Rhode Island AG denies merger between Lifespan and Care New England

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Rhode Island Attorney General Peter F. Neronha has denied the proposed merger between Lifespan and Care New England. In addition, Rhode Island will join the Federal Trade Commission's lawsuit to block the transaction, the AG's office said.
 
The decision was based primarily on the AG's conclusion that the merger would result in "extraordinary market power for the new hospital system in violation of both state and federal antitrust laws," the AG's office said.
 
"As explained in the decision, this consolidation is likely to substantially lessen competition across many important healthcare markets (particularly inpatient general acute care), which will negatively impact healthcare costs, quality and access to care," according to a statement released by the office. "Additionally, the Attorney General found that the parties failed to demonstrate the financial feasibility of the proposal."
 
WHY THIS MATTERS
 
The COVID-19 pandemic has only underscored the vital importance of affordable access to high-quality care for all, the attorney general said. "Put simply, if this extraordinary and unprecedented level of control and consolidation were allowed to go forward, nearly all Rhode Islanders would see their healthcare costs go up, for healthcare that is lower in quality and harder to access," said Neronha.
 
Lifespan and CNE compete aggressively with each other across many inpatient and outpatient service lines, he said. Eliminating this competition would have the same effect as other mergers of this size: rising healthcare costs, lower quality and reduced access, he said.

Right now, Lifespan and Care New England invest in greater quality and access to compete for Rhode Islanders' healthcare business, the A.G. said. Following a merger, the combined system would be empowered to make important decisions – such as cutting service lines that have lower profit margins or delaying innovation or capital investment – without facing the pressure of competition from each other.  

The A.G. said the review was unable to reconcile the financial realities of Lifespan and CNE, each of which faces its own distinct financial challenges, with their promise that when they combine Rhode Island would be left with a financially healthy system that can make substantial investments in ambitious programs without raising its costs for consumers, cutting its services or taking steps to keep its labor costs down.

THE LARGER TREND

Lifespan and CNE filed their initial merger application with the Office of Attorney General and the Rhode Island Department of Health in April 2021. 

Over the course of the ten-month review, the Office collected and analyzed more than 3.6 million documents; took the statements under oath of over 20 Lifespan and CNE executives, consultants they used for the merger, and representatives of Brown University; reviewed scores of academic studies; and worked closely with retained experts to analyze the proposed transaction.

In addition, during three public meetings more than 50 members of the public spoke and the office received over 200 public comments. 
 
Twitter: @SusanJMorse
Email the writer: SMorse@himss.org