Dartmouth Health, GraniteOne Health drop merger plans

New Hampshire’s attorney general opposed the deal. Shortly afterward, the two systems said they were abandoning the planned partnership.

Dartmouth Health and GraniteOne Health have abandoned their plans to merge following the opposition of some New Hampshire state officials.

Dartmouth and GraniteOne first announced their plans to merge in 2019. But the systems are walking away shortly after New Hampshire’s attorney general announced his opposition.

Joanne M. Conroy, CEO and president of Dartmouth Health, notified staff in an email May 13 that the two systems were dropping plans to merge.

“Although we disagree with, and are deeply disappointed by, the result of the regulatory review, we respect the process that led to this decision,” Conroy said in the email.

“While this is not the outcome we had worked toward or hoped for, we know that this decision will best allow us to continue to meet our mission for many years to come,” she told staff.

Conroy said Dartmouth and GraniteOne would continue to collaborate in the future. She said those strong ties “will continue uninterrupted despite our decision to end our formal combination efforts.”

“We had hoped to join with GraniteOne to make strategic investments in offering a New Hampshire-based alternative to more costly out-of-state care and to build capacity in southern New Hampshire,” Conroy said. “We will continue our work together to provide exemplary care for every patient, right here in New Hampshire.”

The two systems began their efforts just a few months before the arrival of the COVID-19 pandemic. In her email to staff, Conroy noted the pandemic has changed the healthcare landscape.

“Despite the unforeseen challenges of the pandemic, Dartmouth Health and GraniteOne remained committed and focused on how we would deliver the benefits and promises of the combination for our patients and communities,” Conroy said. “But it has become clear to us that those benefits and promises that we envisioned several years ago are no longer practical and realistic in the current environment.”

GraniteOne Health said the failure to secure approval from state regulators was "disappointing."

"It’s also disappointing for the patients and communities of New Hampshire," GraniteOne said in a statement. "Based on the public forums we held last fall, it was clear how much the community supports our organizations and recognized the benefits this combination would have provided."

"The hospitals of GraniteOne are and remain incredibly strong organizations dedicated to our mission and supported by our community and our patients. Our unparalleled teams look forward to building a bright future for health care in southern New Hampshire."

New Hampshire Attorney General John M. Formella said his office’s Charitable Trust Unit reviewed the deal and opposed it.

Formella said the deal would “end the existing competition between the two systems that consumers rely on in several health care markets served by both GraniteOne and Dartmouth Health today and, therefore, would violate state and federal law without sufficient remedies to address the anticompetitive harm.”

The attorney general said other health care mergers in New Hampshire haven’t always been to the benefit of consumers. Critics of hospital consolidations often point out they can lead to higher costs for patients, particularly if the mergers occur among providers in overlapping or adjacent markets.

"Our state has experienced significant consolidation in health care over the past several years, and this transaction seeking to combine two of our top four largest systems is unacceptable without appropriate protections for consumers in place,” Formella said in the statement.

In 2010, Dartmouth sought to acquire Catholic Medical Center in Manchester, N.H., which is now part of GraniteOne Health. The New Hampshire attorney general’s office also opposed that deal as well.

President Joe Biden has urged the Federal Trade Commission and the U.S. Justice Department to closely examine proposed healthcare mergers to ensure they don’t lead to higher costs for consumers. In an executive order last year, Biden directed regulators to give close scrutiny to mergers involving hospitals and health systems “to ensure patients are not harmed by such mergers.”

So far in 2022, there haven’t been many hospital mergers. There were only 12 announced mergers in the first three months of 2022, according to a Kaufman Hall report. That’s the smallest number of deals in the first quarter since 2016. Analysts said the spike in COVID-19 hospitalizations undoubtedly contributed to the dearth of deal-making.

However, KPMG and other analysts expect more deals to take place in the coming months.

This month, Atrium Health and Advocate Aurora Health announced their intention to merge. If the deal is approved by federal regulators, it would create one of America’s largest nonprofit health systems. Intermountain Healthcare completed its merger with SCL Health last month.

Analysts expect some more deals will take place, particularly as some smaller systems may determine they need to find partners to stay afloat.