FTC, Rhode Island AG Reject Care New England, Lifespan Merger

Hospital leaders express disappointment but pledge to "move on to a new path forward."

The Federal Trade Commission and Rhode Island regulators on Thursday said they will file suit to block the proposed merger of the two largest health systems in the nation's smallest state.

If consummated, the consolidated eight-hospital Lifespan and Care New England system "would control an unprecedented amount of healthcare in Rhode Island, taking the state's healthcare market from one in which there is healthy competition to a virtual monopoly," regulators said.

"Our review clearly established that Lifespan and CNE compete aggressively with each other across many inpatient and outpatient service lines," Rhode Island Attorney General Peter F. Neronha said in a media release.

"Eliminating this competition will have the same effects here as seen across the country following mergers of this size: rising healthcare costs, lower quality, and reduced access," Neronha said. "The parties simply have not demonstrated why these results would not happen here and how they would be able to deliver on promised benefits that would outweigh these risks."

The regulators' review noted that the consolidated system would:

• Control 75% of all inpatient acute care hospital beds in the state
   
• Control 80% of the state's inpatient hospital care
   
• Control 79% of the state's inpatient psychiatric care
   
• Control 60% or more of the state's market for many outpatient surgeries
   
• Account for 50% of commercial healthcare spending on patients whose primary care physician is part of the merged system's ACOs
   
• Employ 67% of the state's full-time hospital RNs.

Care New England President and CEO James E. Fanale, MD, and Lifespan President and CEO Timothy J. Babineau, MD, issued a joint statement expressing frustration with the regulators' decision.

"Of course, we are disappointed, but I will say that we can truly know that we did everything we could over the past few years of hard work to get this done," Fanale said.

"We thought it was the right thing to do, but now we will need to move on to a new path forward," he said. "There is always a path forward, and we will explore all options to find the best possible -- and acceptable to regulatory bodies – solution for access to affordable, quality, healthcare."

Neronha's office and the FTC will file a joint complaint in federal district court for a temporary restraining order and preliminary injunction to stop the deal and to maintain the status quo until an administrative hearing can be held. 

“This proposed merger is a bad deal for patients who are likely to see higher hospital bills, lower quality of care, and fewer cutting-edge medical services," FTC Bureau of Competition Director Holly Vedova said.

"By eliminating competition between Lifespan and Care New England, this merger would create a new healthcare conglomerate with outsized power over the entire continuum of healthcare services," Vedova said.

"As this country struggles to recover from a devastating pandemic, we can't afford to allow this kind of concentrated control over critical healthcare services."

BCBS Rhode Island

Blue Cross & Blue Shield of Rhode Island said the failed merger bid will not affect its relationship with either health system. 

"The decision of the Rhode Island Attorney General and the Federal Trade Commission does not impact our shared commitment to these efforts, which further long-term economic growth, predictability of healthcare costs, and the well-being of all Rhode Islanders," the payer said.