Brown University said Thursday that it is joining with a California for-profit hospital chain in an attempt to buy Care New England Health System of Providence, adding an unexpected twist to efforts by Partners HealthCare of Boston to acquire the Rhode Island company.
In a letter issued campus-wide, Brown President Christina Paxson warned that the acquisition of Care New England by Partners would put at risk “the vision of an integrated academic health system in and for Rhode Island,” and likely increase the cost of care in the state.
Instead, she suggested an “alternative proposal” in which Brown and Los Angeles-based Prospect Medical Holdings, which owns CharterCARE Health Partners in Rhode Island, would acquire Care New England.
“I feel strongly that letting this acquisition go forward would be wrong for Rhode Island and for Brown,” Paxson said in her letter. “Doing so is likely to lead to specialty health-care shifting to Massachusetts, impeding access to health care for Rhode Islanders and especially for members of the state’s underserved communities.
“If the focal point of Rhode Island health-care shifts to Boston, excellent physicians (many of them Brown-trained) could be less likely to choose Rhode Island as a place to practice,” she said. “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 said the university would submit its plan to Care New England “if the Partners acquisition does not go forward, either because Partners withdraws, or its application to the state is denied.”
But the new proposal could face another hurdle: For now, Care New England doesn’t seem interested. The health system said in a statement that merger talks with Partners would continue and that Brown’s and Prospect’s plan is “a process undertaken of their own independent action and interests.”
“While we appreciate their interest in the future of health care in Rhode Island . . . CNE will proceed in our exclusive discussion with Partners as set forth in our letter of intent and we look forward to the next steps in that process,” the company said.
In a statement, Partners did not acknowledge the Brown-Prospect counterproposal, saying only that it continues to work closely with Care New England.
“We ... remain committed to improving the availability and accessibility of high-quality medical and surgical services to the Rhode Island community,” Partners said in a statement.
Partners, Massachusetts’ largest health system, and Care New England, Rhode Island’s second-largest health system, announced last April they had entered merger talks. Last month, the two systems said they had extended their talks for another month, through Jan. 31.
The Care New England system includes Women & Infants Hospital in Providence, Butler Hospital in Providence, and Kent Hospital in Warwick. These would become part of the Partners network if Partners and Care New England reach a final agreement. Care New England recently closed Memorial Hospital in Pawtucket, its most troubled property.
Under the Brown-Prospect plan, the Ivy League university or a non-profit subsidiary of Brown would acquire Women & Infants Hospital, while Prospect would acquire Kent Hospital and non-hospital assets, such as The Providence Center community mental health organization. Brown would ultimately decide whether it or Prospect would acquire Butler Hospital.
Medical school faculty at the three hospitals would either be invited to join a Brown faculty practice plan or to become Brown employees. Paxson said in her letter that the majority of any operating margins received by Brown would be reinvested in clinical care, medical research, and education.
Brown’s concerns over the potential Partners acquisition also extend to its own academic programs. Currently, about 30 percent of Brown’s medical education — in obstetrics, gynecology, neonatology, psychiatry, and family medicine — takes place in Care New England facilities.
“Because CNE is currently in an exclusive arrangement with Partners, we have not been able to discuss the Brown-Prospect plan with its leaders,” Paxson said.
But the unsolicited Brown-Prospect plan might be good news for Care New England, said Nancy Kane, professor of management at Harvard T.H. Chan School of Public Health.
“If I was Care New England, I’d be delighted they did that because it gives them leverage with Partners,” Kane said.
Brown, Kane said, is likely trying to seize an opportunity given that talks between Partners and Care New England have taken so long, a sign that, “probably some of the obstacles are really real.”
“Brown is saying, ‘Wow, maybe there’s a hope for this,’ ” she said. “This is their opportunity.”
Partners, which owns Massachusetts General and Brigham and Women’s hospitals, and Care New England would need federal and state approvals before they can complete a deal.
Partners has the biggest network of doctors and hospitals in Massachusetts, and state regulators have made clear that they won’t agree to significant expansion locally. As a result, the company has searched for opportunities out of state.Priyanka Dayal McCluskey contributed to this report. Katheleen Conti can be reached at firstname.lastname@example.org.