The Rhode Island-based system hopes to have some options this summer, CEO James Fanale says.
Not long after one deal fell through, Care New England Health is pursuing another merger.
The Rhode Island-based system initially hoped to merge with Lifespan, but the two systems abandoned those plans after regulators opposed the deal.
Now, Care New England Health CEO James Fanale said he hopes to present the system’s board of directors with merger options sometime this summer, WPRI of Providence, R.I. reported. Fanale talked about the plans in an interview with the news outlet.
“We know we’ve got to get this done pretty quickly, but [the board is] not going to move too quickly that they make the wrong decision,” Fanale told WPRI May 25.
Care New England has had financial difficulties. “We’re not going bankrupt. Nobody needs to worry,” Fanale told WPRI. “But we have to evaluate every proposal and option, because we need to do it that way.”
Fanale has said he is planning to retire early next year. After retiring, Fanale plans to continue in a consulting role to guide his successor and advise the board.
Care New England operates Women & Infants Hospital, Butler Hospital and Kent Hospital, and the system employs 7,500 workers.
A few organizations have expressed interest in acquiring Care New England, and the system has received “a couple of formal proposals,” Fanale said, according to the WPRI report. He didn’t disclose the identity of the suitors.
Fanale expects to offer options to the board by June or July, WPRI reported.
Stonebridge Healthcare, a Pennsylvania-based company that says it focuses on buying troubled hospitals that can be turned around, made an offer to buy Care New England in late February, according to GoLocalProv, a Providence-based news outlet. Stonebridge reportedly offered $550 million and pledged to keep Care New England a nonprofit system.
The proposed merger with Lifespan, Rhode Island’s largest hospital system, would have given the combined system the vast majority of the state's market. The systems said the merger would have led to improved healthcare, better research, and opportunities to reduce disparities among disadvantaged groups.
The Federal Trade Commission signaled in February 2022 that regulators objected to the deal, citing concerns about competition.
Rhode Island Attorney General Peter Neronha also opposed the merger.
“Put simply, if this extraordinary and unprecedented level of control and consolidation were allowed to go forward, nearly all Rhode Islanders would see their healthcare costs go up, for health care that is lower in quality and harder to access,” Neronha said in a statement. He said the systems didn’t demonstrate how the rewards would outweigh the risks.
President Biden’s administration has applied more scrutiny to hospital mergers. Biden issued an executive order last year directing regulators to closely examine hospital and healthcare mergers to ensure they don’t reduce competition and lead to higher costs for consumers.
Weeks after the planned merger of Care New England and Lifespan fell through, Lifespan CEO Timothy J. Babineau announced his plans to step down. His retirement is effective May 31, 2022.
There were only 12 announced hospital mergers in the first three months of 2022, the smallest first quarter number since 2016, according to a Kaufman Hall report.
Still, KPMG and other analysts expect to see more hospital and healthcare mergers this year. Some smaller systems that have been struggling financially may have no choice but to find a partner, some analysts say.
Earlier this month, Atrium Health and Advocate Aurora Health announced plans to merge and form one of America’s largest nonprofit hospital systems. Intermountain Healthcare completed its merger with SCL Health in April.