Brown’s president is alarmed about Care New England – and says you should be, too

No. 2 hospital group's CEO argues merger with Boston giant will benefit the state

PROVIDENCE, R.I. (WPRI) – Brown University President Christina Paxson says she is trying to grab Rhode Islanders’ attention as she grows increasingly concerned about the future of the state’s second-largest hospital group.

“The issues that are at stake are so important to every single Rhode Islander,” Paxson told Eyewitness News in an interview Wednesday on the university’s College Hill campus. “They are just first order of importance. This is about access to health care, quality of health care, economic development in the state, access to health care for underserved communities – so many, many dimensions.”

Care New England – owner of Women & Infants, Kent and Butler hospitals – is in advanced talks to become part of the giant Boston-based nonprofit company Partners HealthCare. It marks Care New England’s second attempt to merge with a bigger organization in recent years, a period that’s seen it suffer tens of millions of dollars in losses amid broader turmoil in the health care sector.

Christina Paxson

But Paxson – whose institution has close ties to Care New England thanks to its medical school – argues the company’s executives may be putting Rhode Island at risk, by placing one of the state’s premier medical institutions under the control of a much larger entity based in Massachusetts, one that already has close ties to a different Ivy League school, Harvard University.

“If health care in Rhode Island weakens, it’s bad for all of us,” she said. “It’s bad for the medical school and most importantly, it’s bad for consumers.”

Care New England President and CEO Dr. James Fanale has a very different view. He said he sees Partners – which has been affiliated with his company since 2009 through a cardiology program at Kent – as “a natural fit” to secure his hospitals’ future. Last week he agreed to move ahead with merger talks, and he hopes a definitive agreement will be finalized in the next few months, if not sooner.

“We have to think about all our constituents at Care New England,” Fanale told Eyewitness News. “We have patients to care for, most importantly. Our staff, our physicians, our leadership, our board – and we’re all united to make sure we do the best job possible for everybody. And that’s why we think this is what’s best for our organization and the state of Rhode Island.”

Thousands of jobs, health care at stake

What’s not in dispute: Care New England’s future matters for Rhode Island’s future.

The hospital group employs more than 6,000 workers, making it the state’s second-largest private employer – behind only top hospital group Lifespan – and it grosses more than $1 billion a year in revenue. Its staff and their research are crucial to state leaders’ hopes of developing an innovation-focused economy. And it has likely provided medical care at some point to just about every family in the state, with nearly all the babies born in Rhode Island delivered at one of its hospitals.

Paxson cites three key concerns about the proposed merger with Partners, which will need to be approved by regulators in Rhode Island and Massachusetts, as well as at the federal level, should a final agreement be reached.

The first, she said, is that complex care will be shifted to Boston, particularly if the company is incentivized to do so because it can charge higher rates at its flagships, Brigham and Women’s and Massachusetts General. “That takes it out of Rhode Island and makes it harder for people to access health care,” she said. (Fanale countered that Partners’ collaboration on cardiology at Kent has in fact led to more procedures remaining in Rhode Island.)

Paxson’s second concern: that Partners will use its size and growing dominance to drive up the cost of care. “Partners is huge,” she said. “I mean, Partners has more than a $14-billion-a-year budget. That’s larger than the budget of the state of Rhode Island. … If you’re concerned about market power, on prices Partners has the ability to influence the market. It’s big enough.”

Finally, Paxson cited the potential effect on the state’s economic development. “Right now, research that comes with having great physicians, scientists, who are delivering complex care in Rhode Island, has these powerful spillover benefits, where we’re attracting companies, we’re creating jobs,” she said.

Fanale insisted Care New England would never move away from its commitment to those activities, regardless of its ownership.

“I think we can work together to make sure that research and academics are strengthened in Rhode Island and not weakened,” he said. “Nobody on the Care New England side has any intention of making the academic presence in Rhode Island less. Not at all. As a matter of fact, we want to enhance it.”

Paxson is wary of those promises. “I want to see what those words really mean,” she said. “I will want to know that there are serious, well-defined commitments that will sustain access, keep prices low and create jobs in Rhode Island.”

The Partners merger is on the minds of other influential Rhode Islanders, as well.

In an op-ed last weekend, Rhode Island Foundation President and CEO Neil Steinberg warned against “one-off defensive deals,” instead urging state leaders to seek the creation of a single academic medical center.

“This is a critical point in time for the Rhode Island health-care system,” Steinberg wrote. “There is a unique, time sensitive opportunity to properly plan and make positive change.”

U.S. Sen. Sheldon Whitehouse used Steinberg’s piece to express his own reservations about one of Rhode Island’s most important institutions falling under out-of-state control, fearing a repeat of what previously happened to the state’s banking industry.

