PROVIDENCE — When Governor Gina Raimondo announced this month she was bringing the key players from the state’s hospital landscape together to discuss creating a local academic health care system, everyone sounded the right notes.
The CEOs of Lifespan and Care New England said they were committed to getting back to the table for a new round of merger talks. Brown University president Christina Paxson said she was looking forward to having more conversations. Even Partners HealthCare, the Massachusetts giant that had been trying to acquire Care New England for the past two years, agreed to step back and give the Rhode Island companies space.
But while all of the parties continue to show optimism, they will have to overcome a complicated web of regulatory challenges, governance questions, and financial hurdles in order to reach a deal, according to experts who have been at the table during previous merger discussions in Rhode Island over the last several decades.
“It’s easy to kill it because there are a million ways to kill it,” said Constance A. Howes, a former president and CEO of Women & Infants Hospital. “But it’s tough to get through the whole process.”
While a merger would need federal approval, Rhode Island’s Hospital Conversions Act gives the state attorney general’s office and the Department of Health broad powers when it comes to reviewing all transactions involving health systems. The attorney general’s job is to review every facet of the transaction, while the health department focuses largely on how a deal would affect patients and employees.
“Having the political will to make something happen is a good thing,” Howes said. “But it’s really hard for regulators to put in whatever conditions they want because that might not be palatable.”
In 2010, officials at Lifespan and Care New England cited the state’s review process as one of the reasons they failed to reach a deal on a merger.
Patrick Lynch, who served as attorney general between 2003 and 2011, said his office took its responsibilities seriously when it came to reviewing hospital transactions. He noted another hospital merger between St. Joseph Health Services of Rhode Island and Roger Williams Medical Center was approved on his watch, and “we had to work with the Vatican on that.”
So could a deal among Lifespan, Care New England, and Brown come together?
“The answer might be absolutely, but not unless the proper regulators are given the information they need to make the proper decisions,” Lynch said. “I think concluding it’s the right thing is getting in front of itself.”
Lifespan is the state’s largest health system, operating Rhode Island Hospital, Hasbro Children’s Hospital, The Miriam Hospital, Bradley Hospital, and Newport Hospital. Care New England runs Women & Infants, Butler Hospital, and Kent Hospital. The two hospital groups combine to have more than 22,000 employees.
Care New England was drowning in red ink for several years — losing $70 million in 2016 and 2017 — but it turned a small profit last year after closing down Memorial Hospital in Pawtucket. The system’s top executives were backing a sale to Partners, but the deal was strongly opposed by officials at Lifespan.
Supporters of the latest iteration of a merger — referred to as a “unified local health system” — say it would stop doctors from leaving Rhode Island to work in Boston and allow patients to continue receiving the majority of their care in the state. A local partnership could also bolster Brown’s Warren Alpert Medical School.
But it’s unclear whether a dominant local health system would affect other hospitals in the state, like Woonsocket-based Landmark Medical Center or Westerly Hospital, which is part of the Yale New Haven Health system.
Officials at Lifespan, Care New England, and Brown believe this time is unique for several reasons.
Leadership at Brown University has long been an advocate for creating a local medical system, but this is the first time the Ivy League institution has had a seat at the negotiating table alongside Lifespan and Care New England.
Another change this time around, is Raimondo, who appears more willing than her predecessors to put her thumb on the scale to advocate for a partnership among the three institutions.
The second-term Democrat largely sat on the sidelines in recent years while Partners pursued its acquisition of cash-strapped Care New England. But she said she changed her tune after repeatedly hearing from business leaders and other experts who were calling for a local solution.
“She’s a player in this because she does understand it,” Howes said. Raimondo served on the board at Women & Infants before running for public office.
Lifespan president and CEO Dr. Timothy Babineau, Care New England president and CEO Dr. James Fanale, and Paxson from Brown have attended one meeting with Raimondo since they agreed to begin discussing a Rhode Island-based academic health care system.
Spokespeople for the three institutions declined to comment Tuesday, and referred all questions to Raimondo’s office. Josh Block, a spokesman for Raimondo, said meetings will continue throughout the summer.
During a press conference earlier this month, Raimondo said she believes now is the best chance for the parties to reach an agreement. She acknowledged that previous attempts to merge have failed in part because the two sides couldn’t come to terms on who would run the new system or who would sit on its board, but she said her goal is cut through the tension.
“Anyone who says that to me, including the parties, I’m going to say, stop,” Raimondo said. “That was then, this is now. Look forward. Think about the vision we’re trying to achieve. Stay at this table. Be collaborative and let’s try to get a deal done that’s good for Rhode Island.”
Fanale said he agrees this time could be different.
“We’re equals at the table,” he said. “In the past, Care New England’s been a weakened organization. We’re a lot stronger now.”
Even if the institutions do come to an agreement on a merger, there is no guarantee that it would be beneficial to Rhode Island patients, according to Sam Richardson, an economist at Boston College. He said having a dominant local system could lead to the same cost-control concerns some had about Partners taking over Care New England.
“The way that prices are determined is this negotiation between hospital systems and insurance companies,” Richardson said, “if you have more market power, then you have more power in that negotiation.”
One of the biggest unanswered questions is whether a local system would result in the cash infusion Care New England still needs. A spokesperson for Care New England said the hospital likely needs more than $100 million in capital improvements.
“Care New England needs capital,” Howes, the former president of Women & Infants, said. “It needs money. And I don’t know that Lifespan has it.”
Raimondo has said she would like to see some progress on a merger made this summer. Partners, meanwhile, will remain on the sidelines, but officials there aren’t ruling out another attempt to acquire Care New England.
Richardson, the Boston College professor, said he believes it will take a long time for all of the stakeholders to come to terms.
“If people are expecting this is going to happen quickly, they should change their expectations,” he said.
Priyanka Dayal McCluskey of the Globe staff contributed to this report.