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HEALTH CARE

A seismic shift in Rhode Island health care as Lifespan, Care New England agree to merge

The state’s two largest private employers would form an academic medical center with Brown University.

Rhode Island Hospital in Providence is operated by Lifespan.
Rhode Island Hospital in Providence is operated by Lifespan.Lane Turner/Globe Staff

PROVIDENCE - Rhode Island’s two largest hospital groups have agreed to sign a letter of intent to form one nonprofit academic medical center with Brown University, a merger that could forever change the health care landscape in the state.

The boards of directors for Lifespan and Care New England voted Tuesday to sign the letter of intent, more than a year after similar talks appeared to collapse. But the shaky finances of each organization coupled with a global pandemic brought the sides back together.

In a telephone interview Wednesday, Lifespan President Dr. Timothy J. Babineau and Care New England President Dr. James E. Fanale stressed that the letter of intent is the beginning of a long process that will require regularity approval from the Rhode Island Department of Health, attorney general’s office, and the Federal Trade Commission.

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“In a perfect world, that takes at least a year,” Babineau said, referring to the state’s regulatory process. He said antitrust discussions with the Federal Trade Commission can also take a year.

Lifespan is already the state’s largest employer, operating Rhode Island Hospital, Hasbro Children’s Hospital, The Miriam Hospital, Bradley Hospital, and Newport Hospital. Care New England runs Women & Infants Hospital, Butler Hospital, and Kent Hospital.

A merger would be a significant victory for Governor Gina Raimondo, who urged the two hospital groups and Brown to discuss a merger last year when it appeared as though Massachusetts-based Partners HealthCare would acquire Care New England.

Care New England and Lifespan have had on-and-off discussions about merging for 20 years, but Raimondo brought officials at all three institutions together last summer. Those talks fell apart in July 2019, and Babineau and Fanale spent months trading barbs in public.

Fanale said the two hospital groups have worked closely to help patients during the pandemic, and they realized that the “natural evolution” was to enter into another round of merger talks.

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“We have to look at the vision over the long term,” Fanale said. The organizations did not have a letter of intent to merge in place last year.

Reached Wednesday, Raimondo said she is “cautiously optimistic” that an agreement can be reached. She said a merger would have keep jobs in Rhode Island and improve patient care.

“I think they’re trying to do the right thing,” Raimondo said.

Both hospital groups faced financial challenges before the coronavirus, but the pandemic has elevated concerns.

Lifespan, which reported a $35 million loss in the 2019 fiscal year, laid off 55 people in its corporate services office in March. More than 200 other employees across the company also agreed to retire.

Lifespan, Care New England, and Brown have not reached an agreement on the governance structure of the new entity, and Babineau and Fanale said it was too soon to comment. They declined to discuss whether they’ll both remain employed by a new entity.

“We kept people and personalities out of the conversation and I think that’s why we made a lot of progress," Babineau said.




Dan McGowan can be reached at dan.mcgowan@globe.com. Follow him on Twitter at @danmcgowan.