PROVIDENCE — Partners HealthCare on Tuesday halted its two-year effort to acquire Care New England Health System, Rhode Island’s second-largest hospital operator, after Governor Gina Raimondo called on local hospitals to come up with a solution for health care in the state.
With Raimondo’s urging, Care New England, Lifespan, and Brown University said they would begin negotiations to create a Rhode Island-based academic health care system.
Boston-based Partners owns several Massachusetts hospitals, including Massachusetts General and Brigham and Women’s. Its foray into Rhode Island had stoked concerns that local patients would face higher costs and would have to travel to Boston for care. Lifespan even launched a public relations campaign to formally oppose Partners.
The development is a setback for Partners, which has been working aggressively to expand beyond Massachusetts. But it could be temporary: If the Care New England-Lifespan talks crumble, Partners could resume its bid to acquire Care New England.
And if Care New England and Lifespan eventually reach an agreement, they could — together — discuss a partnership with Partners.
Lifespan and Care New England are longtime rivals that have failed to reach a merger agreement in the past. But now, Raimondo said, they are ready to work out a deal.
“I’ve decided to step up and take an active role and say to these parties: ‘Get to the table and see if you can get this done for Rhode Island,’ ” she told reporters Tuesday.
Raimondo’s comments come as Partners and Care New England were deep into the merger negotiation process. Care New England had worked to improve its finances over the past two years — even closing one struggling hospital — to help keep the Partners deal alive. The two systems had filed an application numbering thousands of pages and were awaiting state approval to complete their deal.
Tuesday’s announcement was the latest twist in Rhode Island’s long-running health care saga, and it came in an unusual joint statement from the governor, the hospital systems, and Brown.
“In order to give this effort the best possible chance for success, and to provide maximum flexibility to the governor and the leadership of these three institutions, we will be withdrawing our application to acquire CNE,” said Partners’ interim chief executive, Dr. Anne Klibanski.
“We look forward to reengaging at the appropriate time — especially with a fully integrated local system,” she said in the statement.
The Partners-owned Brigham and Women’s Hospital plans to keep its existing clinical affiliation with Care New England.
Partners, Massachusetts’ most powerful health care system, has also been working on deals in New Hampshire. In May, officials at Mass. General said they planned to form a regional health care system with Exeter Hospital and Wentworth-Douglass Hospital in New Hampshire’s Seacoast region.
Raimondo, a Democrat in her second term, was initially supportive of Partners coming to Rhode Island. But after speaking with representatives from Partners, Care New England, Lifespan, and Brown over the last six months, she decided she preferred a “local solution.”
The governor said she wants the Rhode Island hospitals and Brown to work quickly over the summer to hammer out a deal.
At the State House on Tuesday, Raimondo noted that the concept of a Rhode Island-based academic health system was discussed more than a decade ago when she was a member of the board of Care New England-owned Women & Infants Hospital, long before she ran for public office.
“For whatever reason, it’s never been able to happen — personalities, clash of cultures,” Raimondo said. “And so what I am saying to the parties is let’s put all that aside, let’s put any history aside. And let’s come to the table and keep our eye on what’s best for Rhode Island.”
Care New England’s chief executive, Dr. James E. Fanale, said he’s optimistic that a deal among the Rhode Island entities is possible.
“We’re really going to work hard this time and ignore the issues of the past,” Fanale said in an interview.
“When the governor calls and says, ‘Listen. we’d like to bring a Rhode Island option to the table’ . . . I think we have to go to the table. We have to earnestly work with Brown University and with Lifespan.”
Brown president Christina Paxson said in a statement that she looks forward to the discussions.
Lifespan officials said they were pleased the governor “has taken this important first step to achieve a vision that has eluded the state for more than two decades” — but they declined to comment beyond a brief statement.
Lifespan officials had argued that Partners’ plan to acquire Care New England would shift local jobs to Massachusetts, among other ills. (Raimondo on Tuesday called Lifespan’s public criticism of Partners “unfortunate” and suggested it didn’t sway her decision to call for a local health care collaboration.)
Lifespan, the state’s largest health care provider, operates Rhode Island Hospital, Hasbro Children’s Hospital, The Miriam Hospital, Bradley Hospital, and Newport Hospital.
Care New England’s network includes Women & Infants, Butler Hospital, and Kent Hospital.
The Rhode Island Foundation and the Partnership for Rhode Island, a business group, threw their support behind Raimondo’s comments Tuesday and said they will collectively spend $300,000 on consultants to help Lifespan, Care New England, and Brown reach a deal.
If Lifespan and Care New England merge, the vast majority of health care services in Rhode Island would be controlled by just one company.
In a statement Tuesday, representatives of District 1199 SEIU New England, a health care workers union, predicted that such a consolidation would likely lead to job losses and said state officials must safeguard patient care and local jobs amid the negotiations.
“It was clear that some of the powers that be in Rhode Island want to maintain a Rhode Island-dominated health care system,” said David E. Williams, president of Health Business Group, a Boston consulting firm.
“I don’t think it’s actually going to solve any of their economic problems,” Williams said, “and I think it’s reasonably likely that Partners will be back at the table in three to six months after Rhode Island determines that going it alone is not viable.”
Priyanka Dayal McCluskey can be reached at priyanka.
email@example.com. Follow her on Twitter @priyanka_dayal.Dan McGowan can be reached at firstname.lastname@example.org. Follow him on Twitter at @danmcgowan.