PROVIDENCE, R.I. (WPRI) – Care New England, Rhode Island’s second-largest hospital group, has already begun looking for a new merger partner after its proposed deal with Southcoast Health Group abruptly fell through earlier this month, executives said Monday.
Care New England President and CEO Dennis Keefe said the nonprofit company is working again with Kaufman, Hall & Associates, a major Illinois-based health-finance consulting firm and the same strategic advisor that helped put together the Southcoast deal, which was called off last week.
Joining forces with another organization is “still in our future plans,” Keefe told Care New England bondholders on a conference call Monday.
“We do feel that we still are strongly desirous of having a strategic partner,” he said. “We continue to work with Kaufman, Hall and we have already reengaged with them to start the work with us and start to look at where we were and where we are and start to think about the future.”
“It’s important, and there is an urgency, but it’s not like we need to do this, like, immediately,” he added.
With more than $1 billion in annual revenue and roughly 7,500 employees, Care New England’s next move has major implications for the Rhode Island economy, particularly because of its importance to the state’s research and education base.
It remains unclear what exactly caused the agreement with New Bedford-based Southcoast to collapse. But Care New England board chairman Charles Reppucci indicated it happened abruptly on Oct. 14 during a previously scheduled discussion between the two companies’ leaders.
“It became clear that both of us were not in agreement as to our shared vision,” Reppucci said. Southcoast’s board almost immediately voted to terminate the transaction, which led Care New England’s board to speed up its own vote to do the same, he said.
“Until the meeting on the 14th there was no plan to terminate the affiliation,” Reppucci said. The terms of Care New England’s agreement with Southcoast bar him from providing further details, he said.
Care New England’s executives said there was no sudden change in the company’s finances that changed Southcoast’s mind, insisting that its operating performance has actually improved over the last year. Keefe added, “At no point did we view Southcoast as vital to Care New England’s survival.”
Keefe said after the Southcoast deal died he reached out to the three other suitors who discussed an agreement with Care New England before the company picked Southcoast: Lifespan, parent of Rhode Island Hospital and other facilities; Partners HealthCare of Boston, which owns Mass General and Brigham and Women’s; and Prospect Medical Holdings, whose Rhode Island division includes Roger Williams Medical Center. Keefe said the calls were a courtesy to inform them of the change but not yet to initiate new talks.
“The relationships there remain very, very solid, the communication is very open, and that’s probably all I can say about that at this point,” Keefe said.
In a statement, however, Lifespan spokeswoman Jane Bruno emphasized that its management team is not in active talks with Care New England.
“Presently, there are no plans to engage with CNE regarding a potential merger,” Bruno told WPRI.com.
“For the last couple of years, Lifespan has been pursuing a variety of strategies to ensure that it remains the leading health care system in the region and meets the needs of the communities we serve,” she said. “Our expansion of Lifespan Physician Group, strategic partnership with the Dana Farber Cancer Institute and successful implementation of a single enterprise wide EHR [electronic health record] are examples of those strategies.”
Care New England has faced financial challenges in recent years, partly due to its 2013 takeover of Pawtucket’s troubled Memorial Hospital. Its other facilities are Kent Hospital in Warwick and Butler Hospital, a psychiatric facility in Providence.
This story has been updated.