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Care New England CEO: ‘Future is strong’ even after hospital merger is rejected

“Our folks are pretty resilient,” Dr. James E. Fanale told the Globe. “They’re calm, patient, don’t seem to be too frazzled, and they know we’ll continue moving forward on our mission to serve our patients and staff.”

Dr. James E. Fanale, president and CEO of Care New England Health System, speaks at a press conference.Jessica Rinaldi/Globe Staff

PROVIDENCE — For nearly two weeks, Dr. James E. Fanale has been visiting each unit within Care New England’s health system, listening to the concerns of his employees.

“They’ve been through this gamut for the past three to five years,” Fanale, the CEO of the system, told the Globe early Tuesday. “But our folks are pretty resilient. They’re calm, patient, don’t seem to be too frazzled, and they know we’ll continue moving forward on our mission to serve our patients and staff.”

“But I think our future is strong,” said Fanale.

On Feb. 17, Rhode Island Attorney General Peter Neronha rejected the proposed merger of Lifespan and Care New England, the state’s two largest health systems and hospital owners, saying it would hurt consumers by creating a health care giant with a stranglehold on the local market.

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That same day, the Federal Trade Commission filed a lawsuit to block the merger, which Neronha said his office would join. The joint opposition meant the deal was all but dead, and the systems tore up their definitive agreement to merge.

Since September 2020, the two systems have been pushing for the merger, arguing that Rhode Island patients would be better off with a bigger, financially solid health care network that could compete with top-level medical centers in Boston and in New Haven, Conn.

The plan included a partnership with Brown University, which had committed $125 million to the new entity, which would have been dubbed Rhode Island Academic Health Care System Inc. It would have been Rhode Island’s largest employer.

“When this Rhode Island solution was proposed by all sort of folks, the base of going into it was that we were going to have to convince them why this is a good plan. When you look at the consolidation numbers though, I knew it was going to be a challenging argument,” said Fanale.

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An exterior of the Women & Infants Hospital in Providence.Jonathan Wiggs/Globe Staff

The merger would have meant that one system would control about 80 percent of the market’s hospital beds and would own eight of the state’s 13 hospitals. Fanale said he wasn’t surprised by the outcome.

“It’s been a long and arduous process,” said Fanale, who was brought in as CEO and president in January 2018, and said he plans on remaining in his role. “I’m not sure, personally, where I’m going to be or what I’m going to do in the future. But I want to make sure we have a plan going forward that solidifies the future because the people here [at Care New England] are just terrific.”

Fanale didn’t offer many details about the status of the system’s current board, but said they were “pretty resilient.” “The board chair has dedicated more hours of his life towards this [deal with Lifespan] than he ever planned, and he’s still sticking around,” he said.

Fanale said he learned a lot from public comments about board composition and governance, and plans on forming a “community care committee” that will provide people in the community to report directly to the board in the next “two to three weeks”

“I could tell you one thing is very important to us is health equity,” said Fanale. “But we have the largest women’s hospital in the region, and we know maternal mortality and morbidity are not equitable.”

Since the attorney general’s announcement, StoneBridge Healthcare, an out-of-state turnaround hospital group, submitted a bid of $550 million to buy Care New England — a purchase price of $250 million and a $300 million, seven-year investment in capital improvements. It was the second time they made such an offer to the system.

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When asked what Fanale thought of the offer, he said, “I know it’s out there. It’s public. But there are others that have contacted us as well. Right now it’s too early to tell.”

Fanale declined to say what other entities have contacted Care New England about making a deal, but described them as “local and regional provider entities.”

“But there’s more than one letter of interest,” said Fanale.

“We have a number of plans we’ve put together about staying independent, standalone options, and then reviewing and exploring any other options as they arise,” said Fanale. “Right now [for the next 30 to 60 days] we want to evaluate where we are, make sure we shore up everything we are doing, and value any proposal as we go along.”

Patrick Quinn, executive vice president of Service Employees International Union, District 1199 New England, said in an interview Tuesday that he agreed with Fanale that it’s time to “come up for air” from the merger talks.

“We need a comprehensive workforce strategy. This state has more money that it’s ever had before, and we can use that money to stabilize the labor market, which is completely upside down right now,” said Quinn.

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Quinn said that as the system examines acquisition offers again, he and the union will look to play a role. “We’re not going to allow others to just make this decision for us,” he said.

Some of those who opposed the deal between Lifespan and Care New England, such as Minority Leader Blake Filippi, a Block Island Republican, called the proposed merger a “prescription for disaster,” and called on the state to “apologize to Partners” and bring them back to the negotiating table.

In April 2017, Boston-based Mass General Brigham (then known as Partners HealthCare) had attempted to acquire Care New England, and even went as far as signing a definitive agreement to merge. Lifespan launched an opposition campaign against the deal saying it would “cost” Rhode Island with rising care prices and shift jobs to Massachusetts. But at the time, the FTC already signed off on the deal.

But former governor Gina M. Raimondo, now US Commerce Secretary, asked Fanale, the leaders at Lifespan, and Brown’s Medical school to create a locally run academic medical center in Rhode Island. Mass General pulled out of its acquisition, but interim president and CEO Anne Klibanski wouldn’t rule out the idea of restarting acquisition discussions in the future.

An exterior of Kent Hospital in Warwick, Rhode Island.Jonathan Wiggs/Globe Staff

“We look forward to reengaging at the appropriate time – especially with a fully integrated local system. We greatly value our relationship in Rhode Island and want to do what’s best for the state and its citizens,” she said in a statement at the time.

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Jennifer Street, a spokeswoman for Mass General Brigham, declined to comment for this story, but Fanale said the system’s relationship and clinical affiliation with Mass General is “outstanding” and “exceedingly important to us now and in the future.”

“So are we likely to discuss options? Certainly, we will. They’re part of us,” he said. “It’s a great relationship, no matter what, and they’ll be part of of the discussion going forward.”

“I think at some point it’s likely that we’ll be part of a larger system — maybe sooner rather than later. I do think the regulatory process is very challenging here to get things approved,” said Fanale. “But right now, I think we need to be in a ‘settling down’ or ‘stability’ period before moving forward to see what else is out there.”


Alexa Gagosz can be reached at alexa.gagosz@globe.com. Follow her @alexagagosz and on Instagram @AlexaGagosz.