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Care New England withdraws from merger talks with Lifespan, Brown

Rhode Island Hospital in Providence, which is operated by Lifespan.
Rhode Island Hospital in Providence, which is operated by Lifespan. (Lane Turner/Globe Staff/File 2019)

PROVIDENCE — Care New England has pulled out of negotiations to form a local academic health center with Lifespan and Brown University, less than two months after the three Rhode Island institutions agreed to spend the summer discussing a partnership.

The decision is a defeat for Governor Gina Raimondo, who said in June that Massachusetts-based Partners Healthcare would back off its attempt to acquire Care New England to clear the way for local partnership.

Care New England’s board of directors voted Monday to withdraw from the negotiations, according to president and chief executive James E. Fanale and board chairman Charles R. Reppucci.

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“As those responsible for the fiduciary oversight of CNE, the board has concluded that it is in the best interest of CNE and the community it serves to end the tri-party discussions,” Fanale and Reppucci said in a prepared statement.

“In making this decision, the board took into account many considerations, including but not limited to, capital requirements and financial stability of the combined system, community need, anti-trust considerations, organizational stability, and implementation risks,” they said.

Care New England is Rhode Island’s second-largest hospital operator — behind Lifespan — controlling Women & Infants, Butler Hospital, and Kent Hospital. The organization has been under intense financial pressure in recent years, losing $70 million in 2016 and 2017. It posted a $4.6 million loss in the second quarter of fiscal year 2019.

Care New England had reached an agreement to be acquired by Partners, but Lifespan launched a public relations campaign opposing the deal. Lifespan operates Rhode Island Hospital, Hasbro Children’s Hospital, The Miriam Hospital, Bradley Hospital, and Newport Hospital.

In a telephone interview Tuesday, Fanale said the three institutions had several face-to-face meetings and a lot of phone conversations over the last month, but “it’s just not the right time” to come to a deal for Care New England.

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Fanale said he met with Raimondo on Monday to tell her Care New England was removing itself from the merger talks.

He said he believes Care New England is stronger financially and organizationally than it has been over the last two years, but he acknowledged its hospitals are still in significant need of capital investments.

Asked whether he expects to turn back to Partners for a potential merger, Fanale said there is “nothing imminent” planned.

In an e-mail, Partners spokesman Rich Copp said the organization values “our longstanding clinical affiliation with CNE and we remain committed to the health of patients in Rhode Island.”

Raimondo did not oppose the proposed merger between Care New England with Partners, but she said she favored a local solution. Last month, she called on Care New England, Lifespan, and Brown to work through the summer to reach a deal, but an agreement never materialized.

“I continue to believe that a locally run, academic medical center is what’s in the best interest of Rhode Island,” she said Tuesday. “I have encouraged the parties to keep an open mind, remain open to future discussions, and to continue to pursue expanded collaboration that could pave the way to further integration down the road.”

Lifespan officials said they, too, are “extremely disappointed” with Care New England’s decision to withdraw from the negotiations.

“We believe that a partnership with Lifespan, Care New England, and Brown University remains the very best approach to ensure high quality, affordable health care and economic vitality for our state,” Lawrence A. Aubin, Lifespan’s board chairman, and Lifespan president and chief executive Timothy J. Babineau said in a statement.

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Brown University president Christina Paxson said she believes a local health system “would deliver enormous benefits to our community in the form of greater access to high-quality affordable health care, and job growth that stems from a thriving biomedical research sector.”

“Care New England and Lifespan are valued partners to Brown’s Warren Alpert Medical School and will continue to be so in the future,” she said. “In the coming weeks, we will work with these partners to assess whether there are areas of possible collaboration that would benefit our community.”


Priyanka Dayal McCluskey of the Globe staff contributed to this report. Dan McGowan can be reached at dan.mcgowan@globe.com. Follow him on Twitter at @danmcgowan.