organization that would come together that would reduce quality. And that’s just me saying that, but we certainly endeavored during the phase of the evaluation that we would pledge for improved quality scores, etc. And we will be held accountable for that. So that was clearly how strong we felt about quality. On the cost side with rate caps and other things, we felt that the fear of costs going up would be drastically mitigated by some of the intervening powers of the state. So that was our platform. That’s what we believe is still true.
Donnis: Attorney General Neronha said the merger did not include plans for how to integrate the two hospital groups. What would you say on that?
Fanale: I certainly understand that the attorney general wanted a very detailed integration plan for how, what the organization was going to look like and how it would feel going forward. I totally get it — we did not meet his needs. And he made that very clear. However, the position that we took in terms of the amount of detail we thought we could get through was limited by a couple of things. One, I’ve been involved in two or three healthcare mergers in the past, and the level of detail in the early stages that one can provide or one’s willing to provide, is usually limited. I have tried to explain that to the attorney general — he wanted a lot more details that we did not submit to him. So I understand why he felt that way. However, some of the detail, we thought if we went into that level of detail, that it would spell things out in such detail that some of our folks might get a bit nervous about the future jobs, which are consolidations, etc. So very hesitant about taking that risk for the current workforce, especially given the height of the pandemic and how harder folks are working.
I guess the last thing would say a very detailed integration plan would have taken so much work time and expense that we felt, we wanted to see if there’s a chance a merger would be approved. Then we would do that work, which is usually what you do in a merger but we again, time and expense, we spent the better part of nine months responding to all the inquiries for information and data, over 10 million pages of information was submitted to the organizations. So that’s where we put our effort. In retrospect, should we have did a more detailed plan to meet the needs of the attorney general’s office? Probably should have. But that was our position at the time.
Donnis: Now that the merger is off the table. What is the best possible future scenario for care New England?
Fanale: Well, you know, the first thing we did when the announcement was made, was that we take a deep breath and we’ve been working on alternate plans. Sure, certainly, because the merger was never a given, it was never a guaranteed issue. So as they say in basketball, it was never a slam dunk. So we had prepared other plans for where we might go, should the merger not succeed. Now, three years ago, we certainly had spent a lot of time at Mass General Brigham, trying to culminate in a deal that would strengthen our balance sheet, given us resiliency. And you know, the players to be at that time did not think think that was a good idea, which certainly we felt very strong was a good idea. We do the Rhode Island solution — that’s not possible. So what Care New England does now is it sits back. It plans for the future. It has a path forward. It assesses its needs, and we are doing our due diligence and all options and keeping all options open as in before. We believe we’re fine. We believe there’s a path forward. We have the best staff one can ever imagine that works for us. They’re resilient. I met with a whole bunch of them last week, I think we’ll have a positive path forward.
We’re now beginning to commence our plans on talking with various folks about what we could do together in the future, whether that be an acquisition or merger etc. We haven’t decided fully as to what we will do. That’s up to the board to decide. But certainly we have to take our time and evaluate all the options available. We’ll talk to all of our current relationships including Lifespan and Brown to see if there are ways that we can do things together that we’re hoping to do as a merged entity. So nothing’s off the table, everything’s on the table, and we’ll explore them all.
Donnis: How soon does care New England need to make a change to preserve its current operations?
Fanale: The strategy behind becoming an affiliate of another organization, be it through merger acquisition, is because our balance sheet in terms of liquidity is not as strong as others. So, for instance, when a pandemic hits and you have extraordinary costs, you have difficulty in sort of navigating those waters. That’s what we’re dealing with now. We had a surge in the first part of this fiscal year that really hurt all hospitals around the country, and give you a limited balance sheet, you got to figure out how to get through that. That said, there’s ARPA funds and other things available to help us get through that. You know, we have plans to shore up our cash on a balance sheet. But the long-term play was really to have a much stronger balance sheet, like, if we had gone through with the Brigham transaction, we would have been fine, we would have the backing of a strong organization. And then you don’t have to worry about these difficult times. But I’m not worried about where we’re going this year. I think long-term, we still have to figure out what the long-term play is and that’s what we’ll do.
Donnis: Has there been any renewed communication with Mass General Brigham?
Fanale: Not as of yet. We need to talk to everybody we have an extremely positive clinical operational relationship with the Brigham. The care that we provide our patients throughout Care New England, especially in Warwick, but the cardiopulmonary program surgery center with Brigham physicians working with is an astounding high quality, high functioning clinical program. That said, where we can take that we don’t know. we haven’t we haven’t commenced the negotiation, excuse me, commenced the discussions, because as I said, we couldn’t talk to anybody till late Wednesday. And so we’ll talk to me we’ll talk to Lifespan. We’ll talk to others, and we’ll see what the best plan forward. Really the goal is to fulfill our mission of taking care of our patients to the best we can.
Donnis: We see a lot of volatility in the hospital landscape, how does the state ensure access to care and quality of care and as sufficient number of healthcare jobs moving forward?
Fanale: I think it’s going to take us quite a while at the state and the healthcare systems and nursing schools etc., to really replenish the ranks of nursing in the state. It’s not gonna happen overnight. But working together, the state probably has to help subsidize those nursing schools, maybe incent folks to go into nursing or to these other health care professions like surgical technicians, medical assistants, CNA. So we need to have a fairly strong workforce development program that could be supported by the state to help the institutions of higher learning to generate these these positions.That would help. I think, also, with the state has to do sort of with the ARPA funds available now, with a portion of this earmarked to help hospitals and nursing homes make sure they provided some of that relief issue, because otherwise a lot of us aren’t going to make it through.
The deficit we have now, I can tell you it’s not because of anything we did. We stayed open, we took care of all the patients that came our way, we didn’t close beds. We shut down surgical procedures for six weeks. That’s a devastating financial blow. But we did that to serve the community. And if we didn’t do that, and we closed a couple of bed surgery units, we wouldn’t have lost as much funding, but what do we do with the patients that need our care? So I think that the ARPA relief fund is workforce development thing that would really quite helped get us out of this this dilemma that we’re in.
Ian Donnis can be reached at idonnis@ripr.org
