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Care New England, Partners will enter into definitive agreement, signaling big step toward merger

The mutual decision to enter into a definitive agreement is the next step toward CNE becoming part of Partners HealthCare.

Beth Jones Sanborn, Managing Editor

Butler Hospital, RI, part of Care New England Credit: Google Street ViewButler Hospital, RI, part of Care New England Credit: Google Street View

Just weeks after Brown University threw an unsolicited hat in the ring to acquire Care New England Health System through a joint venture, CNE and Massachusetts giant Partners HealthCare have announced plans to enter into a definitive merger agreement following months of exclusive negotiations.

The mutual decision to enter into a definitive agreement is the next step toward CNE becoming part of Partners HealthCare. In April 2017, CNE announced that it had elected to join Partners HealthCare after an exhaustive nationwide search for candidates that included both for-profit and nonprofits systems. At that time, the two systems signed a Letter of Intent and CNE agreed to negotiate exclusively with Partners and 10 months of due diligence followed.

[Also: Brown University, Prospect HealthCare throw joint hat in the ring for possible merger with Care New England]

Both systems called the step forward an "important milestone," with the announcement winning approval from both systems' Board of Directors. The definitive agreement, once drafted, represents a more formal document that would outline the details and plans for the actual transaction. Both organizations would then proceed with required state and federal regulatory approvals. In the meantime, the existing letter of intent and exclusivity has been extended until such a time as a definitive agreement has been executed.

Since 2009, Care New England has worked closely with Partners HealthCare through a clinical affiliation with Brigham and Women's Hospital in cardiology, and vascular, thoracic, and colorectal surgery as well as a long-standing collaborative relationship between McLean Hospital CNE's Butler Hospital for behavioral healthcare and innovative research locally within the Rhode Island community. Moreover, CNE has supported a "strong educational and research relationship" with Brown University, which CNE said in a statement "will continue to play a critical role in the health care landscape and its future development."

[Also: Tracking 2018 mergers and acquisitions]

However, the deal with Partners represents a major point of concern for Brown University, who just two weeks ago announced their own proposal for Brown and Care New England to "create an integrated academic health system with local healthcare systems that would keep healthcare in Rhode Island, along with its economic benefits."

President Christina Paxson first sent a letter to the Brown Community pitching the idea, which involved a joint venture with Prospect Medical Holdings, which owns CharterCARE Health Partners in Rhode Island, wherein the two would join forces to acquire CNE in effort to make sure healthcare services stayed in Rhode Island and costs were held down.

Paxson said the Partners deal could be bad for Rhode Island if the system elects to start shifting services to Massachusetts, namely specialty care. This, she said, would decrease access to care for Rhode Islanders and potentially increase care costs. She also said it could mean loss of physicians, many of which could have been Brown trained, as they might decide migrate to Massachusetts if care services do.  

The state's economy could take a hit too."In addition, the full economic benefits of a strong local academic health system -- one that brings in federal grants, generates spin-off companies and creates new jobs in Rhode Island-- would be lost, perhaps forever," Paxson wrote in her letter.

The announcement from CNE and Partners would seem to spear any hope for Brown's plan and propell Paxson's fears in the realm of real possibility. For their part, Partners did address those fears in general, saying in a statement: 

"Our lengthy discussions and due diligence with CNE have strengthened our relationship and further solidified our interest in building on the successful clinical collaboration we have already developed together," said Partners HealthCare President and CEO David Torchiana, MD. "We are also aware of and deeply respectful of the other components of the Rhode Island health care landscape and hope to find common ground and mutually beneficial pathways to improve the academic strength of the hospital programs and maximize the benefit to the Rhode Island economy."

The plan to move forward with a definitive agreement includes Kent Hospital in Warwick; Women & Infants Hospital of Rhode Island in Providence; the VNA of Care New England, based in Warwick; Butler Hospital in Providence; and The Providence Center in several Rhode Island locations. 

"Today's announcement is a positive step for Rhode Island health care as well as our state's economy," said CNE Board Chair Charles R. Reppucci. "I would like to express my most sincere appreciation to all involved who helped us get to this important milestone. While we still have much more work ahead of us, we are one step closer to realizing a unique clinical affiliation that would place Rhode Island at the forefront of health care delivery both locally and beyond.

"Brown values its longstanding relationship with Care New England. We look forward to learning about the details of the proposed acquisition of CNE by Partners HealthCare and engaging with them to discuss their plans. As Rhode Island regulators assess the plan, we urge them to analyze the impact on access to healthcare, the cost of medical care, and jobs and economic development in Rhode Island, and consider whether a local option would better serve the residents of the state. Regardless of the outcome, Brown remains committed to collaborating with all stakeholders to promote the health of our population and economic development in the state," Brown said in a statement.

CNE is the parent organization of Butler Hospital, Kent Hospital, Memorial Hospital of Rhode Island, Women & Infants Hospital of Rhode Island, the VNA of Care New England, The Providence Center, and Integra, a certified accountable care organization created in collaboration with the Rhode Island Primary Care Physicians Corporation. The system includes 970 licensed beds and 216 infant bassinets and also a teaching and research affiliation with The Warren Alpert Medical School of Brown University. Kent is a teaching affiliate of the University of New England College of Osteopathic Medicine, located in Maine.

Twitter: @BethJSanborn
Email the writer: beth.sanborn@himssmedia.com

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