Lifespan, CNE racing to complete merger filings for a September deadline

A “certificate of public advantage,” which could allow the state to approve a hospital merger that could be viewed as “anticompetitive” from the perspective of the FTC, is still on the table.

Nurse Lee Ann Duffy checks on a COVID-19 patient on a ventilator inside the intensive care unit at Kent Hospital in Warwick.David Goldman/Associated Press

PROVIDENCE — The leaders of Rhode Island’s two predominant hospital systems said they are about two months away from completing their merger application.

In an exclusive interview with The Boston Globe on Thursday, Dr. Timothy J. Babineau, Lifespan Corp.’s chief executive, and Dr. James E. Fanale, Care New England’s chief executive, confirmed that they are looking to complete all of the necessary filings to all regulatory parties by “mid-to-late September.”

“We’re spending a tremendous amount of time answering the questions, providing documentation, and going through what is a very normal, routine regulatory review process,” said Babineau. The September deadline is “pretty ambitious. But we’ve got our teams literally working around the clock to meet that deadline.”

The two systems had filed their merger application with state regulators on April 26 after filing with the Federal Trade Commission on April 14.

Once the filings are in, the FTC will have 75 days to render an opinion and the state will have a 120 day deadline. It’s likely, the presidents said, that the agencies will announce their decisions on the applications by the end of this year or in early 2022.

Earlier this year, Fanale and Babineau had discussions with House Speaker Joe Shekarchi, a Warwick Democrat, and Senate President Dominick Ruggerio, a North Providence Democrat, about granting a “certificate of public advantage,” or COPA, which could allow the state to approve a hospital merger that could be viewed as “anticompetitive” from the perspective of the FTC.

Fanale said the systems agreed with legislators and the attorney general’s office to take the “traditional path” through the FTC, but a certificate of public advantage could still be on the table.

“The COPA option is another option if the FTC proves problematic and doesn’t want to allow the merger to occur,” said Fanale. “We agree with all of the local government officials that ... let’s go the traditional route. Let’s see where that takes us. It’s our full-fledged effort to do that. When we get to the conclusion, hopefully it’s allowed to go through.”

Shekarchi, who has been outspoken about protecting jobs and care access at Kent Hospital, previously told the Globe that he has “full confidence” in the attorney general’s office to review the merger application and “make the right decision for Rhode Islanders.”

Front row, left to right: Charles Reppucci, chairman of the Care New England board of directors; Lawrence A. Aubin Sr., chairman of the Lifespan board of directors; and Samuel Mencoff, chancellor of the Corporation of Brown University. Back row: Dr. James E. Fanale, Care New England president and CEO; Dr. Jack A. Elias, dean of The Warren Alpert Medical School; Dr. Timothy J. Babineau, Lifespan president and CEO; and Christina H. Paxson, president of Brown University. Bill Murphy/Lifespan

Lifespan owns Rhode Island, Miriam, Hasbro Children’s, Newport, and Bradley hospitals and is known for its work in neurology, cardiology, orthopedics, pediatrics, and cancer treatment and care. Care New England owns Women & Infants, Kent, and Butler hospitals and has expertise in family medicine, obstetrics, gynecology, neonatology, and adult psychiatry.

In mid-February, the systems had announced that they had signed a definitive agreement to merge and create an integrated academic health system with Brown University. In the proposed deal, Brown also committed a minimum of $125 million over five years to support the development of the academic health system. The integrated system would be designed to have a full array of complementary medical specialties and biomedical research to remain on the leading edge of treatment and therapies.

Babineau said he, Fanale, and Brown President Christina H. Paxson have had weekly discussions with community stakeholders and business community leaders to hear their concerns about the proposed deal.

“There are concerns, and we want to hear them. We aren’t waiting for the Department of Health to convene the mandatory public hearings,” said Babineau.

He said they are reaching out to “anyone we can get in front of that we think is an important constituent.”

The systems have attempted to merge several times in the past, dating back to the 1990s. In a relatively small market, the competitors have had their own set of financial pressures, which have been heightened due to the COVID-19 pandemic.

Fanale said the systems are working to develop their quality metrics, specific commitments, and cost-savings estimates. Many critics of the merger have said that it could lead to less competition, as the merged entity would create a system with 80 percent market share in the state, and would potentially increase overall health care costs.

“Everyone is asking about the premiums. [They are asking] what about costs? We are simultaneously working on those answers, which we will provide,” said Fanale. “We’re not saying we can’t tell you [how this proposed merger] could save money. We’re trying to get a cogent, well-described presentation that we can commit to, work with regulators on, that satisfies their needs, and can be monitored based on the implementation of that plan.”

Babineau said, “We’re doing a lot of work to try to be as specific as possible to address those concerns. It can’t just be ‘trust me it will.’ We don’t have that entire story crafted yet, but we hope to in the next several weeks.”