‘Plan B’ from Brown draws other concerns

Paxson has now put forward what she describes as a “Plan B” in the event Partners walks away from the Care New England deal or the merger is rejected by state officials. Her proposal: for Brown and Prospect Medical Holdings – the California-based owner of Roger Williams Medical Center and Fatima Hospital – to acquire and split up CNE, with Brown taking Women & Infants and potentially Butler, while Prospect takes Kent and its non-hospital facilities.

“The whole point of this is to start a conversation and help people understand that there’s a Rhode Island alternative,” she said.

Paxson declined to say how much money Brown would need to put up to finance such a transaction, though she acknowledged Care New England has “significant” debt and pension obligations that would need to be addressed. She also said it’s too early to lay out exactly how the collaboration between Brown and Prospect would work, particularly since CNE is still bound by an exclusivity agreement with Partners.

Care New England leaders have dismissed the Brown-Prospect proposal out of hand.

James Fanale

“I don’t think it’s a great idea,” Fanale said. “Certainly our staffs and everyone don’t like that approach, where we split up and one goes this way and one goes that way. I don’t see how that enhances the Brown affiliation.”

Paxson herself acknowledged reaction to the idea has been “varied” since it was announced last month. The response from two major unions that represent some CNE workers – the United Nurses and Allied Professionals (UNAP) and SEIU 1199 – illustrated the point: UNAP blasted Brown’s decision to work with the for-profit Prospect, which the union has clashed with at its other Rhode Island hospitals, while SEIU leadership appears to be taking a wait-and-see approach.

Paxson said Brown has developed “a pretty positive” view of Prospect. “Our impression is they run really good community hospitals – they’ve done some really innovative things on behavioral health and opioid addiction – and they understand what it means to have medical education take place in their facilities,” she said.

Critics have also questioned why Brown would work with an out-of-state company in an ostensible attempt to block a different out-of-state company from coming into Rhode Island. “Doesn’t Prospect Medical represent the ‘out-of-state consolidation’ that President Paxson claims will hurt Rhode Island health care?” Jane Williams, dean of the nursing school at Rhode Island College, asked in a letter to The Providence Journal.

“Partners and Prospect are very, very different,” Paxson argued. She said Prospect is a much smaller company than Partners, which has roughly 73,000 employees, and would have no incentive to shift care out of Rhode Island because, unlike Partners, it does not own top-tier hospitals over the border in Massachusetts.

Lifespan on the sidelines for now

Looming at the edge of the discussion is Lifespan, which made repeated failed attempts to merge with Care New England over the last two decades, sometimes with the encouragement of state leaders hoping to develop a unified, powerhouse academic medical center. In the interview, Paxson revealed Brown approached Lifespan about the Plan B for Care New England, only to be rebuffed, before reaching out to Prospect.

“They weren’t interested at the time,” she said. (A Lifespan spokesman said the company decided to wait until the CNE-Prospect merger talks reached their conclusion.)

Brown clearly hasn’t given up hope of involving Lifespan in its plans, however. Jack Elias, dean of Brown’s medical school, has suggested that if the university successfully took over Women & Infants and Butler, the school would eventually seek to join those two hospitals together with Lifespan’s facilities, which include Rhode Island Hospital, The Miriam Hospital and Bradley Hospital.

Paxson argued the current system – with Rhode Island’s medical school and top hospitals controlled by multiple different entities – poses problems. “We hear from the faculty, we hear from the physicians, that the bifurcation hurts,” she said.

“And it hurts both in patient care – so transferring patients across these systems is complicated; we don’t have the integration in care that we need – and the other complication is to do with research,” she said. “If we’re doing a multi-site research project on a really important health care problem in Rhode Island, we’re having to do contracts and work through these different systems. There’s a lot of administrative infrastructure that doesn’t have to be there.”

Despite her concerns, Paxson said Brown will work with Partners if it succeeds in taking over the Care New England hospitals. Fanale, for his part, said Care New England’s leaders planned to reach out to Brown officials this week to begin involving them in discussions of how their relationship would work post-merger.

Yet if that does happen, Paxson suggested there is another major nonprofit health company over another border that could see ripe takeover targets in Rhode Island: Yale New Haven Health System, which acquired Westerly Hospital in 2016 and confirmed last year it was in early talks about a potential acquisition of South County Hospital, too.

“What happens next?” she said. “The story that you hear a lot from people is that you have Yale New Haven coming up from the south, you have Partners coming from the north, and so the next step after a Partners acquisition would be an increasingly large presence of Yale New Haven in Rhode Island.”

“You could imagine in 10 years a situation where none of the major hospitals in Rhode Island are controlled by a Rhode Island entity,” she added. “And I don’t think that would be a good place to be.”

Ted Nesi (tnesi@wpri.com) covers politics and the economy for WPRI.com. He is a weekly panelist on Newsmakers and hosts Executive Suite. Follow him on Twitter and Facebook