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RI Attorney General rejects hospital merger application

Attorney General’s office cites threats of higher health costs, lower quality, harmed labor market

Neronha wrote in a 150-page decision that if the merger were 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.”
Neronha wrote in a 150-page decision that if the merger were 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.”

Rhode Island Attorney General Peter Neronha rejected Lifespan and Care New England’s application to merge their health systems Thursday.

The merger would create an integrated health system with control of 80% of Rhode Island’s market for inpatient care, as well as establish an academic health system in partnership with the University, The Herald previously reported.

The Attorney General’s office will join the Federal Trade Commission in filing a lawsuit to block the merger, Neronha announced at a Thursday press conference.

While the University touted the research benefits of an academic health system and commissioned a report which found that the proposed merger would bring economic benefits, advocates voiced concerns that hospital consolidation would raise prices, weaken the job market and potentially lead to the cutting of care services.

If the merger were to pass, “the state’s healthcare market (would shift) from one in which there is healthy competition to a virtual monopoly,” according to a press release from the Attorney General’s office.

In the official 150-page decision released Thursday, Neronha wrote that “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.”

“As detailed in the decision, expert analysis concluded that the new system’s increased leverage means prices could go up by at least 9% over and above regular cost increases,” according to the statement. “Insurers generally pass on increased healthcare costs to consumers in the form of higher insurance premiums and higher out-of-pocket costs.”

The statement also cited “the absence of concrete financial and system integration plans' to substantiate how the merger’s “benefits will be achieved,” as a contributor to Neronha’s decision.

“The parties’ application failed to tell the Attorney General what the merged system will look like, what exactly Brown University’s role will be, how the new system will deliver on these benefits, and why some of the innovations they propose cannot be undertaken by Lifespan and CNE without a merger,” the statement said.

According to the decision, the Attorney General’s investigation included collecting over 3.6 million documents and 20 statements under oath, retaining six outside experts and firms and receiving more than 250 public comments from both written testimony and three public comment meetings.

Neronha took time to specifically “acknowledge and thank those who actually make possible the delivery of healthcare in this state.”

“These nurses, doctors, technicians and operational and administrative staff have cared for all of us, and they have done so throughout this pandemic, and all of its associated challenges,” he said.

President of United Nurses and Allied Professionals Lynn Blais responded to Nernoha’s decision in an official statement released Thursday.

“The UNAP strongly disagrees with the Attorney General’s rejection of the hospital merger. It is clear that Care New England is in dire financial straits, and in no financial condition to sustain their operations as they currently are,” Blais wrote. “The merger of these two groups could be our last, best chance to ensure a healthy, stable, not-for-profit healthcare system that stays under Rhode Island control.”

The rejection “has now opened the door for three more Rhode Island hospitals — Women and Infants, Kent and Butler — to be sold to an out of state, for-profit corporation who will almost certainly put shareholder profits ahead of quality patient care,” Blais added. “The people of Rhode Island can’t afford another buyer who wants to come in and suck every last nickel out of these hospitals.”

Speaker K. Joseph Shekarchi addressed the decision in a statement released Thursday.

“I thank the presidents, members of the boards of directors and the teams at both Lifespan and Care New England for their hard work on this proposed merger application,” Shekarchi said. “I encourage the two hospital groups and Brown University to immediately terminate their exclusivity agreement and explore all options available to them in the marketplace.”

CNE President and CEO James E. Fanale responded to the decision in a joint statement from Lifespan and CNE released Thursday.

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“We are disappointed, but I will say that we can truly know that we did everything we could over the past few years of hard work to get this done,” Fanale wrote. “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, health care.”

In a statement released Thursday, Senate President Dominick J. Ruggerio commended the Attorney General for his “thorough review” of the merger proposal. Ruggerio noted that he will review the Attorney General’s decision “before taking any further steps.”

“My foremost concerns remain the same — ensuring every Rhode Islander has access to a public health system that provides robust care, fosters partnerships with our research-based institutions and drives equitable access to care while sustaining and creating jobs in this critical sector of our economy.”

Lifespan and CNE can appeal the decision in court through the Hospital Conversions Act, the Rhode Island law that governs hospital merger applications.



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